Regulation of the Minister of Finance Number 22 of 2026 Optimizes Tobacco Excise Revenue Sharing Funds for Industry Development and the Eradication of Illegal Cigarettes

Introduction 

On April 24, 2026, the Ministry of Finance (“MOF”) issued Regulation of the Minister of Finance Number 22 of 2026 on the Use of Tobacco Excise Revenue Sharing Funds ("MOF Regulation 22/2026"). MOF Regulation 22/2026 regulates the use of tobacco excise revenue sharing funds by regional governments to support public welfare, health, and law enforcement, as well as their distribution to the tobacco industry and affected communities.

MOF Regulation 22/2026 improves the efficiency, effectiveness, and accountability of fund utilization while introducing adjustments to previous provisions. MOF Regulation 22/2026 also regulates the implementation of tobacco industry development programs, as well as assistance and protection for laborers and farmers in the tobacco sector.

Comparison 

MOF Regulation 22/2026 repeals Regulation of the Minister of Finance Number 72 of 2024 on the Use of Tobacco Excise Revenue Sharing Funds ("MOF Regulation 72/2024"). The following is a comparison between MOF Regulation 22/2026 and MOF Regulation 72/2024:

Key Provisions 

Improvement of Raw Material Quality for the Agricultural Sector 

Article 5 mandates the use of Tobacco Excise Revenue Sharing Funds (Dana Bagi Hasil Cukai Hasil Tembakau, "DBH CHT") to support the agricultural sector through raw material quality improvement programs. These programs include:

1. Training for farmers to improve raw material quality;

2. Harvest and post-harvest handling;

3. Application of agricultural technical innovations; and

4. Provision of agricultural business facilities and infrastructure to support the improvement of raw material quality in accordance with industry standards.

Industry Development and Facilitation for Small and Medium Enterprises 

Article 6 regulates industry development programs to support tobacco industry activities, particularly for small and medium enterprises. DBH CHT funds are utilized for the following activities:

1. Registration of cigarette rolling machines;

2. Data collection on the tobacco industry;

3. Provision or maintenance of testing facilities for tobacco raw materials and tobacco products for small and medium enterprises;

4. Tar and nicotine level testing for small and medium enterprises;

5. Development and human resources capacity building in small and medium tobacco industry enterprises;

6. Establishment, management, and development of Tobacco Industrial Zones or industrial centers; and

7. Provision or maintenance of connectivity infrastructure supporting tobacco industry activities.

Labor Protection and Worker Welfare 

Regional governments are obligated to allocate funds for social environment development programs for workers in the tobacco sector as set forth in Article 7. Beneficiaries include tobacco farm laborers, cigarette factory workers including those experiencing employment termination, and clove farmers. Such funds are utilized for:

1. Provision of Direct Cash Assistance;

2. Payment of insurance premiums for tobacco production protection for farmers; and

3. Payment of social security contributions for employment.

Furthermore, regional governments also organize work skill improvement programs through training, the provision of business capital assistance in the form of goods, and the provision of seedlings and agricultural production facilities for crop diversification.

Law Enforcement Against Illegal Excisable Goods 

MOF Regulation 22/2026 regulates the implementation of law enforcement against illegal excisable goods as set forth in Article 8 to Article 10, which encompasses supervision over the ownership of cigarette rolling machines, the dissemination of excise provisions through various media, and joint operations to take enforcement actions against tobacco products using counterfeit, reused, or no excise stamps. As a key innovation, MOF Regulation 22/2026 specifically delegates authority to the Director General of Customs and Excise to receive information on the circulation of illegal goods, and to coordinate joint operation activities and the capacity building of personnel involved in the eradication of illegal excisable goods. To support the implementation of such activities, Annex Part A lists the operational facilities that may be financed, which include vehicle rentals, mobile X-ray detection equipment, GPS trackers, drones, CCTV, and application-based vulnerability mapping services.

Healthcare Services and Premium Guarantees for Workers 

MOF Regulation 22/2026 mandates the allocation of funds to support the healthcare sector as set forth in Article 12, which covers promotive, preventive, and curative services. Such funds are utilized for the payment of health insurance premiums for residents registered with the regional government, including workers experiencing employment termination. Additionally, the funds are also utilized for the procurement of medicines, medical equipment, ambulances, and the construction or rehabilitation of healthcare facilities and sanitation infrastructure.

Budget Proportions for the Welfare Sector 

MOF Regulation 22/2026 stipulates the fund utilization proportions as set forth in Article 13, allocating 50% of the total funds for the public welfare sector. From this amount, 20% is utilized for industry development programs, raw material quality improvement, and skills training, while 30% is utilized for the provision of social assistance, including Direct Cash Assistance or the payment of insurance premiums for workers.

Transition of Legal Status of Remaining Funds and Determination of Activity Plans 

Regional governments are obligated to re-budget the remaining DBH CHT from the previous year in the current or subsequent fiscal year based on the reconciliation results with the central government as set forth in Article 17. In the event that a regional government fails to conduct re-budgeting or reconciliation, the Minister shall calculate the remaining funds to determine regional budget policies. Furthermore, MOF Regulation 22/2026 mandates the determination of the DBH CHT Activity and Budgeting Plan for the 2026 fiscal year within a maximum of 30 working days from its effective date as set forth in Article 21.

Closing

MOF Regulation 22/2026 regulates the use of tobacco excise revenue sharing funds to support tobacco industry development, labor protection, healthcare services, and law enforcement against illegal excisable goods, while also opening access for businesses, particularly small and medium enterprises, to development programs such as testing facilities, human resources capacity building, and the development of tobacco industrial zones. Regional governments are required to allocate funds for labor protection programs through the provision of social assistance and the payment of insurance premiums, as well as to support healthcare services through the provision of facilities and the financing of health insurance premiums. MOF Regulation 22/2026 also covers the supervision of the circulation of illegal excisable goods supported by operational facilities, the obligation to re-budget the remaining funds from the previous year based on reconciliation with the central government, and the determination of the Activity and Budgeting Plan for 2026 within a maximum of 30 working days from its effective date, ensuring that program implementation and fund distribution proceed in accordance with applicable provisions.