Indonesia Tobacco Excise Tax to Stay Unchanged in 2026

TAX - JAKARTA. Indonesia will keep its excise tax rates on tobacco products unchanged next year, after considering the impact such taxes have on employment in the tobacco industry, Finance minister Purbaya Yudhi Sadewa told a press conference on Friday.

"We decided not to increase excise tax rates for tobacco products next year, but we will clean up the market of illegal tobacco products," Purbaya said adding his decision has put consideration to avoid layoffs.

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The decision was taken after the minister held a discussion earlier on Friday with the Indonesian Cigarette Manufacturers Association, which recommended no change in the rates for 2026.

Indonesia, which has one of the world's highest smoking prevalence rates in the world, did not raise excise rates on tobacco products this year, arguing that the policy had done little to curb cigarette consumption, but instead encouraged smokers to shift to cheaper or illegal cigarettes.

Before this year, the Southeast Asian country had raised excise tax rates for tobacco products almost every year since 2014 to discourage smoking, especially among its youth.

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In a 2023 survey, the health ministry said 7.4% out of 70 million active smokers in the country were between the age of 10 to 18. 

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