JSX requests for tax incentive

JSX requests for tax incentive

The Jakarta Post, Jakarta

The management of the Jakarta Stock Exchange (JSX) has asked the
Directorate General of Taxation to provide tax incentives to
publicly-listed companies.

The request was put forward during a meeting between the JSX
and tax officials late last week. It was not immediately clear
whether the tax office would grant the demand.

JSX director Harry Wiguna was quoted by detik.com as saying
that the facility was expected to lure more companies to go
public and list their shares on the exchange.

Earlier last month, the JSX revised downward its performance
target for the year, citing unfavorable global economic
conditions, which had affected the local stock market. The bourse
management, for example, cut the number of initial public
offerings (IPOs) this year by half to around 20. So far, only
three companies have made IPOs and listed their shares on the
exchange.

Harry said that providing tax incentives for listed companies
was valid because listed companies had been more transparent than
non-listed companies, which make the former less prone to evade
their taxes as they were being monitored by many parties
including the JSX, the capital market supervisory agency
(Bapepam), and also the public.

"It will be difficult for them to manipulate taxes. Because
once they get caught, the sanction is severe," he said.

He added that although the government would loose tax revenue
by providing the facility, in the long-run as more companies went
public the effect would be good for the overall economy.

However, the JSX demand may be difficult to realize as the
government is under pressure to raise greater tax revenues to
help finance the state budget amid plans to reduce the budget
deficit to a much safer level and determination to lessen
dependence on foreign loans.

Minister of Finance Boediono said earlier this month that the
government would no longer provide tax facilities or other forms
of financial incentives for the business sector due to the
limited budget capacity.

Indeed, the tax office is determined to press ahead with a
plan to impose income tax on interest gains from mutual fund
investment, despite strong criticism from industry players.