House approves tax-break facility<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The House of Representatives (DPR) approved on Tuesday a
\ngovernment proposal to waive the 10 percent value added tax (VAT)
\non the import of certain capital goods and raw materials by
\nseveral industries.<\/p>\n
The new tax-break facility would allow the revocation of VAT
\non the import of capital goods such as machinery and factory
\nequipment, as well as raw materials for the agricultural,
\nfishery, forestry and animal husbandry sectors. The ruling, which
\nwill be in the form of a presidential regulation, is expected to
\ntake effect in July this year at the latest.<\/p>\n
Law No. 18\/2000 on VAT stipulated that any decision to impose
\nor lift VAT should be made in consultation with the House.<\/p>\n
DPR approval was given recently during a meeting between
\nMinister of Finance Boediono and House Commission IX on state
\nbudget and finance.<\/p>\n
Boediono welcomed the decision, saying that it would help
\nimprove domestic businesses, thus enabling them to increase their
\noutput to meet demands from local and export markets. The related
\nsectors would also become more attractive for investment.<\/p>\n
All this will bring about plenty of revenue for the
\ngovernment, more than enough to offset the estimated Rp 1
\ntrillion of potential loss in tax collection, as a result of the
\ntax-break policy, he added.<\/p>\n
Business groups have long lobbied the government for such a
\nstimulus package, saying that domestic companies, especially the
\nexport-oriented ones, were facing difficulties in competing head-
\non in the international market with competitors from China and
\nother countries, which are regarded as more efficient.<\/p>\n
The government's decision to raise electricity and fuel prices
\nfor manufacturers and industries this year was also seen as an
\nadditional factor creating heavy burdens on domestic businesses.<\/p>\n
The new tax-break facility is the second fiscal-stimulus
\nmeasure introduced by the government this year. The first, worth
\naround Rp 6 trillion, was issued in January, in which the luxury
\ntax on 45 products -- mainly electronics -- was eliminated.<\/p>\n
While this could make manufacturers lower their prices, making
\nthem more affordable for people, it was also aimed at helping
\ndiscourage rampant smuggling practices.<\/p>\n
The VAT facility was actually applied in 2001, but was revoked
\nlast year due to the industries' failure to improve their
\nperformance and the government's need for extra cash to help
\nfinance the cash-strapped state budget.<\/p>\n
Director General for Taxation Hadi Purnomo said that tax
\ncollection as of April stood at Rp 65.1 trillion, of which Rp
\n20.3 trillion came from VAT.<\/p>\n
The state budget has targeted the directorate to rake in some
\nRp 214 trillion in tax revenues this year.<\/p>\n
Items to enjoy the new tax-break facility:<\/p>\n
1. Capital goods in the form of machinery and factory equipment,
\ninstalled or uninstalled but not including spare parts<\/p>\n
2. Animal feed for animal husbandry businesses<\/p>\n
3. Raw material for making animal feed<\/p>\n
4. Seeds for agriculture, forestry, fisheries and plantations<\/p>\n
5. Clean water from water companies<\/p>\n
6. Electricity.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/house-approves-tax-break-facility-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }