Govt plans another tax-break facility for ailing industry<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government plans to introduce a tax-break facility worth
\nRp 1 trillion (about US$113 million) to help ailing local
\nbusinesses cope with rising production costs and a gloomy export
\nmarket.<\/p>\n
According to a draft of the planned policy, a copy of which
\nwas made available to The Jakarta Post on Tuesday, the tax break
\ncovers the revocation of value-added tax (VAT) on the import of
\ncapital goods and raw materials for the agricultural, fisheries,
\nforestry and animal husbandry sectors.<\/p>\n
Spokesman for the Ministry of Finance Maurin Sitorus said that
\nthe ministry had been holding talks with the House of
\nRepresentatives to gain approval for the policy.<\/p>\n
\"There will be another stimulus package coming soon. We have
\nmade the draft of the regulation and are now waiting for the
\nHouse's approval,\" he said.<\/p>\n
Maurin said the House approval was needed as Law No. 18\/2000
\non VAT stipulated that any decision to impose or lift VAT should
\nbe made in consultation with the House.<\/p>\n
The planned tax-break facility was actually applied in 2001,
\nbut the government dropped it in July last year on the grounds
\nthat it had failed to boost new investment or improve the
\nperformance of the business sector. At the time, the cash-
\nstrapped government was also under pressure to collect higher tax
\nrevenue to finance the state budget, heavily burdened with the
\ncost of the late 1990s bank bailout program.<\/p>\n
But following strong criticism from the industrial sector over
\nthe government's decision to raise electricity rates and fuel
\nprices for manufacturers and industries in January this year, the
\ngovernment revised its stance by introducing the stimulus
\npackage.<\/p>\n
Businessmen have said that without the tax breaks, local
\ncompanies particularly those exporting their products would not
\nbe able to compete with more efficient competitors from China and
\nother countries in a global economy suffering from a malaise.<\/p>\n
In January, the government introduced its first package worth
\nRp 6 trillion. The government at that time eliminated and cut
\nluxury tax on some 45 product items, mainly electronics, to help
\nmanufacturers reduce their prices thus enabling people to buy
\ntheir products at a more affordable prices, and help discourage
\nthe smuggling of overseas products.<\/p>\n
Meanwhile, legislator Paskah Suzetta said that the House had
\nagreed in principle to the government's new policy.<\/p>\n
He said that the House was scheduled to endorse it in May.<\/p>\n
According to the draft of the new policy, the government would
\nlose some Rp 1 trillion in potential tax revenue by implementing
\nthe policy.<\/p>\n
But the government hopes to be able to collect other forms of
\ntaxes with the expected increase in investment, industrial output
\nand exports as a result of the policy.<\/p>\n
Elsewhere, the government also planned to exempt the
\nelectricity sector from value-added tax.<\/p>\n
Water companies will also enjoy a similar facility.<\/p>\n
Eye box<\/p>\n
Items to be covered by new tax-break facility<\/p>\n
1. Capital goods in the form of machinery and factory equipment,<\/p>\n
installed or uninstalled but not including spare parts
\n2. Animal feed for animal husbandry industry
\n3. Raw material for making animal feed
\n4. Seeds for agriculture, forestry, fisheries<\/p>\n
and plantations
\n5. Clean water from water companies
\n6. Electricity<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-plans-another-tax-break-facility-for-ailing-industry-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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