New tax policy on bonds still confusing: SSX<\/p>\n
JAKARTA (JP): The Surabaya Stock Exchange (SSX) said on
\nTuesday that the government's new tax policy on bonds was still
\nconfusing, and that it might even lead investors to avoid
\nreporting their transactions on the SSX.<\/p>\n
SSX president Anton Natakoesoemah said he needed more time to
\nstudy the new tax policy before he could inform the market
\nplayers on the policy's impact.<\/p>\n
Anton admitted he did not fully understand the new tax policy,
\nsaying that some items required clarification from the
\ngovernment.<\/p>\n
The SSX, he said, would meet with the director general for
\ntaxes to seek an explanation of the new regulation.<\/p>\n
"We also want the directorate general to meet with market
\nplayers and consult with them on the regulation. Let the market
\nplayers then draw their own conclusions," he told The Jakarta
\nPost.<\/p>\n
The new tax policy is one of 41 new tax and financial policies
\nannounced by the government on Monday.<\/p>\n
Government Regulation No. 139\/2000 on income tax on revenue
\nfrom bonds traded on the bond market, was issued on Dec. 21, and
\nhas been effective since Jan. 1.<\/p>\n
Under article 3 of the Regulation, domestic and foreign-based
\ntaxpayers must pay income tax of 15 percent and 20 percent
\nrespectively on interest earnings from bonds.<\/p>\n
The old regulation imposed only a single rate of 15 percent on
\nboth domestic and foreign-based taxpayers.<\/p>\n
But, according to Anton, the second section of article 3 could
\nbe misleading.<\/p>\n
This section states that the amount of income tax to be
\ncharged on revenues from capital gains, interest and or discounts
\nobtained by the owner of a bond at the time of a transaction on
\nthe stock exchange is 0.03 percent of the gross transaction
\nvalue.<\/p>\n
Based on earlier explanations by the directorate general, he
\nsaid, the imposing of 0.03 percent for each bond transaction was
\nmeant to promote the bond market.<\/p>\n
Although the charging of income tax on bond transactions was
\nnew, Anton said it would not necessarily discourage bond
\ninvestors.<\/p>\n
According to him, because the tax deduction on every bond
\ntransaction is final, traders are no longer required to report
\nearnings from their bond investments in their annual tax returns.<\/p>\n
Earnings reported in the tax returns are subject to between 5
\npercent and 35 percent income tax depending on the actual amount
\nof income.<\/p>\n
"I see it (the tax policy) rather as an incentive for bond
\ninvestors to register their transactions at SSX, so that they do
\nnot have to report it as taxable income in their financial
\nstatements," Anton explained.<\/p>\n
Unlike share transactions, where the exchange of ownership is
\nregistered with the Jakarta Stock Exchange under names, bond
\ntransactions can occur without registering them with the SSX,
\nbecause bonds do not bear the names of their holders.<\/p>\n
Anton said the new tax policy would encourage investors to
\nregister their transactions with the SSX, thereby promoting the
\nbond market's transparency.<\/p>\n
However, an official at SSX said there was no guarantee that
\ninvestors would register their transactions.<\/p>\n
According to him, people associate taxes with burden and not a
\nform of incentive if that was what the government was trying to
\ndo.<\/p>\n
"One of the most frequent questions I face when talking about
\nthe policy with investors is: What if someone did not register
\nhis transaction with SSX?" the official, who refused to be named,
\nsaid.<\/p>\n
He said that the regulation did not impose any sanctions on
\nbond investors who refused to register their transactions, thus
\navoiding the 0.03 percent income tax.<\/p>\n
"There is a loophole in the policy that could hurt the bond
\nmarket," he said.<\/p>\n
The official warned that if fewer transactions were registered
\nwith the SSX, it would become more difficult for bond investors
\nto assess a bond's market value.<\/p>\n
Vice president economic research at PT Danareksa Sekuritas
\nRaden Pardede dismissed the new tax policy as having only a minor
\nimpact on the bond market.<\/p>\n
The additional income tax of 0.03 percent for each transaction
\nis relative small, he said.<\/p>\n
Raden also said that the government would immediately charge
\nthe income tax when investors registered their transactions with
\nthe Indonesian Central Custodian Office (KSEI) and not with SSX.<\/p>\n
"There is no way that investors can avoid the tax, because
\nevery transaction must go through KSEI," he explained.<\/p>\n
The policy, he said, would ensure that the government would
\nobtain income tax revenue from every bond transaction.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-tax-policy-on-bonds-still-confusing-ssx-1447893297",
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