Batam's exit tax viewed negatively by business

BATAM, Riau (JP): The imposition of exit tax on Indonesian passport holders from Batam Island as of January 2002 could become a disincentive for the business sector, a leading entrepreneur has indicated.

Abdullah Gosse, chairman of the Batam chapter of the Indonesian Chamber of Commerce and Industry (Kadin), told The Jakarta Post earlier this week that the imposition of exit tax was not in line with Batam's designated status as a bonded and free trade zone.

"The tax poses no problem for the stronger medium- and small- scale businesses, but it will be quite a burden for the weaker medium- and small-scale businesses," he said, pointing out that Singapore imposed no such tax on its citizens at the port of departure.

Anxiety has emerged in business circles after a recent statement by the head of the Batam tax office Djangkung Sudjarwadi that exit tax would be applied to those traveling abroad, even if only to Singapore or Malaysia.

The imposition of the tax is based on a government regulation issued during the administration of president Abdurrahman Wahid. Previously, no departure tax was imposed on travelers to Singapore, Malaysia and Thailand.

For Indonesian passport holders from outside Batam, the tax will come into force on October 2001, while those from Batam will be required to show their tax file numbers (NPWP) in order to obtain an exemption.

According to Abdullah, this rule will still burden Batam medium-scale and weaker businesspeople because they go to Singapore or Malaysia three times a week and mostly had no tax file numbers.

Djangkung meanwhile explained that those whose tax had been withheld by employers or who had been registered as taxpayers were entitled to exemption from exit tax.

He expressed his belief that the imposition of exit tax would increase locally generated revenue because 25 percent of the tax receipts derived from this source would go to the regional administration.

Pura Jaya Hotel manager Zukriansyah in Batam responded to the exit tax by describing the plan as being implemented too hastily without prior discussion.

"Our promotional programs in neighboring countries may have to be canceled as the cost of sending our staff there will be greater due to the tax," he added. (26/arp)