Key points
Indonesia's Ministry of Finance has issued Minister of Finance Regulation Number 26 of 2026 (PMK 26/2026) on the Procedures for the Collection, Withholding, and Remittance of Cigarette Tax. The regulation was promulgated and took effect on 12 May 2026, revoking PMK 143/2023 which had governed regional cigarette tax operations (closing article, PMK 26/2026).
The legal basis remains Article 36 of Law Number 1 of 2022 on Financial Relations between the Central and Regional Governments (UU HKPD): cigarette tax is a levy on cigarette excise at a rate of 10 percent of the excise amount. PMK 26/2026 does not change the rate; it refines collection mechanics and tightens the allocation of regional receipts.
Scope: electronic cigarettes included
PMK 26/2026 confirms that cigarette tax objects cover machine-rolled cigarettes, cigars, leaf cigarettes, and other forms of cigarettes subject to cigarette excise. Electronic cigarettes (vape, both open and closed systems) fall within other forms of cigarettes subject to the tax.
Other processed tobacco products such as shredded tobacco, molasses tobacco, snuff, and chewing tobacco are excluded from cigarette tax objects even when they bear tobacco excise.
Collection mechanism
Cigarette tax is collected by the Customs and Excise Office at the same time as cigarette excise settlement. Manufacturers and importers holding a Taxable Goods Entrepreneur Identification Number (NPPBKC) self-assess the tax due and remit it to the state treasury through the excise collection system.
The Directorate General of Customs and Excise then forwards receipts to provincial regional general treasury accounts in proportion to population. Seventy percent of provincial receipts must be shared with districts and cities within that province; the remaining 30 percent stays with the province (Article 85 paragraph 4, UU HKPD).
New clause: 50 percent earmark and 37.5 percent JKN contribution
The defining change from PMK 143/2023 sits in Article 4 paragraph (1). Regional governments, both provincial and district or city, must allocate at least 50 percent of their share of cigarette tax revenue to activities with predetermined uses (earmarked spending).
Within that earmarked share, 75 percent must be used as a contribution to the National Health Insurance (JKN) program, equal to 37.5 percent of total regional cigarette tax revenue. The remainder of the earmark must include at least 7.5 percent for other health services and at most 5 percent for excise law enforcement against illegal cigarettes.
A firm clause backs the rule: if a regional government fails to meet its JKN contribution obligation, the central government may deduct the amount directly from regional cigarette tax funds and channel it to BPJS Health.
What changed from PMK 143/2023
Three differences are most visible. First, PMK 143/2023 did not explicitly fix the 75 percent minimum JKN contribution from the earmarked share; PMK 26/2026 codifies that figure. Second, the central government's right to deduct cigarette tax funds directly when JKN contribution is missed is made explicit. Third, the treatment of electronic cigarettes as cigarette tax objects is restated to remove practical interpretation gaps in the field.
Implications for regional governments
Regional governments will need to align 2027 planning and budgeting documents with the new earmarking structure. For provinces with significant cigarette tax receipts (notably tobacco-producing regions), the rule should discipline health spending allocation and reduce discretionary diversion to non-health line items.
For cigarette manufacturers and importers, collection mechanics are largely unchanged: rate remains 10 percent of excise, mechanism remains self assessment alongside excise. What shifts is downstream use of the funds, not the upstream obligation.
Regulatory references
Minister of Finance Regulation Number 26 of 2026 on Procedures for the Collection, Withholding, and Remittance of Cigarette Tax. Effective 12 May 2026. Revokes Minister of Finance Regulation Number 143/PMK.07/2023.
Law Number 1 of 2022 on Financial Relations between the Central and Regional Governments, Article 36 (10 percent rate) and Article 85 paragraph (4) (70:30 revenue sharing).