Indonesia studying to scrap luxury tax on foreign yachts
Published: Thursday, 02 August 2018
A press release from Indonesia Investments cited country’s Finance Minister Sri Mulyani Indrawati that the ministry is currently studying the proposal to scrap the luxury goods tax (PPnBM) for the arrival of foreign cruise ships or luxury yachts into Indonesian waters.
Based on Finance Ministry Regulation No. 35/PMK.010/2017 (PMK-35), the tariff on cruise ships or luxury yachts can be as high as 75 per cent as they are categorised as luxury goods.
Captain Jimmy Blee of Asia Pacific Superyachts Indonesia commented: “If this goes through, it will be great news for the visiting superyachts and other vessels, as according to the press release scrapping the luxury goods tax (PPnBM) on foreign cruise ships or luxury yachts. This would encourage the arrival of ships and yachts to Indonesia.”
According to the press release dated July 26, Luhut Panjaitan, Indonesian Coordinating Minister for Maritime Affairs, said the government so far only manages to collect around IDR3 billion (approximately US$200,000) in PPnBM per year from the arrival of foreign cruise ships or luxury yachts.
However, based on internal calculations, government revenue could see an additional IDR6 trillion (approximately US$414 million) injection if the tax would be cut to zero.
The Indonesian government – under the leadership of President Joko Widodo – has shown desire to increase revenue from the tourism industry, despite it already ranks second in terms of the nation’s biggest foreign exchange earners (after palm oil).