Government forms team to review new tax policy on bonds
Government forms team to review new tax policy on bonds
JAKARTA (JP): The government will soon set up a joint team to
review a recently issued income tax policy on the transaction of
bonds, according to an Surabaya Stock Exchange (SSX) executive.
SSX president Anton Natakoesoemah said the joint team would
comprise of officials from the capital market's self-regulatory
organizations (SRO), the directorate general of taxes, and bond
market players.
The SRO includes among others the Jakarta Stock Exchange
(JSX), the Capital Market Supervisory Agency (Bapepam), and the
SSX.
"There is a possibility that the government will revise its
tax policy if we can come up with sufficient reasons," Anton told
reporters on the sidelines of a product launching by securities
firms PT Trimegah Securities and Bank Niaga.
He said the decision to form the joint team was a result of a
meeting last week between the SSX, bonds trading securities
firms, and the directorate general of tax.
"We're expecting the joint team to start working by next
week," he added.
According to him, the new tax policy on bonds is a
disincentive to bond investors, trading at local bond markets.
Government Regulation No. 139/2000 on income tax on revenue
from bonds was issued on Dec 21, and has been effective since
Jan. 1.
Under article 3 of the Regulation, domestic and foreign-based
taxpayers must pay income tax of 15 percent and 20 percent
respectively on interest earnings from bonds.
The previous regulation imposed only a single rate of 15
percent on both domestic and foreign-based taxpayers.
But Anton warned of the second section of article 3, which he
said runs a danger of double taxing bond interest revenues.
This section states that the amount of income tax to be
charged on revenues from capital gains, interest and or discounts
obtained by the owner of a bond at the time of a transaction on
the stock exchange is 0.03 percent of the gross transaction
value.
It implied that bond owners must pay another 0.03 percent
income tax from bond interest, on top of the 15 or 20 percent in
the first section.
"It (the new tax policy) is obviously double taxing," Anton
went on saying.
He said this double taxing would hamper local bond trading,
which is now dominated by the SSX because the policy would also
encourage investors to carry out bond trading outside the market
to avoid tax payment.
Bonds transaction can occur without being registered because
bonds do not bear the names of their holders.
Bapepam chief Herwidayatmo said it was too early to predict
whether the directorate general would revise its new tax
regulation on bonds.
"We have forwarded our appeal and the fact that we're going to
sit together and discuss it (the new tax policy) is already
progress," he said.
Trimegah president Avi Dwipayana expressed similar concerns,
saying that people would become more reluctant to invest in
bonds.
"The government should offer tax incentives to stimulate the
trading of bonds here," he said.
Trimegah's newly launched service allows its mutual fund
clients to use Bank Niaga's ATM outlets to conduct transactions.
(bkm)