Changes to the de minimis threshold in Indonesia for cross=border e-commerce: Repost from Janio Asia
On the 23rd of December 2019, the Indonesian Directorate General of customs and excise released a press release stating that the de minimis exemption on shipments imported into Indonesia will be revised downwards from USD75 per shipment to USD3 per shipment for all imported goods shipped on a B2C basis. The applicable duties and taxes will also be adjusted, with some variations across product categories, effective from 1st of January 2020.
Why is there a change?
The Directorate General has stated that the reasons for implementing this change include preventing the market from being flooded with mass-made or counterfeit products from overseas markets and also to level the playing field for local manufacturers who import materials or goods in bulk and thus have to pay duties and taxes regardless of the import value. Indonesia has experienced a massive 814% increase in imported parcels, from 6.1 million packages to 49.69 million packages in 2019, that are classified under e-commerce activity. Indonesian craftsmen and manufacturers of bags, shoes and garment products have especially been affected in recent years from the surge in cross-border imports of these items, resulting in many being driven out of business. With the new de minimis threshold in place, all importers, be it e-commerce sellers or local manufacturers, will be subject to more equitable importing rules.
While the changes to the de minimis threshold will affect virtually all e-commerce sellers importing via B2C consignments, there is some silver lining in the form of reductions in the total applicable duties and taxes for B2C imports of items outside the product categories of garments, bags and shoes.
Prior to the changes, items that exceeded USD75 were liable for a flat duties and tax rate that amounted to approximately 40% of CIF (Costs, insurance and freight expenses). For sellers with shipments whose CIF value was previously below the threshold, the changes to the rules will result in an overall increase in costs for the seller. On the other hand, for shipments excluding bags, shoes and garments, that have CIF value exceeding USD75 and hence were already subjected to the 40% duties and tax can now enjoy a lower total cost as the duties and taxes are reduced to approximately 19% of CIF value. For higher value products such as health, beauty, pantry and food items, there is now a greater profit opportunity in the market. Do note that for items that fall under the categories of bags, shoes and garments, the range of the import duties will depend on the exact sub-category and HS code of the imported items. For shipments that include a variety of products in one order, the calculation of duties and taxes will be conducted on a line-item basis.
What are the alternatives to B2C shipping?
For shippers looking for alternatives to importing via B2C, products can instead be imported in bulk on a B2B basis. Methods to do this include regular B2B import or through a trading house. A trading house would be able to import on behalf of the seller, though the cost of the service would tend to be higher, whereas a B2B import would require the seller to have both a local business license as well as an importing license. Both methods would also require local distribution, storage or fulfilment.
Source: Janio Asia December 2019
Original Article: https://janio.asia/id/articles/indonesia-de-minimis-2020-what-the-changes-mean-for-e-commerce-importers/?utm_medium=email&_hsenc=p2ANqtz--gSJTOodt_XQn-lB7VFQkspDRCvPUYFMbVic-haVnceOMm4ZTd0vwdLdNSBy5F0MbXd6wd3CC3y8wqftqFCZKalqrFKm2UtGczruuh75JI01KF_Fg&_hsmi=81324006&utm_content=81324006&utm_source=hs_email&hsCtaTracking=328e8fae-d793-47f4-ac27-105e5c9531b4%7C9a1dc361-e8c6-40bc-b9d1-80d74b1aafd8