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How Important is Tax Assessment (Formula of Import Value)

Understanding the import value formula is important for entrepreneurs involved in import transactions or importers. By calculating the import value according to the formula, importers can determine their Tax Assessment Basis.

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So, what is the formula for calculating the import value as the Tax Assessment Basis? Read the following article from IDP Cargo to learn comprehensive information about import value.

A Brief Overview of Import Value

Quoted from the Advanced Taxation Teaching Module by Subadriyah, S.E., M.Si, import value is the monetary value that serves as the basis for calculating customs duties plus other levies imposed as taxes.

The other levies imposed as taxes are based on provisions in the Customs Regulations for Taxable Imported Goods (BKP), excluding Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM) levied under the VAT Law.

The determination of BKP import value is based on the Customs Law using the basis of Customs Duties, namely cost (invoice price), insurance (inter-customs area insurance costs), and freight (inter-customs area transportation or shipping costs), abbreviated as CIF.

Import Value Formula

Here is the import value formula that can be used to determine the Tax Assessment Basis, as quoted from the book “Fundamentals of Taxation” by Juli Ratnawati and Retno Indah Hernawati.

Import Value = CIF + Customs Duties + Other Valid Levies

Explanation

  • Import Value = Value of imported goods transaction from abroad in the condition of cost, insurance, and freight.
  • CIF = Cost Insurance Freight
  • Customs Duties = Duties imposed by the country on imported goods for use within the Customs Area.
  • Other valid levies = Other levies imposed as taxes based on provisions in the Customs Regulations for Taxable Imported Goods (BKP), except VAT and PPnBM.

Import Regulations and Procedures

According to Susilo quoted from the book “Export-Import” by Edi Supardi, import can be defined as the activity of bringing goods from one country (foreign country) into the customs territory of another country.

Before importing goods, it is advisable to have knowledge of the applicable import regulations and procedures, especially in the Customs Territory of the Republic of Indonesia. Here are the regulations and procedures:

Pre-import or before importation

At this stage, prospective importers must prepare the required permits, including the following:

1. Permit from the Ministry of Trade

Prospective importers must obtain special permits from the Ministry of Trade of the Republic of Indonesia known as the Import Identification Number (API) and the Limited Import Identification Number (APIT).

2. Minister of Finance Decree on Duty Exemption

If the prospective importer wishes to use duty exemption and/or deferment facilities, the prospective importer must apply for the facility called KITE (Import for Export Facility) which includes the following information:

  1. Duty Exemption and Deferral of VAT and PPnBM;
  2. Refund of Customs Duties and Payment of VAT and PPnBM;
  3. Duty Exemption and Deferral of Customs Duties and VAT and PPnBM; and
  4. Duty Exemption and Deferral of Customs Duties and VAT and PPABM.

3. Special Permits

If the goods to be imported are used or second-hand goods, such as used machinery, special permits are required from the Ministry of Trade and an Independent Surveyor (SUCOFINDO or an overseas surveyor SGS).

Therefore, these permits must be obtained before the goods are shipped. However, if the goods to be imported are new goods, these special permits are not required automatically.

Import implementation

Import can be carried out by prospective importers in two ways, namely importing with a Letter of Credit (L/C) and importing without an L/C (Non L/C). Once an agreement is reached between the exporter and importer, the import can be carried out.

During the waiting period for the arrival of the imported goods, the importer will receive a Notice of Document Arrival from the bank (if importing using an L/C) or receive the import documents directly from the exporter via an international courier (if importing without an L/C).

Additionally, the importer will also receive a Notice of Vessel Arrival from the shipping company or international Freight Forwarder. Upon the arrival of the vessel carrying the imported goods at the destination port, the importer will exchange one copy of the bill of lading.

The delivery order can be executed by the Customs Clearance and Forwarding Agent (CCFA) or Customs Broker on behalf of the shipping company or international freight forwarder for the purpose of container release. Contact us now for more insights.

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