Indonesia Export Tax – Indonesia’s palm oil industry is a critical part of the global market, significantly influencing both domestic economic policies and international trade. In recent years, the Indonesian government has made several adjustments to its export tax regime on crude palm oil (CPO) to balance domestic needs with international market dynamics.
Current Indonesia Export Tax Structure
As of 2024, Indonesia has implemented a progressive tax system for crude palm oil exports, reflecting fluctuations in global market prices. This system involves both export duties and export levies, which are calculated based on the reference price set by the Ministry of Trade.
Export Duties and Levies
Export duties for CPO are applied on a sliding scale, dependent on the reference price. For instance, as of recent updates, if the CPO reference price is below $680 per metric ton, the export duty is set at $0. However, as the reference price increases, so does the duty. For example, with a reference price between $830 and $880 per metric ton, the export duty is $52 per metric ton. The highest duty, $288 per metric ton, applies when the reference price exceeds $1,430​ (Argus Media)​​ (Indonesia Investments)​.
In addition to export duties, a separate export levy is imposed. This levy is used to fund domestic programs, such as the biodiesel subsidy and cooking oil stabilization schemes. The levy varies but was recently set at $85 per metric ton​ (Luwjistik)​.
Reference Price Adjustments
The reference price for CPO is reviewed periodically by the Ministry of Trade, considering factors like global market trends, production costs, and the prices of other vegetable oils. This review ensures that the tax regime adapts to current market conditions. As of August 2023, the reference price was adjusted to $872.27 per metric ton​ (Argus Media)​.
Read More: Customs Clearance Procedures in Indonesia
Impact on the Industry
Economic Balance
The export tax structure aims to create a balance between boosting government revenue and maintaining the competitiveness of Indonesian palm oil in the global market. Higher export taxes can reduce profit margins for exporters, but they help stabilize domestic prices and ensure sufficient supply for local consumption.
Export Market Dynamics
The progressive nature of the export tax system allows it to respond dynamically to market conditions. When global prices rise, the increased revenue from export duties can support domestic economic policies and development programs. Conversely, when prices fall, lower taxes can help maintain the export volume by keeping Indonesian palm oil competitive on the international market​ (Luwjistik)​.
Domestic Consumption
One of the key objectives of the export tax regime is to ensure an adequate supply of palm oil for domestic consumption, particularly for cooking oil. Special provisions are made for refined, bleached, and deodorized (RBD) palm olein in branded packaging, which often enjoys lower or zero export duties to keep domestic prices stable​ (Luwjistik)​.
Policy Evolution Palm Oil Export
The Indonesian government continually reviews and adjusts its palm oil export policies to reflect changing market conditions and economic priorities. For example, a significant policy shift in 2023 involved lowering the threshold at which the lowest band of export taxes is applied from $750 to $680 per metric ton. This change aimed to make the tax structure more responsive to volatile market conditions​ (Argus Media)​​ (Indonesia Investments)​.
Future Prospects
Looking forward, the Indonesian government is likely to continue this adaptive approach, ensuring that the palm oil industry remains a vital part of the national economy while also being a significant player on the global stage. Further adjustments may involve more frequent updates to the reference price and potential changes to the levy structure to better align with both domestic needs and international market dynamics.
Conclusion
Indonesia’s export tax on crude palm oil is a crucial mechanism in managing both domestic economic stability and international trade competitiveness. By employing a progressive tax system and adjusting the reference price periodically, the government aims to balance the interests of various stakeholders, including producers, consumers, and the state. As the global palm oil market continues to evolve, so too will Indonesia’s policies, ensuring they remain effective and relevant.
Indonesia Customs website here.
Collection of Indonesia customs consultations here.
Topic: Indonesia export tax, crude palm oil, CPO export tax, palm oil industry, Indonesia palm oil policy, palm oil export duties, palm oil levies, global palm oil market, Indonesian palm oil exports, Ministry of Trade Indonesia, CPO reference price