The government is introducing new excise rates for alcoholic beverages from 1st January 2024. It has been noted that there is an increase in the excise rates for drinks containing alcohol.
Askolani, the Director General of Customs and Excise at the Ministry of Finance, stated that the Fiscal Policy Agency is responsible for calculating the reasons behind the rise in excise rates. However, the Directorate General of Customs and Excise itself has identified the reasons for this decision.
The announcement of the increase in excise rates for alcoholic beverages was made in Minister of Finance Regulation Number 160 of 2023 concerning Excise Rates for Ethyl Alcohol (EA), Drinks Containing Ethyl Alcohol (MMEA), and Concentrates Containing Ethyl Alcohol (KMEA).
Nirwala Dwi Heryanto, the Director of Communications and User Guidance for Customs and Excise Services, explained that there are several reasons for the hike in liquor excise. One of the reasons is the growth in consumers of drinks containing ethyl alcohol.
“The prevalence of ethyl alcohol consumption among those aged over 10 years continues to rise, from 3 percent in 2007 to 3.3 percent in 2018,” stated Heryanto on Sunday, 7th January 2024.
Heryanto also highlighted growth in alcoholic beverage production over the last decade, with figures showing a production growth of 2.4 percent. Furthermore, he mentioned that there has been no adjustment to the excise rate for alcoholic beverages in the past 10 years.
“The last ethyl alcohol excise rate adjustment was in 2014 for Groups B and C, and in 2019 for Group A,” explained Heryanto.
“Provisions regarding EA, MMEA, and KMEA excise rates as stated in the Attachment to this Ministerial Regulation, will come into force on 1st January 2024,” reads Minister of Finance Regulation No.160/2023, quoted from the official website of the Ministry of Finance. Meanwhile, the ethyl alcohol (EA) tariff remains the same as previously set.
The following are details of the new MMEA and KMEA excise rates which will increase starting 1st January 2024:
Ethyl Alcohol
- Whatever the level, the tariff is still charged at Rp20,000 per litre for both domestic production and imports.
Drinks Containing Ethyl Alcohol (MMEA)
- Category A up to 5 percent alcohol content is subject to a tariff of Rp16,500 per litre for both domestic and imported production. The rate has increased from the previous Rp15,000 per litre.
- Group B with an alcohol content above 5 percent to 20 percent, Rp42,500 per litre for domestic production and Rp53,000 per litre for imported products. Previously, domestically produced alcohol was subject to an excise tax rate of Rp33,000 per litre and Rp44,000 per litre for imported products.
- Group C with an alcohol content above 20 percent to 55 percent is Rp101,000 per litre (domestic production) and Rp152,000 per litre (imported). Previously, Rp80,000 thousand per litre (domestic production) and Rp139,000 per litre (imported).
Concentrates Containing Ethyl Alcohol (KMEA)
- Without class, the liquid form is subject to a tariff of Rp228,000 per litre for both domestic production and imports.
- Without class, in the form of solids, it is still subject to an excise tax of Rp1,000 per gram.