There have been many efforts by the government to simplify the rules for trade in Indonesia. One of them is the issuance of a KITE facility for export-import activities in Indonesia.So what is a KITE regulation? What are the benefits for exporter and importer?
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As a matter of fact, Covid-19 pandemic has brought many changes in all aspects of life in various countries. One of them is the export-import activities in Indonesia. Therefore, the Indonesian government is making efforts to stabilize the trade balance. One of the efforts is to simplified the KITE facillitation.
What is KITE?
KITE (Kemudahan Impor Tujuan Ekspor) is an acronym of Ease of Imports for Export Purposes. In short, this is one of the government programs to facilitate exporters in Indonesia. Under KITE, the main target is exporters who want to import goods and then export them abroad.
That being the case, the function of KITE is to reduce the production cost of exporters. Thus, they can increase their production capacity.
KITE comes from the Minister of Finance of the Republic of Indonesia. However, Directorate General of Customs and Excise (DJBC) is the one who implememts this regulation. The government establishes this to keep the balance of trade stable.
In order to obtain this, there are conditions that you must meet. Beware that not all business owners can get this facility.
Types of KITEs in Indonesia
Then what types of KITE facilities are there in Indonesia?. This is divided into two types.
1. KITE Pembebasan (Exemption)
KITE Pembebasan is a tax exemption for the importation of processed, assembled and installed raw materials and then export the final product. This includes exemption from import duty, PPN or PPnBM payable on imported raw materials.
In addition, the release of raw materials for subcontracting is also not subject to VAT or PPnBM. The same applies to the return of subcontracted goods to the company.
2. KITE Pengembalian (Return)
Besides exemption, There is the return type. In this type, Government will later return the taxes you pay on any imported raw goods that you export.
How to Get KITE?
If you wish to receive this facilities, you must become a KITE taxpayer. The requirements to become a KITE taxpayer are:
1. Business in the Manufacturing Sector
Initially, the main requirement for getting this is having a business in manufacturing sector.
2. Certificate of Ownership
Second, you need to have a certificate of ownership, valid for at least 3 years, for the location to be used for manufacturing activities
3. Storage
After that, storages are one of the main requirements. In storage,you can store your goods and products.
4. An IT - Based Inventory Information System
Besides that, using an IT -based inventory information system is important. Over there, Directorate General of Customs and Excise can manage the customs documents and access it.
5. Business Registration Number (NIB)
As importers who want to import to Indonesia, you need a NIB (Nomor Induk Berusaha). This license declares that you have a legal company in Indonesia to do foreign trading. As stated on Ministry of Trade’s policy, those who want to import products to Indonesia must have a legal company first.
On the other hand, what if you don’t have a company yet?. Fortunately, you are still able to import things using Importer of Record Service in Indonesia such as Kickrate.
Once all requirements are prepared, please submit an application letter to the head of the Regional Office or KPU that oversees the location of
Allowed Goods in KITE
Import with this KITE facility can only be used to import raw materials to support production that will later become finished products ready for export. You cannot buy and sell the raw materials you import.
Then, you also cannot use KITE for Lartas Goods. As Lartas goods have permit and tax to submit, you cannot import and then export those in a KITE regulations.
KITE Time Period
According to the customs regulations, KITE is possible to use only within 12 months from the date of importation. If the company imports within 1 year from the date of import, the goods imported using the this facility must be exported immediately.
This time frame can be relaxed to more than 12 months if the company has a production period of more than 12 months. In addition, companies can also apply for a further extension of time. It only needs to be filed before the end of the specified period.
What If You Breach KITE Regulations?
Since this facility has relation to taxes and duty, companies that abuse this facility will face severe penalties from the government.
What are the penalties for companies that violate the use of the KITE?
First, a company that fails to comply with the import duty exemption or relief provisions will be liable to pay the import duties due.
Second, companies found in violation are also subject to administrative sanctions in the form of a fine of not less than 100% or not more than 500% of the total import duty that should have been paid.
In the worst case, your import and export permits can be cancelled.
In conclusion, This regulation will benefit many traders in Indonesia. Besides lowering the total cost, it can be a chance to increase the profit of your business. Make sure to also sign up to our platform to get access on our features.
