Govt. to streamline regional taxation
The central government and the House of Representatives are amending the 2000 Law on Regional Tax and Retribution in an effort to prevent regions from enacting selfish bylaws, The Jakarta Post reported.
The amendment is aimed at encouraging investment in cities and regencies that have in the past enacted bylaws designed to increase revenue, the Finance Ministry's Director of Regional Tax and Retribution Budi Sitepu said recently.
"Many troubled retributions arise (as a result) of giving authority (to regions) to enact new taxes and retributions," Sitepu said.
"Regional taxes (and retributions) will be made in the close list (the bill on regional tax and retribution). Regions are not allowed to impose (taxes and retributions) other than those stated on the list," he said.
According to the Finance Ministry, 7,200 bylaws on regional tax and retribution had been evaluated as of mid-July, 28% of which was labeled as "recommended to be canceled or revised".
The Justice and Human Rights Ministry said the government had revoked 974 bylaws since the introduction of regional autonomy in 1999. The ministry recently launched a book of guidelines limiting regions' authority to draft bylaws.
In the bill on regional tax and retribution, the Finance Ministry includes taxes on hotels, food catering, golf and bowling, advertising banners, street lights, parking, ground water and the harvesting of swallow's nests used for food, Sitepu said.
In the amendment, the government and the House are planning to impose a 75% tax on luxury entertainment and a 10% tax on traditional entertainment, a change from the maximum 35% tax imposed in the original 2000 law.
The government is also preparing an environment tax of 0.5% of gross revenue to be imposed on manufacturing industries with incomes of more than Rp300 million ($32,608.71) per year and that have been found to be environmentally damaging.
To reduce congestion, the government is considering imposing congestion tax on vehicles entering main roads in big cities -- similar to the Electronic Road Pricing scheme enacted in Singapore.
Sitepu said that if such a scheme was introduced in Jakarta, it would replace the three-in-one system, which demands that all cars traveling on the city's main thoroughfares during rush hour each carry a minimum of three people.
Bill proposes tax refunds for foreigners
Lawmakers in August will begin deliberating a bill on the value added tax, the sales tax on luxury goods and a tax refund scheme for foreign tourists shopping here, The Jakarta Post reported.
The bill calls for the ceiling rates of the luxury tax to be raised from the current 75 percent to 200 percent. The floor rate would remain at 10 percent, said Vera Febyanthy, head of the House's working committee for the bill, on Monday.
The bill does not, however, set clear standards or definitions on which goods are considered luxury items, she added.
"We will ask the government to provide definitions of luxury items. It must categorize which goods would be liable to the high tax," Vera said.
Yachts, big motorcycles and some cars are considered luxury items in the bill, she added.
However, she said, the government should not impose high taxes on electronic goods such as televisions, which could now be classified as a basic need.
In February, the Directorate General of Taxation cut the 20 percent luxury tax on certain electronic goods to 10 percent.
Also in the bill, the directorate general is proposing a tax refund scheme for foreign tourists shopping in Indonesia similar to tax refund schemes used in other countries, including Singapore.
Visitors to Singapore can claim a refund on the goods and services tax (GST) paid on purchases. To claim the refund, tourists must make their purchases from participating stores.
"The Directorate General of Taxation will need to work with the Directorate General of Immigration for this to happen," Vera said.
While the Directorate General of Taxation would suffer losses from the reduction in tax income, Vera said, it would reap profits by increasing the income tax of businesses offering tax refunds.
Vera said the bill was expected to be finalized by the end of the year and could be implemented next year with the bill on income tax.
The amendment is aimed at encouraging investment in cities and regencies that have in the past enacted bylaws designed to increase revenue, the Finance Ministry's Director of Regional Tax and Retribution Budi Sitepu said recently.
"Many troubled retributions arise (as a result) of giving authority (to regions) to enact new taxes and retributions," Sitepu said.
"Regional taxes (and retributions) will be made in the close list (the bill on regional tax and retribution). Regions are not allowed to impose (taxes and retributions) other than those stated on the list," he said.
According to the Finance Ministry, 7,200 bylaws on regional tax and retribution had been evaluated as of mid-July, 28% of which was labeled as "recommended to be canceled or revised".
The Justice and Human Rights Ministry said the government had revoked 974 bylaws since the introduction of regional autonomy in 1999. The ministry recently launched a book of guidelines limiting regions' authority to draft bylaws.
In the bill on regional tax and retribution, the Finance Ministry includes taxes on hotels, food catering, golf and bowling, advertising banners, street lights, parking, ground water and the harvesting of swallow's nests used for food, Sitepu said.
In the amendment, the government and the House are planning to impose a 75% tax on luxury entertainment and a 10% tax on traditional entertainment, a change from the maximum 35% tax imposed in the original 2000 law.
The government is also preparing an environment tax of 0.5% of gross revenue to be imposed on manufacturing industries with incomes of more than Rp300 million ($32,608.71) per year and that have been found to be environmentally damaging.
To reduce congestion, the government is considering imposing congestion tax on vehicles entering main roads in big cities -- similar to the Electronic Road Pricing scheme enacted in Singapore.
Sitepu said that if such a scheme was introduced in Jakarta, it would replace the three-in-one system, which demands that all cars traveling on the city's main thoroughfares during rush hour each carry a minimum of three people.
Bill proposes tax refunds for foreigners
Lawmakers in August will begin deliberating a bill on the value added tax, the sales tax on luxury goods and a tax refund scheme for foreign tourists shopping here, The Jakarta Post reported.
The bill calls for the ceiling rates of the luxury tax to be raised from the current 75 percent to 200 percent. The floor rate would remain at 10 percent, said Vera Febyanthy, head of the House's working committee for the bill, on Monday.
The bill does not, however, set clear standards or definitions on which goods are considered luxury items, she added.
"We will ask the government to provide definitions of luxury items. It must categorize which goods would be liable to the high tax," Vera said.
Yachts, big motorcycles and some cars are considered luxury items in the bill, she added.
However, she said, the government should not impose high taxes on electronic goods such as televisions, which could now be classified as a basic need.
In February, the Directorate General of Taxation cut the 20 percent luxury tax on certain electronic goods to 10 percent.
Also in the bill, the directorate general is proposing a tax refund scheme for foreign tourists shopping in Indonesia similar to tax refund schemes used in other countries, including Singapore.
Visitors to Singapore can claim a refund on the goods and services tax (GST) paid on purchases. To claim the refund, tourists must make their purchases from participating stores.
"The Directorate General of Taxation will need to work with the Directorate General of Immigration for this to happen," Vera said.
While the Directorate General of Taxation would suffer losses from the reduction in tax income, Vera said, it would reap profits by increasing the income tax of businesses offering tax refunds.
Vera said the bill was expected to be finalized by the end of the year and could be implemented next year with the bill on income tax.