Brief Overview of KITE: Kemudahan Impor Tujuan Ekspor

In the midst of the uncertainty during Covid-19 crisis and Russia-Ukraine War, haunted by the 2023 upcoming economic crisis, economic resilience is still the Indonesian government top priority. To do so, the Indonesian Government keeps pushing trade balance positively and giving more income to the nation in accordance with next year’s instability. The Indonesian government keeps anticipating and mitigating the dynamic of the global economy that potentially affects export demand abroad in the middle of digression of manufacturing expansion to several partnering countries in October 2022. Efforts will keep being made by the Indonesian Government including export diversifications, strengthening downstream strategy and optimization of various tax and custom strategies such as but not limited to Bonded Zone and KITE (Kemudahan Impor Tujuan Ekspor). [1]

KITE Facilities by its literal definitions means Ease of Imports for Export Purposes (Kemudahan Impor Tujuan Ekspor) is one of Indonesian Government policies to promote nations manufacturing sector at the same time increasing its exports and imports as well. Legal definitions of KITE are different depend on its type which is KITE Exemption (KITE Pembebasan), KITE Repayment (KITE Pengembalian) and KITE SMI or Small and Medium Industries (KITE IKM atau Industri Kecil dan Menengah). Hereby below the definitions of KITE including its benefits in general according to in effect law:

KITE Exemption is Exemption on Import Duties including anti-dumping, retaliation, safeguard and return duties, as well as un-imposed Value Added Tax or Sales Tax on Luxury Goods on import or entry of goods and material originating from external custom jurisdictions to be processed, assembled or installed on other goods with the aim of being exported later. In this type of KITE, companies might pay Customs Fees and Taxes with guarantees including cash, from bank, insurance company, Indonesian EximBank, guarantee company or corporate guarantee when submitting notification of imports of goods (Pemberitahuan Impor Barang / PIB) and having guarantees repaid after export realizations on behalf of PIB.

KITE Repayment is the repayment of Import Duties, which has been paid for the import or entry of goods and materials originating from external customs jurisdictions to be processed, assembled, or installed on other goods with the aim of being exported later. In this type of KITE, companies were obliged to pay customs fees regarding import when submitting PIB. Repayment could be processed after export realization on behalf of PIB.

KITE SMI are facilities in the form of exemption from Import Duties including anti-dumping, retaliation, safeguard and return duties, as well as un-imposed Value Added Tax or Value Added Tax and Sales Tax on Luxury Goods on import and/or entry of goods and/or materials to be processed, assembled, or installed on other goods with the aim of export and/or delivery of IKM production.

The requirement of companies that were allowed to benefit from KITE facilities are below:

1. Own NIPER (Nomor Induk Perusahaan) and industrial business license
2. Carry out manufacturing business sector including processing, assembling and installing activity and willingly to do export on imported goods
3. Hold proof of ownership for at least 3 years for the location to be used for production activities
4. Have a storage area for goods and products
5. Utilize an information inventory system based on IT Inventory for managing goods related to customs documents and could be accessed by the Directorate General of Customs and Excise
6. Install Closed Circuit Television (CCTV) that could be accessed either directly or by online by the Directorate General of Customs and Excise
7. Not applicable to prohibited and restricted imported and exported goods

Time frame of KITE facilities according to applicable rules is 12 months after import, companies have to export the processed, assembled or installed imported goods. Later on, companies have to submit a report on export realization maximum 30 days after export due date or extension period due date. Companies may request on extension period before the due date in conditions of:

1. Delay of export from buyer condition abroad
2. Cancelation or replacement of buyer abroad
3. Possess remaining goods and materials due to minimum purchase limit that could not be processed until the end of period
4. Disaster or force majeure
5. Other circumstances that require extension period due to risk management and consideration of Head of regional office or Head of Main Service of the Directorate General of Customs and Excise

KITE applicant company is allowed partly to subcontract the processing, assembling and installing imported goods and materials to subcontract companies listed in the Ministerial Decree and wholly subcontract the process if KITE applicant company:

1. has the status of a public company whose shares are partly or wholly owned by the public;
2. has received recognition as an authorized economic operator;
3. is an importer that has been determined as Customs Partners
4. or is a company other than as referred to in letter a, letter b, and letter c, with a low-risk category,

After unloading by the KITE applicant company, subcontracting activities is allowed to carry on with approval from the Head of regional office or Head of Main Service of the Directorate General of Customs and Excise. After subcontracting activities has been done, KITE applicant company may proceed with export activities.

The legal standings of KITE were included in but not limited to:

1. Constitutions No.17 of 2006 Regarding Amendment to Constitutions No 10 of 1995 Regarding Customs
2. Finance Minister Regulations No.16/PMK.011/2008, No.253/PMK.04/2011 jo. No.177/PMK.04/2013, No.254/PMK.04/2011 jo. No. 176/PMK.04/2013, No.31/PMK.04/2020, 145/PMK.04/2022 (latest) and 149/PMK.04/2022 (latest)
3. Customs and Excises Directorate Regulations PER-15/BC/2012 jo. PER-05/BC/2014, PER-16/BC/2012 jo. PER-04/BC/2014, PER-08/BC/2022 (latest) and PER-09/BC/2022 (latest)

Therefore, in conclusion, the Indonesian Government has made efforts in promoting its manufacturing and export-import sector in order to keep the nation’s balance of trade and economic resilience due to the upcoming crisis. One of the efforts is releasing KITE policy including KITE Exemption, repayment and SMI. Each type has its own benefits in order to loosen tax and customs burden into manufacturing and export sectors. Within the policies, there are several requirements that need to be fulfilled by the KITE applicant company in order to receive the benefits, extend the time frame and proceed with subcontract activities.

[1] https://www.kemenkeu.go.id/informasi-publik/publikasi/berita-utama/Ekspor-Indonesia-Terus-Melanjutkan-Kinerja-Positif

As integrated business service in indonesia, TBrights has Customs Partner and customs consultant will assist you to solve any need of customs services in Indonesia

By Tommy HO – Managing Partner TBrights