Collection of property tax on plant machinery postponed
Collection of property tax on plant machinery postponed
JAKARTA (JP): The collection of property tax on plant machinery,
originally slated to begin during the current (1994-1995) fiscal year,
has been postponed, Tax Director General Fuad Bawazier announced
yesterday.
Bawazier told a conference on the intensification of property tax
collection in Semarang, Central Java, that he decided to postpone the
property tax on plant machinery after considering recommendations from
industrialists.
"Most industrialists have asked that the property tax collection be
postponed, arguing that such a measure may discourage new investments
which are very much needed to expand the economy," he said.
Bawazier said his office actually began collecting property taxes on
plant machinery on the basis of the finance minister's Decree
No.174/1993 of Sept. 14, 1993.
"But after taking into account the disincentives to new investments
of such a measure, I decided to postpone enforcing the ruling until
further notice," he added.
Industrial companies which have paid property taxes on their plant
machinery are being asked by the tax director general to get refunds
from the nearest property tax office.
The property tax, introduced in 1985 as part of the overall tax
reform program of 1984, was initially imposed only on buildings and land
at the rate of 0.1 percent of market value.
Early this year, the rate of property tax on residential buildings
valued at more than Rp 1 billion (US$465,000) was raised to 0.2 percent
of market value.
The government extended the property tax coverage to include plant
machinery beginning in April in coincidence with the start of the 1994-
1995 fiscal year.
But strong complaints from industrialists and difficulties in
appraising plant machinery eventually prompted the tax director general
to postpone the new measure.
Bawazier acknowledged at the meeting that the postponement was also
caused by the great difficulty in defining which plant machinery should
be subject to property tax and by the absence of clear-cut standards for
the appraisal of plant machinery.
The government envisaged property tax receipts for the current fiscal
year of Rp 1.62 trillion, up 23.4 percent from the previous year.
Different from other nationally-administered taxes such as income and
value added taxes, the property tax receipts are directly transferred to
the second-level district administrations. (vin)