Govt plans tax stimulus to spur growth<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government is set to provide tax break facilities to the
\nbusiness community in an effort to improve the business climate
\nand lure new investment, as well as to help support existing
\nfirms to expand their businesses.<\/p>\n
Director General of Taxation Hadi Purnomo said the Ministry of
\nFinance was finalizing regulations on the incentive facilities
\nand was hopeful they could be issued later this month.<\/p>\n
\"The facilities are needed to support the private sector to
\nexpand their businesses, with an expectation that their robust
\nactivity will spur higher economic growth and create more
\nemployment,\" he said after a media conference on Monday.<\/p>\n
Unfavorable taxation regulations have been cited as among the
\nmain reasons for the reluctance of new investors, notably from
\noverseas, to come and invest here.<\/p>\n
Hadi said the incentives would include a reduction in
\nwithholding tax on dividends from the current 30 percent to 10
\npercent.<\/p>\n
To help boost business operations, another ruling would also
\nbe introduced to grant companies an extension on untaxable income
\ndue to operational losses from the current five years to 10
\nyears.<\/p>\n
Another ruling would also allow companies to claim tax refunds
\non assets depreciation within two years, instead of the current
\nfive years.<\/p>\n
Also, a reduction in income tax would be applied to companies
\noperating in under-developed regions. Under the ruling, firms can
\nallocate a minimum 30 percent of their profits for investment and
\nexpansion, without having to pay for the expenditure tax at the
\nend of their annual fiscal year.<\/p>\n
This particular incentive would not only cover under-developed
\nregions, Hadi said, but would also be expanded to a number of
\nbusiness sectors deemed important for the country but that had
\nyet to be fully exploited, such as the fisheries and agriculture
\nsectors.<\/p>\n
\"The government will allow the BKPM (Investment Coordinating
\nBoard) to decide which regions and business sectors will be
\neligible for tax break facilities under the credit investment
\nallowance scheme,\" he said.<\/p>\n
President Susilo Bambang Yudhoyono has repeatedly voiced the
\nneed to reduce the country's huge unemployment rates by helping
\nthe business community expand their businesses.<\/p>\n
At present, there are about 45 million people who are either
\nentirely or partially unemployed.<\/p>\n
Hadi also said that the directorate had decided to drop plans
\nto impose tax on profits obtained from bond-based mutual funds
\nfollowing the delay in the revision of the tax laws, which was to
\nhave been completed last year.<\/p>\n
\"We confirm that there will be no tax on profits obtained from
\nmutual funds, as was previously scheduled to go into effect this
\nyear,\" he said.<\/p>\n
The tax office had planned to tax bond-based mutual funds, in
\npart due to the government's need to collect as much revenue as
\npossible to help it finance the state budget deficit.<\/p>\n
As of last year, the tax office had managed to reap Rp 238.9
\ntrillion (US$256 billion) in revenue -- around Rp 300 billion
\nmore than targeted.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-plans-tax-stimulus-to-spur-growth-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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