New excise layer targets illegal cigarettes as authorities ramp up nationwide enforcement
Indonesia is preparing a tougher fiscal and enforcement approach to rein in its illegal cigarette trade, signaling a major shift in how tobacco excise compliance will be enforced nationwide.
New Excise Layer to Push Compliance
Finance Minister Purbaya Yudhi Sadewa confirmed that the government is discussing the addition of a new cigarette excise tariff layer this year. Speaking in Jakarta on Wednesday, he said the policy aims to encourage illicit cigarette producers to enter the legal market and ensure all players contribute taxes to the state.
Strong Warning Ahead of Regulation
Purbaya emphasized that the new regulation could be issued as early as next week and will be accompanied by strict sanctions. He warned that producers who continue to evade their obligations after the rule takes effect will face firm enforcement, signaling zero tolerance for repeat offenders.
Simplifying a Complex Tax Structure
Indonesia has been gradually simplifying its cigarette excise tariff structure over the past decade. The number of tariff layers has been reduced from 19 in 2009 to eight by 2022. The current framework is governed by Finance Minister Regulation Number 97 of 2024, reflecting the state’s effort to balance revenue collection with regulatory clarity.
Massive Seizures Highlight Scale of Problem
Enforcement data underscores the urgency of the policy shift. Since 2025, the Directorate General of Customs and Excise has seized 1.4 billion illegal cigarettes through 20,102 enforcement actions nationwide. These figures point to widespread illicit circulation that continues to undermine state revenue.
Pekanbaru Case Marks Strategic Breakthrough
One of the most significant seizures occurred on January 6 at a warehouse in Pekanbaru, Riau, involving approximately 160 million illegal cigarettes. Customs and Excise Director General Djaka Budi Utama said on January 7 that this single case represented nearly 11 percent of all seizures since 2025, making it a strategic milestone in the national crackdown.
Rising Economic Stakes for the State
In 2025 alone, total seizures were valued at Rp9.8 trillion, or approx. S$784 million, marking a 2.1 percent increase compared with the previous year. Authorities say the rising value reflects both stronger enforcement and the persistent profitability of illegal tobacco distribution networks.
Indonesia’s plan to introduce a new cigarette excise layer, backed by aggressive enforcement, signals a decisive move to protect state revenue and restore order to the tobacco market. For both Indonesia and Singapore, where cross-border trade and investment are closely linked, the crackdown highlights how regulatory discipline and fiscal reform can shape regional economic stability.
Sources: Antara News (2026)
Keywords: Cigarette Excise, Illegal Cigarettes, Customs And Excise, Tobacco Regulation, Indonesia Tax Policy
