Govt seeks major cut in income tax<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad sought
\napproval from the House of Representatives (DPR) here on Saturday
\nto significantly reduce income tax rates to a range of between 10
\nand 30 percent from 15-35 percent at present.<\/p>\n
In his explanation at the House's plenary session, the
\nminister said that the tax reduction is essential, both in
\npromoting social justice and in strengthening competitive edges
\nof the domestic economy.<\/p>\n
The government proposes a cut of the income tax rates to 10
\npercent for the lowest income bracket of up to Rp 25 million
\n((US$11,500) per annum.<\/p>\n
The minister said the new rate of income tax for the income
\nbracket of between Rp 25 million and Rp 50 billion will be set at
\n15 percent, for the income bracket of between Rp 50 million and
\nRp 75 million at 20 percent, while any income in excess of Rp 75
\nmillion will pay taxes of 30 percent.<\/p>\n
The income tax bill, which will amend the Income Tax Law No.
\n7\/1983, does not only lower the tax rates but also expands the
\nincome brackets to four from three currently.<\/p>\n
Under the present tax law, the rate of the income tax for the
\nlowest income bracket of up to Rp 10 million is 15 percent, for
\nthe income bracket of between Rp 10 million and Rp 50 billion 25
\npercent and for that above Rp 50 million 35 percent.<\/p>\n
Mar'ie said that unlike in the present income law, the
\nproposed rates could be revised through a decree of the Minister
\nof Finance.<\/p>\n
\"The new income tax rates will be more flexible and the 30
\npercent imposed on the highest income bracket could be further
\nreduced,\" he said, adding that the planned income tax rates are
\nstill open to change to meet the need of the country's economy.<\/p>\n
Highest<\/p>\n
The present corporate income tax of 35 percent is the highest
\nin Southeast Asian countries.<\/p>\n
Mar'ie said that a further cut of the income tax rate for the
\nhighest income bracket (corporate) to 25 percent is quite
\npossible in order to attract foreign investment and improve
\nefficiency of domestic industries.<\/p>\n
The income tax bill also seeks an increase in the tax exempt
\nincome for an individual taxpayer to Rp 1.72 million ($822) from
\nRp 960,000 at present. The additional tax exemption for a married
\ntaxpayer will rise to Rp 864,000 from Rp 480,000, while the
\nadditional deduction for a wife will increase to Rp 1.72 million
\nfrom Rp 960,000 at present and the deduction for a child will be
\nraised to Rp 960,000 from Rp 480,000.<\/p>\n
Hence, the maximum amount of income deductible from the
\ntaxable income of a single taxpayer will increase from Rp 1.44
\nmillion to Rp 2.59 million and for a married taxpayer with three
\nchildren (maximum) will rise from Rp 3.84 million to Rp 6.91
\nmillion.<\/p>\n
The bill on the income tax was submitted together with three
\nother tax bills.<\/p>\n
Enactment<\/p>\n
The bills, which will respectively amend the present tax laws
\non general tax provisions and procedures, value added tax (VAT)
\non goods and services and sales tax on luxury goods as well as
\nland and building (property) tax, are expected to be enacted
\nbefore the end of the year.<\/p>\n
The tax revision is proposed to follow changes in the tax
\nregulations of other members of the Association of Southeast
\nAsian Nations (ASEAN) -- Brunei, the Philippines, Thailand,
\nSingapore and Malaysia, the minister said.<\/p>\n
Mar'ie said that the new income tax bill will also allow for
\nthe granting of tax incentives to investors, who are involved in
\npriority business sectors and those operating in frontier areas.<\/p>\n
Under the proposed tax amendment, companies may also receive a
\ntax facility if they reinvest their after-tax earnings in the
\ncountry, the minister said, adding such an incentive is important
\nin encouraging investors to expand their business operations in
\nIndonesia.<\/p>\n
The bill also allows companies to deduct expenditures on
\nresearch and human resource development from their taxable
\nincome, the minister said.(hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-seeks-major-cut-in-income-tax-1447893297",
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