Exporters need faster process for VAT refund<\/p>\n
JAKARTA (JP): Procedures for the refund of value added tax
\n(VAT) paid by export-oriented companies need to be reformed in
\norder to promote the development of local trading companies, says
\nan analyst of the World Bank.<\/p>\n
Surinder Malik said that reform may guarantee speedy refunds
\nof VAT which has been paid on domestic inputs used for the
\nproduction of export goods or paid on export products.<\/p>\n
Exporters are exempt from duties and VAT on materials imported
\nfor the production of export goods. Because they are required to
\npay duties and VAT on materials upon their arrival -- if they are
\nnot processed in a bonded zone -- they are entitled to a refund
\nof the duties and VAT which have been paid.<\/p>\n
"Otherwise, it would be difficult to achieve backward linkages
\nand promote the development of local trading companies," Malik
\ntold a World Bank-sponsored seminar held here last week.<\/p>\n
The seminar, with the theme of Building on Success: Maximizing
\nthe Gains from Deregulation, featured a dozen economists from
\nlocal and foreign institutions, such as Akihiko Nishio of the
\nWorld Bank and Mari Pangestu of Indonesia's Centre for Strategic
\nand International Studies.<\/p>\n
Speaking about the government's duty and indirect tax
\nfacilities, Malik said some of the facilities often fail to
\nperform as expected.<\/p>\n
Many exporters, for example, consider the VAT refund
\nadministration ineffective because of the inability to claim
\nrefunds of VAT on inputs purchased domestically from suppliers
\nfor indirect exporters.<\/p>\n
"This discourages the development of backward linkages," he
\nsaid, citing that an Indonesian synthetic leather manufacturing
\nfirm, in order to avoid VAT payments, preferred to export its
\nproducts to Singapore rather than supply local shoe exporters.<\/p>\n
Import<\/p>\n
In return, he said, shoe manufacturers prefer to import
\nsynthetic leather from Singapore in order to also avoid the costs
\nassociated with VAT.<\/p>\n
Malik said that similarly, some firms in the electronics
\nsector import components from Singapore that are made in
\nIndonesia, due to the difficulties in the administration of
\nincentives for indirect exporters.<\/p>\n
"Under such a system, a strong synergy between direct and
\nindirect exporters cannot be expected," he said, adding that the
\nsystem also discourages the activities of trading companies and
\nthat it is a major reason why every manufacturer prefers to
\nexport their products themselves.<\/p>\n
The refund of VAT on domestic inputs used for the production
\nof export goods is one of the export facilities introduced by the
\ngovernment with the aim of promoting exports. The facilities are
\nadministered by the Export Facility and Financial Data Analysis
\nAgency. The other export facilities include the exemption and
\nrefund of duties on imported materials used for the production of
\nexport goods. In addition, all investments approved by the
\nInvestment Coordinating Board are also exempt from duties and
\nindirect taxes on machinery, equipment and intermediary inputs
\nfor the first two years of production.<\/p>\n
Concerning the duty exemption facility, he said that a common
\nbonded manufacturing warehouse (CBMW) system needs to be
\nintroduced to facilitate small direct and indirect exporters'
\naccess to the duty exemption facility.<\/p>\n
"CBMW licenses should be issued for private enterprises or
\nassociations," he said.(hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/exporters-need-faster-process-for-vat-refund-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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