Cargo activities at seaports will be taxed

Rendi A. Witular, The Jakarta Post, Jakarta

The Directorate General of Taxation will impose a value added tax (VAT) on services related to the handling of goods at seaports, or technically known as stevedoring, as part of measures to help meet this year's tax revenue target, a senior tax official said.

Director of VAT at the tax directorate I Made Gde Erata told The Jakarta Post over the weekend that the tax office was now drafting the legal basis for the planned policy.

"Stevedoring is categorized as a service, thus it must be taxed," said Erata.

This year's total VAT revenue target is set at Rp 80 trillion (about US$9 billion), while the total tax revenue target is Rp 213 trillion.

Erata also said that his office would also tax the income obtained by cargo handling companies.

The Indonesian National Shipping Council (INSC) had previously said the state could reap at least $200 million per year in tax revenues from the terminal handling activities.

The stevedoring activities had been mainly done by foreign- owned shipping companies.

Local exporters have previously complained of the high terminal handling costs charged by the foreign shipping companies which is around $150 per 20-foot container (TEU). This is in addition to the freight cost of around $1,110 to $1,200 per (TEU).

Local exporters have no choice but to use foreign-owned ships, as local shipping companies only account for a mere 5.4 percent of the shipment of goods, both import and export.

Foreign-owned ships, on the other hand, transported the remaining 94.6 percent of goods, which reached 350 million tons annually.