Govt to submit tax law changes to House

The Jakarta Post, Jakarta

The government will submit the final draft of the amendment of the country's tax laws to the House of Representatives in January next year for deliberation, Minister of Finance Boediono said.

He said on Thursday that the proposed changes are part of efforts to help boost tax revenue.

"The amendment is aimed at simplifying the tax structure and rates, increasing taxpayers' compliance, and broadening the tax base, so that revenue from tax can be increased," he said on the sidelines of the annual meeting of the Consultative Group on Indonesia (CGI), the country's traditional donor grouping.

Boediono said the amendment would focus on several key issues such as lowering the corporate tax rate, simplifying the personal income tax system, reducing or eliminating assorted luxury taxes, and speeding up tax refunds.

Earlier, he said that simplifying the tax structure and rates is expected to help improve the investment climate by taking into account the rates and structures in neighboring countries.

The proposed tax reform is part of the government's post- International Monetary Fund economic program.

The government is under pressure to collect higher tax revenues next year, as nearly 80 percent of the total revenue targeted for the 2004 state budget will be drawn from taxes. The government is targeting to rake in around Rp 234 trillion in tax revenue next year, excluding excise and import duties.

As for this year, the government is expecting to raise Rp 210 trillion from taxes, excluding excise and import duties. As of the first week of December, the government has collected around Rp 180 trillion in tax revenue.

Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) urged the government to cut the country's corporate tax rate from 30 percent to 25 percent, as an incentive for the business sector and to encourage fresh foreign investment in the country.

Kadin chairman Aburizal Bakrie said on Thursday that the current corporate tax rate was relatively higher than the rate in neighboring countries like Malaysia, Singapore, and the Philippines.

Chairman of the Indonesian Economic Recovery Committee (KPEN) Sofjan Wanandi welcomed the plan, but said that the government must also consider the business sector in drafting the changes.

"We want to ensure that the final draft submitted to the House is the result of discussions between the government and the business sector. We have set up a special team to review the draft starting next week," he said.