Income tax rate for shipping firms lowered

Income tax rate for shipping firms lowered

JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced a
reduction yesterday in the income tax rate for domestic shipping
companies from 1.8 percent to 1.2 percent of their gross
revenues.

The minister said the income tax rate for foreign shipping and
airline companies is maintained at 2.64 percent.

The cut in the income tax rate for the domestic shipping
companies is stipulated in Finance Minister Decree No.
416/KMK.04/1996.

The tax rate is final, implying that the tax payment should be
carried out immediately after the shipping companies receive
revenues. A similar system is also applied in stock trading
activities.

Taxpayers generally pay their income tax based on their annual
profits, with rates ranging from 10 percent to 30 percent,
depending on the size of their incomes. Institutions or companies
mostly pay 30 percent income tax.

Tax Director General Fuad Bawazier said that income tax rate
for the domestic shipping companies is based on their average
revenues.

"The average net income of the local shipping companies is 4
percent of gross revenues, much lower than the average 6 percent
booked by foreign shipping companies," he said.

This meant that the 1.2 percent tax rate of the gross revenues
charged of national shipping companies is equal to 30 percent of
their annual incomes, he said. (hen)