Government revenue can take various forms, including through customs duties. The term consists of two words: “bea” and “cukai.”
What is Customs?
Customs duties (commonly referred to as “Customs”) are additional charges imposed on goods that have the potential to be harmful or cause adverse effects to users. One example is tobacco products such as cigarettes.
Under Law No. 39 of 2007, customs duties may also be applied to goods classified as luxury items or high-value goods, but not to basic necessities.
Definition of Duty
Duties are levies imposed on the import and export of goods brought into and out of the customs territory. These duties are mandatory and apply to both exported and imported products. Duties imposed on imported goods are called import duties, and those imposed on exported goods are called export duties.
The term “duty” itself originates from Sanskrit and means “value.” The agency that regulates and collects duties is called the customs authority. Matters related to duties are referred to as customs affairs.
According to S. I. Jajadiningrat, customs duties are not the same as taxes, because taxes are an obligation to surrender a portion of one’s wealth to the state due to circumstances, events, or actions that confer a specific status—and not as a punishment—in accordance with rules established by the government that can be enforced but are not necessarily respected. There is no direct reciprocal service provided by the state.
Definition of Excise Tax
Excise tax is a state tax levied on specific goods. The goods subject to excise tax are specified in the aforementioned law. Some examples of goods subject to excise tax include alcohol, tobacco, and fuel.
Consumers may not see the excise tax directly on the products or services they purchase. This is because excise taxes are costs paid by merchants, who then pass those costs on to consumers through higher selling prices.
However, there are some types of excise taxes paid directly by consumers, such as property taxes, pension contributions, and many others. These types of levies are essentially business taxes, but they are separate from other taxes that businesses must pay, such as income tax.
What Is the Difference Between Duties and Excise Taxes?
Excise taxes usually go hand in hand with customs duties, but they have different meanings. So, what is an excise tax, and how does it differ from a customs duty? From a conceptual standpoint, customs duties and excise taxes are entirely distinct. A customs duty is a levy imposed on exported or imported goods within a customs territory.
Excise tax, on the other hand, is an official tax levied only on goods with specific characteristics—for example, goods whose consumption needs to be controlled, whose distribution needs to be regulated, or whose consumption may have negative effects.
Purpose of Customs and Excise
Duties are levied on legal entities and individuals engaged in import and export activities. Unlike excise taxes, the burden falls on consumers, who pay more for these products due to the added excise tax.
Examples of Goods Subject to Customs Duties and Excise Taxes
The goods subject to customs duties and excise taxes differ. Customs duties are levied only on goods entering the country as a result of export or import activities. Excise taxes, on the other hand, apply specifically to goods meeting certain criteria, such as tobacco and its derivatives, as well as alcohol. This provides a brief overview of what customs duties and excise taxes are, along with some examples.