Batam's exit tax viewed negatively by business

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)