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More so than most other countries, Indonesia is notorious for making people feel at ease by getting rid of rules or laws that most people don’t like, only to slip some even worse ones in there at the same time.

Recently this happened when they announced they would be getting rid of import taxes on alcohol, which most people thought would lower the prices of alcohol. Instead some new regulations were introduced which made the prices of alcohol skyrocket even higher.

Now we are faced with a similar dilemma, as Fiscal tax will be no more as of 2011.

If you are unfamiliar with Fiscal tax

…it is the tax that Indonesians and expats with a KITAS pay when they leave the country. The cost is pretty high at rp 2.5 per person, per exit but if you have an NPWP (taxpayers card), you are exempt from paying this tax.

Basically this is the government’s way of saying, if you have enough money to leave the country, you have enough money to pay your taxes. Not an unfair way of thinking about things, but in a country where almost no one pays taxes it seems unfair to charge the people who might be traveling frequently.

They have announced though that 2011 will mark the end of the Fiscal tax. Sounds good on the surface, but we need to dig down a little deeper to find out what is really going on.

New Customs Tax system

Next year without the Fiscal tax many Indonesians and expats have probably already started to plan their next shopping trip to Singapore and planning what they could spend that rp 2.5 million that they saved on.

Unfortunately Indonesia will be implementing a new Customs Tax system when entering the country of Indonesia with personal belongings. This new regulation states that people entering the country with personal belongings with a total value of over $250 USD will be subject to paying tax on the items. They have also said that the amount will be $1,000 USD for a whole family.

What is not yet clear as whether this will be just for Indonesians, or whether it will include foreigners as well and if so, what are expats on KITAS considered as? Another thing that is still unclear is what items exactly will be taxed. We would hope that they would only tax brand new items brought to Indonesia from abroad, but the way this issue is being reported on it sounds as if all personal belongings will be taxed.

This is where things can get a little tricky because many people have mobile phones and laptops (many of which they actually bought in Indonesia) that easily exceed the quite low limit for personal belongings. If that is true then some people may choose to leave their mobile phone and laptop at home while they vacation, which for some leaves them feeling “naked” without the ability for easy communication. Also it has been reported that there are three different tax tiers for different items and that the highest tier that is present among all of the personal belongings will be applied to everything even if a majority of the items will fall into a lower tier.

To many people this is all sounding very unfair to tax people for these things that they bring into the country, especially if it ends up that they will tax for goods that were previously bought. As with anything in Indonesia, it is always hard to get a definite answer on many of these questions, and really, we are just going to have to wait and see what is going to happen when it is all carried out. I for one won’t be doing any traveling outside of Indonesia until around June 2011, so the information on how things work should be more widespread by then, but I definitely feel for those who are going to have to find out the hard way in January.

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