5 Essential Guidelines for Import Duties Exemption in Government Projects Funded by Foreign Loans and Grants

On December 16, 2024, the Ministry of Finance (MoF) issued Regulation (PMK) No. 109 of 2024 regarding the import duties exemption for goods used in government projects financed by foreign loans and/or grants. This regulation is designed to streamline the customs process and provide legal clarity for goods imported for government-funded projects. The goal is to facilitate smooth execution of these projects and simplify the procedures for granting import duty exemptions.

Key Provisions of PMK No. 109 of 2024

The regulation introduces important provisions aimed at providing support for import duties exemptions in the context of government projects financed through foreign loans and grants. The exemption applies to goods imported for such projects outside the customs area and bonded logistics centers. Eligible entities for these exemptions include ministries, agencies, and regional governments. However, third parties can assist or carry out the release or import of these goods.

Application Process for Import Duty Exemption

To obtain the import duty exemption, the relevant institutions must submit an application. This application should include the budget implementation list (DIPA), procurement contracts, and a statement letter from the head of the work unit. The process is designed to be efficient: electronically submitted applications are processed within five hours, while written applications are processed within one business day. This quick processing time ensures that import duties exemptions can be granted promptly, facilitating the smooth execution of government projects.

Prohibition on Misuse of Exempted Goods

Article 10 of PMK No. 109 outlines important guidelines to prevent the misuse of goods granted import duty exemptions. Any goods imported under this exemption will be classified as either State-Owned Goods or Regional-Owned Goods. If the goods are misused, they must be either returned (re-exported) or destroyed, and the applicable import duties will need to be paid. This provision ensures that the import duty exemptions are only used for their intended purposes, maintaining the integrity of the program.

Effective Date of the Regulation

PMK No. 109 of 2024 will become effective on January 22, 2025. This gives the relevant ministries, agencies, and regional governments time to familiarize themselves with the new regulation and make necessary preparations for applying for import duty exemptions for goods related to government projects financed by foreign loans and grants.

Conclusion

The implementation of PMK No. 109 of 2024 marks an important step in simplifying the customs procedures and offering legal certainty regarding import duty exemptions for government projects funded by foreign loans and grants. This regulation aims to ensure that the goods imported for these projects are used appropriately and that the exemption process remains transparent and efficient.

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