Luxury Tax on Liquor Scrapped

JAKARTA
Antara, The Bali Times

THE controversial luxury goods sales tax on liquor, which has given Bali some of the highest alcohol prices in the world, will be scrapped from April 1, according to Finance Minister Sri Mulyani Indrawati, who made the announcement on Monday.

“Under the newly enacted law on value added and luxury goods taxes, alcoholic drinks are free from luxury goods sales tax as of next April 1. We will adjust the relevant tariff accordingly,” the minister said after attending an event to destroy illegal liquor.

She said the Trade Ministry was now also evaluating and on the point of adjusting its regulations on the liquor trade to the new law and thereby reduce the liquor-smuggling frequency and ensure the state‘s income from duties.

The director general of duties and excise, Thomas Sugijata, said under the new fiscal law, alcoholic beverages would be subject only to customs duties.

“There will be a revision of the income from duties target because starting April 1, 2010, we no longer collect luxury goods sales tax from alcoholic beverages,” he said.

With the scrapping of the luxury goods sales tax on alcoholic beverages it was hoped state income from duties on imported alcoholic drinks would increase.

Up to now imported liquor has been subject to duties, luxury goods sales tax and value added tax that combined can amount to 400 percent of the beverage’s import price.

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