Tax holidays should be open to all: Businessmen<\/p>\n
JAKARTA (JP): Businessmen and economic analysts have called on
\nthe government to open its 10-year tax holiday to new companies
\noperating in all sectors of business.<\/p>\n
Chairman of the Indonesian Chamber of Commerce and Industry
\n(Kadin) Aburizal Bakrie said yesterday that all new companies
\ndeserve the tax exemption.<\/p>\n
On Thursday, the government announced the reintroduction of an
\nup to 10-year tax holiday for new companies operating in certain
\nindustries. Companies operating outside Java and Bali will be
\nable to enjoy a 12-year tax holiday.<\/p>\n
The last time the government offered similar tax holidays was
\nin 1984.<\/p>\n
According to the Ministry of Finance, the tax facility would
\ngive exemption from not only corporate income tax but also from
\nincome tax on dividends paid to foreign-based shareholders.<\/p>\n
The ministry said that industries which qualified for tax
\nholidays would be determined by President Soeharto based on
\nrecommendations from the Team for Assessment of Tax Facilities
\nfor Certain Industries.<\/p>\n
James W. Castle from Business Advisory Indonesia questioned
\nthe limitations. He said yesterday that giving different
\ntreatment to certain industries was unfair.<\/p>\n
Christianto Wibisono of the Indonesian Business Data Center
\nsaid the tax holiday should be aimed at narrowing the gap in
\neconomic development between the western and eastern parts of the
\ncountry, rather than aiming it at certain industries.<\/p>\n
Aburizal said that tax exemptions for new companies were still
\ncommon, even in Europe, so it would do no harm for the tax
\nholidays to be given to all new companies rather than those in
\nspecific industries.<\/p>\n
Priorities<\/p>\n
In Poland, for example, companies can enjoy tax holidays for
\ntheir first 10 years of operation and then they need only pay 50
\npercent of income taxes for the following 10 years, he said.<\/p>\n
Castle said that companies operating in export-oriented
\nindustries and those involved in infrastructure development
\nshould be given priority for tax holidays.<\/p>\n
\"The government's decision to provide a longer tax holiday to
\ncompanies operating outside Java and Bali is appropriate,\" he
\ntold The Jakarta Post.<\/p>\n
But he said that longer periods of tax immunity would not
\nnecessarily solve the problems of companies in those areas if
\nlocal infrastructure remained poor.<\/p>\n
Priority in developing eastern Indonesia's economy should be
\ngiven to improving infrastructure, he said.<\/p>\n
Castle said that the investment climate of Indonesia was still
\npromising, given continued increases in both foreign and domestic
\ninvestment approvals.<\/p>\n
He said that more investment incentives were needed so that
\ncompanies did not relocate their factories to other developing
\ncountries which offered better incentives.<\/p>\n
Christianto said the reintroduction of tax holidays was not
\nexpected by most economists.<\/p>\n
\"What we are really waiting for are not the incentives to
\npromote certain business sectors but those which could help
\nnarrow the economic gap between the western and eastern part of
\nthe country,\" he said.<\/p>\n
Like Aburizal, Christianto said that the 12-year tax
\nexemption given to investors operating outside Java and Bali
\nwould not be adequate in encouraging companies to set up in
\neastern Indonesia.<\/p>\n
\"If we want to narrow the economic gap between the more
\ndeveloped west and the least developed east, the additional time
\nshould be lengthened to at least five years,\" Christianto told
\nthe Post.<\/p>\n
He said the government should be clear and indiscriminate when
\nselecting the industries for tax exemptions. Otherwise, the tax
\nincentives would benefit only those with good government
\nconnections. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tax-holidays-should-be-open-to-all-businessmen-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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