Income tax law amended<\/p>\n
JAKARTA (JP): Middle-income individual taxpayers will bear a
\nlighter tax burden, regional administrations will receive 20
\npercent of individual income tax receipts and luxury sales taxes
\ncan be raised to a maximum of 75 percent, according to amendments
\nto five tax laws approved by the House of Representatives on
\nMonday.<\/p>\n
The current income tax law applies the highest rate of 30
\npercent to individual taxpayers with annual taxable income in
\nexcess of Rp 50 million.<\/p>\n
Under the amended income tax law, annual taxable income of
\nbetween more than Rp 50 million and Rp 100 million will be
\nsubject only to a rate of 15 percent, and the highest rate of 35
\npercent will be applied to taxable income in excess of Rp 200
\nmillion.<\/p>\n
These changes are part of the amendments to the 1983 income
\ntax law, one of five tax laws amended on Monday by the House
\nafter more than a month of deliberations. The majority of the 10
\nfactions in the House welcomed the amendments as a fairer
\ndistribution of the tax burden.<\/p>\n
The other four tax laws amended were the laws on value added
\ntax and luxury sales tax, on general rules and procedures of
\ntaxation, on tax collection by distress warrant and on the
\ntransfer tax on land and buildings.<\/p>\n
Minister of Finance Bambang Soedibyo, who represented the
\ngovernment at the House plenary session, said the amendments were
\ndesigned to broaden the tax base, improve tax administration and
\nenhance a fairer distribution of the tax burden.<\/p>\n
The amended income tax law differentiates the income tax
\nbrackets and income tax rate structure for individual and
\ncorporate taxpayers, which under the current law are the same.<\/p>\n
Individual income tax brackets will be broadened from three to
\nfive, but the number of corporate income tax brackets will remain
\nat three.<\/p>\n
Based on the amended law, the income tax rate for individual
\ntaxpayers will be as follows:<\/p>\n
* 5 percent for annual taxable income of up to 25 million
\n(US$2,800 at the current foreign exchange rate).<\/p>\n
* 10 percent for annual taxable income of between more than Rp
\n25 million and Rp 50 million.<\/p>\n
* 15 percent for annual taxable income of between more than 50
\nmillion and Rp 100 million.<\/p>\n
* 25 percent for annual taxable income of between more than Rp
\n100 million and Rp 200 million.<\/p>\n
* 35 percent for annual taxable income in excess of Rp 200
\nmillion.<\/p>\n
Presently, taxable income of up to Rp 25 million is subject to
\n10 percent tax, taxable income of between more than Rp 25 million
\nand Rp 50 million is subject to 15 percent tax and taxable income
\nin excess of Rp 50 million to 30 percent. These same rates also
\napply to corporate taxable income.<\/p>\n
Corporate income tax rates under the amended law will consist
\nof only three levels, as follows:<\/p>\n
* 10 percent for annual taxable income of up to 50 million.<\/p>\n
* 15 percent for annual taxable income of between more than Rp
\n50 million and Rp 100 million.<\/p>\n
* 30 percent for annual taxable income in excess of Rp 100
\nmillion.<\/p>\n
Fairness<\/p>\n
Legislators praised the wider range of tax rates for
\nindividual taxable income, saying it reflected a greater sense of
\nfairness.<\/p>\n
\"This income tax structure reflects a higher sense of justice
\ncompared to the current three tax layers,\" the Indonesian
\nDemocratic Party of Struggle (PDI Perjuangan) faction stated in
\nits final opinion at the plenary session.<\/p>\n
The Golkar faction also welcomed the new tax rate structure
\nand argued that though the rates seemed lower for certain income
\nbrackets, the bottom line would still be a greater amount of tax
\nrevenue for the government.<\/p>\n
The amended income tax law also will extend the categories of
\ncorporate (permanent establishment) income tax payers to include
\nsuch nonprofit organizations as social and political
\norganizations and social-oriented foundations.<\/p>\n
The amendments also provide tax incentives for businesses in
\nthe form of tax allowances, accelerated depreciation, carryover
\nof loss (for compensation) for up to 10 years and for corporate
\ndebtors which restructure their debts under the government-
\nsponsored Jakarta Initiative.<\/p>\n
\"These incentives will help facilitate debt restructuring,
\nthereby allowing indebted companies to resume operations at full
\ncapacity,\" the PDI Perjuangan faction noted.<\/p>\n
In support of the decentralization of political and fiscal
\npower, the amended income tax law will provide 20 percent of
\nindividual tax receipts to the regions. At present, all revenues
\nfrom income tax, value added tax and luxury sales tax go to the
\ncentral government.<\/p>\n
The Golkar faction noted that this revenue sharing would
\nencourage local administrations to woo investors.<\/p>\n
Under the amendments to the law on general rules and
\nprocedures of taxation, individual and corporate taxpayers facing
\nsevere cash-flow problems will be allowed to defer their tax
\npayments for one year.<\/p>\n
Other amendments to the law include the simplification of the
\nprocedures for the refund of excess income tax and value added
\ntax payments.<\/p>\n
The procedures for tax collection by distress warrant will be
\nstrengthened to raise tax compliance.<\/p>\n
The amendments to the law on value added tax and luxury sales
\ntax increase the highest rate of luxury sales tax from 50 percent
\nto 75 percent.<\/p>\n
\"We expect a higher level of tax compliance, hence larger tax
\nreceipts,\" Bambang said about the amendments.<\/p>\n
He hoped the government's tax receipts, which now amount only
\nto as high as 12 percent of gross domestic product, would
\nincrease from 11 percent at present to 12 percent by 2001 and 13
\npercent by 2003. (bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/income-tax-law-amended-1447893297",
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