Foreign shipping firms to pay higher tax

Foreign shipping firms to pay higher tax

JAKARTA (JP): Tax Director General Fuad Bawazier said here
yesterday that the withholding tax imposed on foreign shipping
companies will be increased as part of the government's tax
extension program.

"I hope to announce the new rate later this month," he told
newsmen when he was asked about the dominance of foreign shipping
companies in the country.

He refused to elaborate about the planned rate hike but said
that it would be much higher than the present level of 2.4
percent.

The tax imposed on foreign shipping companies, which at
present carry around 90 percent of Indonesia's export and import
goods and another 40 percent of goods shipped within the country,
is part of the expansion of the withholding tax in the new tax
law.

Hartoto, the chairman of the Association of Indonesian
Shipping Companies (INSA), said that local shipping companies
could not compete with foreign shipping firms not only due to
their stronger fleets but also because of their lighter tax
burdens.

Local shipping companies are required to pay a number of
levies including operational and docking levies, in addition of
income taxes, and import duty and sales tax during the
procurement of the ships.

"The government has to give a special tax incentive to local
shipping firms to enable them to compete," he said, adding that
shipping firms in neighboring countries such as Singapore and
Malaysia receive special tax subsidies from their governments.

Fuad, however, denied that the inability of local shipping
companies to compete with their foreign counterparts was caused
by their heavier tax burdens.

"It is easy to find a scapegoat," he said of the shipping
association's argument. (hen)