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NEWS UPDATES Asean Affairs        18  June 2011

Tax agreement ends Indo movie blockade

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Indonesian audiences will be heartened to learn that the government has finally moved to end a running feud with movie importers, announcing a new film tax regime.

Finance Minister Agus Martowardojo on Friday said importers now need only pay a specific tax for the films, providing a simple solution to the long-running dispute over royalties for movies from overseas.

According to the new rules that became effective on June 16, importers only have to pay Rp 21,000 to Rp 22,000 per minute for each copy of the movie they screen. With a viewing time of 100 minutes, the tax on the average feature would be as little as Rp 21 million (US$2,500).

Previously the importers had to pay an ad valorem tax for each movie they brought into the country. Such a tax takes a percentage of the value of the good or service, in this case ticket sales.

The movie value calculation was problematic because it was based on royalties, which depended on how well attended a movie was in cinemas. This meant the tax could not be determined at the time the film was imported.

A specific tax, however, is a sum imposed on an item regardless of its value. “This is a more simple and easy was to calculate the tax,” Agus said.

The trial is ongoing.


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