Winds of change: Indonesia targets customs improvements through KITE facilities

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Winds of change: Indonesia targets customs improvements through KITE facilities

Sponsored by

sponsored-firms-gnv.png
indonesia-5497254.jpg

Irsan Pratama and Jeklira Tampubolon of GNV Consulting summarise important updates to the rules governing Indonesia’s Import Facility for Export Purposes, and the exportation of palm oil, palm olein, and cooking oil.

The Indonesian Ministry of Finance (MoF) has issued two regulations as part of its Import Facility for Export Purposes (Kemudahan Impor Tujuan Ekspor, or KITE) with the aim of improving customs services. The regulations are designed to simplify procedures; expand supply chains and export channels; accommodate the development of business process activities; refine policies in the field of import duty facilities on the importation of goods for export purposes; and increase competitiveness, investment, and national exports.

The regulations, which have been effective since November 1 2022, are as follows:

  • MoF Regulation No. 145/PMK.04/2022 concerning Refund of Import Duty that Has Been Paid on Import of Goods and Materials to be Processed, Assembled, or Installed on Other Goods for the Purpose of Export. This regulation revokes MoF Regulation No. 161/PMK.04/2018.

  • MoF Regulation No. 149/PMK.04/2022 concerning Exemption of Import Duty and Non-Collection of Value Added Tax or Value Added Tax and Luxury Goods Sales Tax on Import of Goods and Materials to be Processed, Assembled, or Installed on Other Goods for the Purpose of Export. This regulation revokes MoF Regulation No. 160/PMK.04/2018.

The main changes in the new MoF regulations are as follows:

  • New requirements for obtaining the KITE facility:

    • The business entity must be a taxable enterprise that was not previously regulated;

    • The applicant must install CCTV to monitor incoming, storage, and releasing of goods, and the CCTV should be accessible by the Indonesian Customs Authority;

    • The list of raw materials and finished goods should be included with the harmonised system code at eight-digit level; and

    • The requirement that the KITE facility holder must submit a conversion formula before starting production has been removed.

  • Reporting:

    • The new regulations require the KITE facility holder to submit annual reports on June 30 at the latest (previously, the deadline was the end of the fourth month after the end of the fiscal year); and

    • Under the KITE Exemption, in the event that the licence has expired and/or been revoked, the facility holder is required to submit a liability report within 60 days after the expiry date of the KITE facility (the previous stipulation was within 30 days).

  • Sources of raw material and/or goods to be further processed:

    • The raw material and/or goods can be sourced from:

      • Importation – outside the customs territory and a Bonded Logistics Centre; and

      • Local – a bonded warehouse, a bonded zone, a bonded exhibition zone, a free trade zone (FTZ), a special economic zone, and/or another economic zone.

  • Guarantee (applicable for a KITE Exemption facility):

    • Under the new regulations, the guarantee can be in the form of a cash guarantee, a bank guarantee, a customs bond, an Indonesia Eximbank guarantee, or a corporate guarantee.

  • Unloading:

    • Under a subcontract arrangement, the unloading of imported goods can be performed at the subcontractor’s premises, provided that the KITE facility holder has obtained approval from the Customs Office.

New regulation on palm oil, palm olein, and cooking oil

The government has also issued Minister of Trade (MoT) Regulation No. 50 of 2022 concerning Export Procedures for Crude Palm Oil, Refined, Bleached, and Deodorised Palm Oil, Refined, Bleached, and Deodorised Palm Olein, and Used Cooking Oil.

The provisions for the exportation of these products apply to the following:

  • The release of goods from the Indonesian Customs Territory to outside the Customs Territory;

  • The release of goods from an FTZ to outside the Customs Territory;

  • The issuance of export licences is based on export rights, which can be transferred to other parties by submitting an application for the transfer of export rights electronically to the Director General through the Indonesian National Single Window System (SINSW); and

  • Exports carried out by exporters that have obtained export approval are subject to:

    • Export duty in accordance with the provisions of the laws and regulations concerning the determination of export goods subject to export duty; and

    • The rate for public service agencies of the Palm Oil Plantation Fund Management Agency in accordance with the provisions of the laws and regulations concerning the determination of goods subject to the rate for the Palm Oil Plantation Fund Management Agency's public services.

The summary of goods under export restrictions is stipulated in the Attachment of MoT Regulation No. 50 of 2022 and has been effective since October 7 2022.

more across site & shared bottom lb ros

More from across our site

Only 2% of in-house survey respondents said they were ‘heavy’ users of AI for TP, Aibidia’s report also found
There was a ‘deeply embedded culture within PwC that routinely disregarded formal confidentiality obligations,’ the chairman of Australia’s Tax Practitioners Board said
Jennifer Best was most recently the acting commissioner of the IRS’s large business and international division
Section 899’s exclusion from the One Big Beautiful Bill does not mean it has been nipped in the bud, Aruna Kalyanam also tells ITR
Thanks to operational slickness and sheer force of will, A&M Tax will continue hoovering up talent across the globe
Setu Kamal became the first practising barrister to be added to the UK’s tax avoidance promoter list; in other news, UHY expanded its network in Canada
US President Donald Trump’s tariffs may get thrown out by courts in the future and taxpayers should already be planning for that possibility, BDO’s Dustin Stamper tells ITR
Awards
ITR is delighted to reveal the first shortlisted nominees for the Middle East Tax Awards
The firm has appointed Deloitte’s former tax leader for Thailand to lead the new operation, which builds on considerable Asian investment in recent months
The Donald Trump administration could use legislation from 1930 if the Supreme Court blocks its tariffs; in other news, China has updated its VAT refund procedures
Gift this article