Thomas Sugijata, director general of customs, said on Monday that in less than two weeks, three importers that had failed to pay royalties over the past two years could be barred from bringing in films.

“We sent them a letter on January 12 regarding this issue, and they have to respond by March 12,” he said. “If they fail to pay or to file an objection with the tax court by that time, we will have to revoke their import licenses.”

Thomas said the three importers owed Rp 31 billion ($3.5 million) in unpaid royalties and could face similarly steep fines for their failure to pay.

Seven other companies licensed to import movies have ceased operations, he said.

According to the tax law, importers have to pay 23.8 percent of a film’s customs value, including import tax, value-added tax and income tax.

Previously, royalties were not factored into the cost because distributors argued that the amount would only be known after the film was released.

The customs value of imported films had previously been based on the physical length of the film roll, with each meter valued at 43 cents.

The government now wants to tax royalties up front because a 2006 customs law stipulates that royalties should be included in the import-tax calculation.

The Motion Picture Association of America, which counts major Hollywood studios as members, said last month that the government’s decision to include royalties in its import tariffs would be detrimental to the flow of imported films into the country.

It also announced it would halt supplies of imported films to Indonesian cinemas pending the settlement of the dispute.

Jero Wacik, the minister of culture and tourism, said on Monday that any move to ban movie imports would kill the local film industry.

He also said the government was open to negotiations with film importers if they thought the royalties were too high.

“We’ll make every effort to keep foreign movies coming into Indonesia to keep the local film industry alive,” the minister said, “because the Indonesian film industry hasn’t been able to produce enough films to fill local screens.

“We also don’t want to force foreign-film lovers to resort to buying pirated DVDs by making the movies unavailable here.”

Jero said the government would still collect a percentage from ticket sales and the figure would depend on how popular a film was.

“If the film is popular and thus generates a large amount of revenue, the importers will have to pay a high tax,” he said. “But if it’s not popular, then they won’t have to pay that much. However, the final form of the tax scheme is still being discussed.”

Jero said the government would help improve the domestic film industry without shutting out foreign films.

He said the state would provide grants to encourage producers to make movies that would “have a good influence on developing the nation’s character.”

“Reducing the number of imported films in Indonesia is only one of the ways to safeguard the national culture and develop the nation’s character,” the minister said. “[We can also] reduce the tax on local films.”