Indonesia: Tobacco Bracing for Tax Hikes

The government of Indonesia will increase the excise tax on tobacco and tobacco products in 2021, according to a report in The Jakarta Post.

The increase is expected to negatively affect cigarette makers amid weakened purchasing power in the pandemic, according to analysts.

Cigarette excise taxes will be increased by an average of 12.5 percent in February 2021.

“The majority of the companies’ sales volume comes from machine-made clove cigarettes, including those of Sampoerna and Gudang Garam,” Mirae Asset Sekuritas analyst Christine Natasya wrote in a research note.

The increase applies only to machine-made clove cigarettes and machine-made white cigarettes, according to Finance Minister Mulyani Indrawati. The hand-rolled cigarette excise tax will remain the same.