Export tax bill on the works

Export tax bill on the works

Dow Jones, Jakarta

The Ministry of Finance has drafted a bill aimed at taxing raw or
semifinished industrial and agricultural products exported out of
the country, a senior government official said on Friday.

"The bill is aimed at ensuring sufficient supply of raw
materials for domestic industry, and stabilizing commodity prices
in the domestic market," said Muhammad Najib, director of exports
for agriculture and mining products at the Ministry of Trade.

The Ministry of Finance has already submitted the bill to the
President for approval.

Currently, the government has in place a system of export
taxes on raw and semifinished products, but the taxes do not
apply to all goods. For example, exports of palm oil products are
subject to 1 percent to 3 percent in taxes, while cocoa bean
exports are not taxed at all.

It is not immediately clear whether the new law will apply to
all goods.

The bill would not stipulate what commodities will be subject
to the export levy, Nadjib said.

"A list of commodities will be proposed by related ministries
such as the Ministry of Agriculture and Ministry of Industry
after the bill is passed," he said.

The finance ministry will then determine the export tax based
on the list of commodities submitted by the ministries, said
Nadjib.

The government has already agreed that cocoa beans -- a key
agricultural export -- will top the list of commodities to be
taxed, according to M. Yamin Rachman, director of agro industry
at the Ministry of Industry.

The tax to be levied on cocoa beans is expected to ease a
domestic supply shortage, which has persisted for years.

A 10 percent value-added tax imposed in 2000 on all primary
agricultural commodities sold to domestic processors has prompted
growers to export up to 80 percent of the country's total cocoa
bean output to avoid the tax.

Last year, Indonesia's cocoa grinding industry only operated
at half of its installed capacity of 310,000 metric tons a year
due to a lack of cocoa beans.

Yamin said an initial 2 percent to 3 percent export tax on
cocoa beans will be proposed.