Cargo activities at seaports will be taxed

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.