Customs: Definition and 2 Examples of Goods
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.
Exports and Imports: Definition, Purpose, and 5 Examples of Policies
Export and import are terms you’re probably familiar with. Export and import refer to international trade or trade between countries. Within a country, export and import activities play a very important role and are, of course, closely linked to economic activity. Simply put, selling goods or services to other countries is called exporting. Meanwhile, purchasing products or goods from other countries is called importing. So, what are the definitions, objectives, and examples of export and import activities? Read the full explanation below. Definition of Export Export is the activity of sending goods out of the customs territory. The customs territory is the territory of the Republic of Indonesia, consisting of land, water, and air, as well as all areas designated within the Exclusive Economic Zone (EEZ). Simply put, export is the activity of selling goods or services to foreign countries. A person or institution that exports is called an exporter. What Is an Exporter? An exporter is a legal entity or an individual who engages in export activities. Large-scale export activities naturally require the involvement of customs authorities to regulate cross-border trade. Export activities typically occur when a country is capable of producing goods or services in large quantities and domestic demand has been met. This results in a surplus of these goods, which can then be shipped abroad for sale. When a country engages in export activities, it receives revenue in the form of foreign currency. The more frequently a country exports, the greater the profits it earns from exchange rate differences. Types of Exports There are two types of exports in Indonesia: oil and gas exports and non-oil and gas exports. Oil and gas products include crude oil and natural gas. Meanwhile, non-oil and gas exports encompass agricultural, plantation, forestry, and livestock products, as well as handicrafts, manufactured goods, and mineral products from the mining industry. Indonesia’s export commodities include rubber, palm oil, natural gas, coal, and timber for the apparel and textile industries. The following are several factors that influence export activities: Conditions in foreign markets Exporters’ experience in capturing foreign markets The business climate created by the government Terms of international agreements Each export item has its own specific requirements depending on the type of product. Not all individuals or communities can engage in export activities. This is because export activities require several procedures that must be followed. Export activities can create new effective demand, which forces domestic market goods to seek innovation to increase productivity. Export activities can also contribute to economic growth and the expansion of foreign markets for certain goods. Types of Export Activities There are two types of export activities: regular exports and exports without a letter of credit. The difference between the two lies in the use of a letter of credit as a payment instrument. Regular export activities involve selling goods overseas in accordance with all applicable regulations. These exports are typically conducted using a letter of credit. Meanwhile, exports without a letter of credit may be conducted if the Department of Commerce has issued a special permit. Export activities pursue the following objectives: Price control for products Exporting countries have the opportunity to utilize excess production capacity. Thus, a country is considered capable of controlling the prices of export goods originating from its territory. This is because domestic products will have lower prices when they are produced easily and in abundance. For a country to control prices in the market, it must export to other countries that need those products. Increasing foreign currency reserves / foreign exchange earnings The value of a country’s wealth held in the form of foreign currency is referred to as foreign exchange reserves. Export activities help open new opportunities abroad. These opportunities will help expand the domestic market, investment, and foreign exchange reserves within the country. Increasing Employment Opportunities Export activities indirectly create new jobs. Thus, export and import activities also help reduce the unemployment rate. Furthermore, growth in domestic exports creates jobs, which in turn reduces poverty. Definition of Imports Import refers to the activity of bringing goods into a customs territory. The import of goods or services from abroad or from another customs territory is intended for distribution within the country or in a free trade zone. Services received from abroad, such as insurance, transportation, and foreign labor, are also considered imports. As a general rule, imported goods are those that cannot be produced domestically. What Is an Importer? A person or entity that imports goods is called an importer. Goods are imported for profit. The profit arises because the price of imported goods may be lower than the price of similar domestically produced goods or services. Examples of Import Activities A simple example: Indonesia, which does not produce wheat, must import wheat from other countries to meet its domestic wheat needs. Customs procedures are also necessary to oversee the process when imported goods are shipped on a large scale. Simply put, the government imposes tariffs on each product for every importer. The types of goods imported include consumer goods or finished goods, capital goods, raw materials, and auxiliary materials. Reasons for Importing The following are several reasons why a country engages in import activities: The importing country may be able to produce these goods, but the costs involved would be higher, resulting in higher prices for the goods sold. The importing country may already be able to produce these goods domestically, but production is insufficient to meet domestic demand. Importing countries cannot produce these goods due to a lack of raw materials, skills, etc. Importing can have both advantages and disadvantages, particularly for domestic producers, as they cannot compete with imported products in terms of either price or quality. Imports also deplete a country’s foreign exchange reserves, which can lead to a trade deficit. Benefits of Importing The following are some benefits of imports: Gain access to more modern technology through imported goods A country can focus on the production of specific goods or services. Combat inflation because imported goods