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)