More Nail-Biting Over Films as Court Rejects Importers’ Fee Pleas

The tax court has rejected the appeal filed by two major foreign film importers against the government’s demands for unpaid royalties, which could mean a longer wait for the return of Hollywood blockbusters to Indonesian screens.

“Unless they pay all [outstanding] royalties, they are banned from bringing foreign films into Indonesia,” Widhi Hartono, head of auditing at the Customs Office, said on Thursday.

The two distributors, largely responsible for bringing in major Hollywood movies, are among three firms that were ordered by the state in February to pay a total of Rp 31 billion ($3.6 million) in unpaid taxes since 2009.

The demand was made shortly after member studios of the Motion Pictures Association decided to stop exporting movies to Indonesia over a dispute on royalty calculations.

The third film importer, believed to deal mostly with small and independent films, has already paid the government Rp 9 billion in back taxes.

The Ministry of Finance last month announced a new scheme that would see importers pay only a “specific tax” on movies, rather than an ad valorem tax, which was based on each movie’s monetary value — mainly ticket sales.

The new plan was meant to be a simple solution to the long-running dispute over royalties that foreign studios said had “a detrimental impact on the cost of bringing a film into Indonesia.”

According to the new rules, importers only have to pay Rp 21,000 to Rp 22,000 per minute for each copy of the movie they screen. With a viewing time of 100 minutes, the tax on the average feature would be as little as Rp 21 million per copy.

Djonny Sjafruddin, the head of the Indonesian Cinema Companies Union (GPBSI), said local movie houses had run out Hollywood film stocks, which caused a 60 percent dip in ticket sales since the foreign-film boycott started in February.

“We have not heard any news from [MPA] and we now only screen independent films in our cinemas,” he said. “Last January, the cinema industry could earn Rp 3.9 billion [a month], but now we only earn a collective Rp 1.9 billion.”

Currently, there are nine foreign film importers allowed to bring foreign films into the country, but most of these firms only distribute B movies.

Widhi said on Thursday that six new film importers had applied for permits with the customs office. “But I don’t know what kind of films that they are going to bring [here],” he said.