Local govts may levy environment tax on businesses
Local governments may soon tax industries found to be causing environmental damage, a ministry official says.
Budi Sitepu, Finance Ministry director of regional tax and retribution, said the tax would amount to 0.5 percent of a company's revenue and was included under the amendment to the 2000 law on regional tax and retribution currently under deliberation at the House of Representatives.
"It (the tax) is for manufacturing industries, and may also include the mining industry," Budi said.
"The environment is so important. Even though industries have secured analyses on environmental damage (in their operations), they still have the potential to harm the environment."
The deliberation is expected to be completed this year.
Budi said local governments collecting the "environment tax" should earmark the funds obtained to preserve the environment.
"Only companies with annual revenue above Rp 300 million (US$32,600) will be subject to the tax," he said.
Under the law on micro, small and medium enterprises (MSMEs), small enterprises are categorized as those having annual gross revenue between Rp 300 million and Rp 2.5 billion, while medium enterprises are those between Rp 2.5 billion and Rp 50 billion.
Budi said small and medium enterprises would also have to be responsible for environmental damage.
Tukijo, the chairman of House's working committee on the bill, said the environment tax was expected to help local governments fight against environmental damage.
However, Sofyan Wanandi, the Indonesian Employers Association (Apindo) chairman, said the tax would further reduce Indonesia's business competitiveness.
"There are already laws on the environment, on limited liability companies, in which we have to pay taxes related to the environment," Sofyan said.
Under the law on limited liability companies, businesses are obliged to carry out corporate social responsibility programs. "If we have to pay many taxes for the environment, investors will not come here."
He said local governments should not burden businesses with more taxes.
Sofyan said the government should make a clear rule of which tax could be imposed on businesses in efforts to create a healthy and competitive business climate in Indonesia.
In the income tax bill, the government and the House have agreed to reduce income tax for companies from the current 35 percent to 28 percent. The bill is expected to be endorsed later this year.
Director General of Taxation Darmin Nasution said the government agreed to reduce the tax rate "to bolster competitiveness".
Budi Sitepu, Finance Ministry director of regional tax and retribution, said the tax would amount to 0.5 percent of a company's revenue and was included under the amendment to the 2000 law on regional tax and retribution currently under deliberation at the House of Representatives.
"It (the tax) is for manufacturing industries, and may also include the mining industry," Budi said.
"The environment is so important. Even though industries have secured analyses on environmental damage (in their operations), they still have the potential to harm the environment."
The deliberation is expected to be completed this year.
Budi said local governments collecting the "environment tax" should earmark the funds obtained to preserve the environment.
"Only companies with annual revenue above Rp 300 million (US$32,600) will be subject to the tax," he said.
Under the law on micro, small and medium enterprises (MSMEs), small enterprises are categorized as those having annual gross revenue between Rp 300 million and Rp 2.5 billion, while medium enterprises are those between Rp 2.5 billion and Rp 50 billion.
Budi said small and medium enterprises would also have to be responsible for environmental damage.
Tukijo, the chairman of House's working committee on the bill, said the environment tax was expected to help local governments fight against environmental damage.
However, Sofyan Wanandi, the Indonesian Employers Association (Apindo) chairman, said the tax would further reduce Indonesia's business competitiveness.
"There are already laws on the environment, on limited liability companies, in which we have to pay taxes related to the environment," Sofyan said.
Under the law on limited liability companies, businesses are obliged to carry out corporate social responsibility programs. "If we have to pay many taxes for the environment, investors will not come here."
He said local governments should not burden businesses with more taxes.
Sofyan said the government should make a clear rule of which tax could be imposed on businesses in efforts to create a healthy and competitive business climate in Indonesia.
In the income tax bill, the government and the House have agreed to reduce income tax for companies from the current 35 percent to 28 percent. The bill is expected to be endorsed later this year.
Director General of Taxation Darmin Nasution said the government agreed to reduce the tax rate "to bolster competitiveness".