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)