Expats no longer required to pay foreigners tax

Expats no longer required to pay foreigners tax

JAKARTA (JP): Expatriates in Jakarta will no longer have to
pay a foreigners tax because the city is to stop collecting it as
of May 28, City Council was told yesterday.

During a plenary session on tax with city councilors, the
Jakarta office of the Ministry of Finance explained that the
decision to revoke the tax was in line with the newly passed Law
No. 19/1997 on regional tax and levy collection.

Amarullah Asbah, head of Commission C for city revenue, said
after the meeting that the measure means the city no longer
perceives the foreigners tax as a source of income.

"Thus, the municipality has decided to abolish the foreigners'
tax starting May 28 next year, which is the end of the current
1997/1998 city budget year."

Based on City Bylaw No.9/1996, expatriates are subject to tax
after staying more than 90 days.

Those not subject to the tax include foreigners involved in
social, religious or governmental works.

The annual tax of Rp 450,000 (US$105) is charged to the head
of the family, while the spouse is required to pay Rp 300,000.

A further Rp 150,000 must be paid for the first and the second
child, while the third child and other family members are subject
to Rp 300,000 each.

The municipality's plan was rejected by some city councilors,
including Amarullah.

He said the council urged the municipality to keep collecting
the foreigners tax as a source of revenue and method of
controlling the presence of expatriates.

"We still need the foreigners tax, which is one of the city's
prospective sources of income."

Amarullah said that the expatriates have to contribute
something to the city because they receive higher salaries than
most locals.

"If they're earning a living here, it means they have to obey
certain rules, regulations and obligations, such as paying tax."

The city has collected Rp 13.5 billion from expatriates during
the 1996/1997 fiscal year and aims to raise Rp 15 billion from
the foreigners tax in the 1997/1998 fiscal year.

"I think the city should create a new tax to replace the
foreigners tax. It is important for Jakarta, as a service city,
to maintain such a tax regulation."

Jakarta is just like any other metropolitan city, so we can't
just let immigrants do whatever they want here without making a
contribution to the city," Amarullah said.

When asked to comment on the city's plan to revoke the
foreigners' tax, expatriates were at first surprised before
becoming suspicious.

"They (finance ministry office) must be planning a new system
to collect tax from us which might be worse," a female expatriate
said.

Her colleague added: "What purpose did the tax ever serve
other than to perpetuate the myth that all foreigners have too
much money."

Amarullah said the finance ministry's Jakarta office would
also revoke other tax rulings in the city, including the 25-
percent levy on revenue from privately run parking lots and taxes
on liquor, owning a radio and having a pet.

"As of May 28, the city, for example, will no longer collect
levies from private parking companies, meaning that the city
will only get parking revenue from its own parking lots and those
located on public streets."

But there will be some new taxes, such as tax for artesian
wells and the use of groundwater, which will be applied by the
city at the beginning of that period, Amarullah said.

Officers of the finance office were not available for further
comment. (edt/bsr)