Jakarta. Indonesia plans to collect Rp 1.7 trillion ($102 million) from an excise tax on packaged sugary drinks in 2027, with the levy expected to take effect in the second half of the year as the government seeks to curb consumption of sugar-sweetened beverages amid the country’s growing diabetes burden.

The government is still finalizing implementing regulations, including the tax rate and the sugar-content thresholds that would determine which beverages are subject to the levy, Director General of Customs Djaka Budhi Utama said Friday.

“The 2027 state budget law already stipulates an excise tax on sweetened packaged beverages, with a revenue target of around Rp 1.7 trillion,” Djaka told reporters at the Finance Ministry’s monthly state budget briefing in Jakarta.

“We are still completing the regulations and hope the tax can be implemented in the second half of 2027,” he said.

The proposed levy is intended to cover packaged drinks containing added sugar. Potential products under discussion include carbonated soft drinks, energy drinks, sweetened flavored beverages and other ready-to-drink products.

The public-health challenge is substantial. Indonesia’s Health Ministry estimates that 20.4 million people in the country have diabetes, placing Indonesia fifth globally by the number of people living with the disease.

The Indonesia Health Survey (SKI) 2023 found that diabetes prevalence among people aged over 15 reached 11.7% based on blood-glucose testing. The total number of people with diabetes could reach 30 million, according to estimates cited in the supplied data, while only around 10 million to 15 million have been diagnosed.

Sugary-drink taxes are intended to discourage consumption by raising the price of products with added sugar and potentially encouraging manufacturers to reformulate their beverages. However, the impact of Indonesia’s planned levy will depend partly on its final rate, which products it covers and the sugar thresholds used.

Discussions on the rate are continuing between the Directorate General of Customs and the Finance Ministry’s Directorate General of Economic and Fiscal Strategy, Djaka said. The government has yet to determine the final scope of the tax or how much sugar a beverage must contain to be subject to excise duties.

The government previously proposed an excise rate of Rp 1,500 per liter for ready-to-drink beverages and Rp 2,500 per liter for concentrates, syrups and extracts. Those proposals have not been finalized for implementation in 2027.

The Rp 1.7 trillion revenue target is lower than the Rp 7.6 trillion figure discussed in earlier deliberations, reflecting changes to the plan as the government prepares technical rules and considers industry conditions and consumers’ purchasing power.

The proposed excise is part of wider efforts to regulate the consumption of products high in sugar, salt and fat. Government Regulation No. 28 of 2024 on Health provides a regulatory basis for measures to control the consumption of such products.

The final design of the tax, including its rates and the beverages covered, will depend on the implementing regulations now being prepared.

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