Tax on deposit interest<\/p>\n
The government has issued a regulation stipulating that as of
\nJan. 1, 2001, the income tax imposed on the interest accruing
\nfrom term deposits and savings accounts in banks is increased
\nfrom 15 percent to 20 percent and this is final in nature. The
\nminimum level of taxable deposits is lowered from Rp 10 million
\nto Rp 7.4 million.<\/p>\n
Allow me to comment on this hike:<\/p>\n
* This tax increase is highly burdensome to the people because
\nthere are quite a lot of unemployed people that can save their
\nmoney as term deposits.<\/p>\n
* Banks and Bank Indonesia will have to raise the rate of
\ninterest on loans, deposits and savings and consequently the rate
\nof interest on loans in the community will also rise. Corporate
\ncosts will be on the way up while at present many Indonesian
\ncompanies are already in great financial trouble.<\/p>\n
* As a result, there will be capital flight from Indonesia.
\nRupiah will be changed into strong U.S. dollars or the ASEAN
\ndollar as Indonesia adheres to the principle of free-float
\nforeign exchange. In other countries there is no tax imposed on
\nthe interest accruing from deposits and savings.<\/p>\n
This policy will only benefit corruptors. The money they
\ncollect from corruption will be placed in banks as term deposits,
\nlet's say for just one month. Then the money will be withdrawn
\nand can be spent freely as a government regulation guarantees
\nthat the origin of this money will never be traced. Also, it does
\nnot have to be declared in the annual income tax assessment as it
\nis tax-free. This is really the function of a term deposit in
\nIndonesia. (I personally do no have any deposits, mind you.)<\/p>\n
To raise the tax on the interest accruing from deposits will
\nbe the easiest method the government can adopt to get additional
\nrevenue from income tax. Let's just wait and see whether
\nIndonesia's economy will be improving or worsening.<\/p>\n
Director General of Taxation Dr. Machfud Sidik has recently
\nsaid that there should be no concern over capital flight from
\nIndonesia. Everybody depositing their money abroad will be taxed
\nin Indonesia when they submit their annual income tax assessments
\nat the end of the year. Unfortunately, there is no guarantee that
\nthese people will ever submit their annual income tax assessments
\nin Indonesia. Will the Directorate General of Taxation be able to
\nexercise control over this matter? This is sheer nonsense.<\/p>\n
SUHARSONO HADIKUSUMO<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/tax-on-deposit-interest-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }