Govt to impose 5% tax on forex buying<\/p>\n
JAKARTA (JP): The government will impose, starting Monday, a
\nnew 5 percent tax on foreign exchange purchases by individuals or
\nlegal entities, according to the Ministry of Finance.<\/p>\n
A ministry spokesman, Agus Haryanto, announced yesterday that
\nthe new tax aimed to reduce speculation on foreign exchange,
\nespecially the U.S. dollar, which had resulted in the weakening
\nof the rupiah.<\/p>\n
\"The imposition of a tax on foreign exchange purchases serves
\nas an effort to contain the increasing foreign exchange
\nspeculation,\" Agus said.<\/p>\n
The tax is classified as an income tax, Agus said, and as such
\nthe amount paid by a taxpayer when purchasing a foreign exchange
\ncould be credited to his annual tax return.<\/p>\n
However, according to finance minister decree No.
\n185\/KMK.04\/1998, dated March 19 this year, the new tax would not
\nbe imposed on foreign exchange purchases by authorized money
\nchangers or commercial banks.<\/p>\n
Other legal entities would have to pay the 5 percent tax when
\npurchasing foreign currency barring those which do so to repay
\noffshore debts or to finance imports.<\/p>\n
An indebted company wanting a tax waiver when purchasing a
\nforeign currency would have to enclose a confirmation letter from
\nthe central bank stating that it does have foreign debts.<\/p>\n
And an importer, when buying foreign currency to finance
\nimports, has to enclose a confirmation letter of its letter of
\ncredit from the issuing bank here to get a waiver.<\/p>\n
Agus also announced yesterday the expansion of an income tax
\nincentive for companies undertaking mergers, acquisitions and
\nbusiness expansions.<\/p>\n
The facility basically allows corporations to use their book
\nvalue in transferring assets during mergers, acquisitions and
\nexpansions.<\/p>\n
So far, the government has given such a tax incentive to
\nbanks, financial institutions and companies wanting to conduct an
\ninitial public offering of shares.<\/p>\n
The new finance ministry decree, No. 117\/KMK.04\/1998, dated
\nFeb. 27, expands the facility to also cover insurance and
\nreinsurance firms as well as publicly listed firms wanting to
\nconduct a secondary offering of shares.<\/p>\n
\"But the use of book value in transferring assets must still
\nobtain approval from the finance minister, through the director
\ngeneral of taxes,\" Agus said.<\/p>\n
\"This policy aims to encourage businesses to merge,\" he added.<\/p>\n
Agus also announced yesterday a facility for banks to write
\noff their bad debts. The facility is incorporated in finance
\nministry decree No. 130\/KMK.04\/1998, dated Feb. 27.<\/p>\n
The facility allows banks to calculate their bad debts as part
\nof their operating costs, and thus avoiding being taxed on the
\namount.<\/p>\n
However, to qualify for such a facility, a bank must first
\ninclude the bad debts, as losses, into its commercial financial
\nreport and transfer the debts to district courts or the state's
\nbad debts settlement body.<\/p>\n
A bank must also publicly announce the amount of its bad debts
\nand the name of the debtors in a local publication and submit
\ndata on the bad debts, including the debtors' tax numbers and
\nother related documents, to the director general of taxes. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-impose-5-tax-on-forex-buying-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}