The customs on the distribution of imported movies is in breach of the WTO’s agreement.

Posted: February 21, 2011 in News

By : Achmad Aris

Jakarta – The customs tax on the distribution rights of foreign movies that was implemented by the Government and the Directorate General of Customs and Excise is deemed in breach of the WTO’s Valuation Agreement.

Tax inspector from the University of Indonesia’s Tax Center, Darussalam stated that the 8th article, paragraph 1 (c) of the WTO Valuation Agreements clearly states that it is prohibited to include the distribution rights in determining the value of customs.

“The ones that should be charged with customs is the media that carried it, not the movie’s distribution rights,” he said, earlier today (Monday, February 21st 2011)

He explained that the royalty which is accounted for in customs are the royalty based on common definition, by excluding the royalty based on the rights of distribution.

The complete WTO Article about royalty and licensing fees based on Paragraph 1 (c) is as follows : ‘payments in respect to patents, trade marks and copyrights. However, the charges for the right to reproduce the imported goods in the country of importation shall not be added to the price actually paid or payable for the imported goods in determining the customs value.’

The right to reproduce is the right to broadcast the movie in any media, or in other words, the distribution rights.

According to Darussalam, this whole polemic about customs on the distribution rights arose due to the different views of the government officials, in interpreting the base calculation of the customs’ value.

“For as long as it was implemented, customs are only applicable to physical items, not on the rights on non-physical ones. If it’s applied on them, wouldn’t it be trouble if you have to put customs on live Soccer games?” he said. (yus)

The Original article can be found here :


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