Cinema Official Decries Lack of Clarity Over Taxes

The Jakarta Globe

Less than a week away from a deadline for film importers to make good on two years’ worth of unpaid royalties, a top cinema official complained the government had not been clear with its regulations.

The customs office has said three importers that had not paid Rp 31 billion ($3.5 million) in royalties over the past two years could be barred from importing films if they didn’t pay or file an objection with the tax court by Saturday.

But Djonny Syafruddin, the chairman of the Indonesian Cinema Companies Association, said about 30 foreign-film importers he had spoken to claimed they had paid the necessary taxes.

“The government has not been transparent with regard to customs regulations,” he said. “The government needs to explain regulations in detail, instead of giving importers a surprise.”

The customs value of imported films was previously 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 new tax is behind the Motion Picture Association’s recent move to stop the export of films to Indonesia.

Djonny said his organization would back government efforts to support the domestic film industry. “If the government wants to charge a zero percent tax on filmmaking equipment that is fine too,” he said, referring to one of the suggested tactics.

“But it has to be understood that domestic films have not been able to meet cinema needs across the country,” he added. “Therefore, foreign films are needed to keep cinemas alive.”

Djonny said Indonesian cinemas only had about two months of foreign film stock in reserve.

On Feb. 20, Jero Wacik, the culture and tourism minister, said the new tax arrangement for local and imported films would be finalized within two weeks.

Syamsul Lussa, the director of film at the ministry, said on Sunday that the tax scheme was still being discussed.

“We do not have a final result for the tax scheme,” Syamsul said. “It will be announced on National Film Day on March 30.”

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