Govt delays tax hike on stock

The Jakarta Post, Jakarta

The government has decided to postpone a controversial plan to raise the tax rate on stock transactions as deliberations on a revised tax law have yet to be completed, an official has said.

Syarifuddin Alsyah, a member of the tax reform team for the Directorate General of Taxation, told The Jakarta Post recently that the directorate would not raise tax rates, including those for stock transaction, for this year.

"We have postponed the plan to raise tax rates for stock transactions this year as they have to be based on the upcoming new tax law, which I believe will not be concluded this year due to the general election," said Syarifuddin.

He explained that the delay in deliberating the draft of the revised tax laws was caused by objections voiced by some state institutions on several controversial articles. Among the institutions are the Ministry of Trade and Industry, and the central bank.

Syarifuddin refused to disclose the disputed articles.

The Directorate General of Taxation previously said it would raise income tax for share transactions to 0.3 percent from the current 0.1 percent by the end of this year, in order help boost state revenue from taxes.

Analysts, however, said the delay in the decision was not merely caused by the delay in revising the tax law, but due more to attempts by the current government under President Megawati Soekarnoputri to seek financial support from the capital market community for the upcoming presidential election runoff in September.

Syarifuddin dismissed the accusation, saying the delay was due solely to the lack of a legal basis.