New steps planned to boost tax payment
New steps planned to boost tax payment
JAKARTA (JP): Credit card holders with a billing ceiling of
more than Rp 10 million (US$952) will be required to have a tax
identification number (NPWP) and to file annual income tax
returns, Director General of Taxes Hadi Purnomo said on Tuesday.
He added that people purchasing cars worth more than Rp 200
million would also be required to have an NPWP.
These measures are part of a more intensive tax campaign which
will soon be launched by the government to broaden the tax base,
he said.
Hadi said that there was still enormous potential to collect a
larger amount of tax from bank time deposits, pointing out that
last year only around Rp 1.5 trillion was collected in
withholding income tax on interest revenues from more than Rp 400
trillion in time deposits.
"I am optimistic that with such a vigorous tax effort, the
2001 tax revenue target can be achieved," he said amid some
concern that the government's recent decision to cancel some of
its tax measures would affect the 2001 tax receipt.
The tax revenue target this year is around Rp 180 trillion, of
which around Rp 96 trillion will come from income tax.
But there has been concern that the government may not be able
to meet the tax revenue target because of a recent delay in
certain tax policies, including the plan to impose luxury tax on
Batam Island and value added tax (VAT) on agricultural products.
Hadi said that the luxury tax on Batam Island would be delayed
for one year.
He said that the government would explain to the International
Monetary Fund (IMF) its decision to delay the tax policy.
An IMF mission is expected to start discussing the country's
economic reform program with the government on Wednesday.
The mission arrived late on Tuesday.
The government delayed the imposition of the luxury tax due to
the unclear status of Batam; whether it was a bonded zone or a
free trade zone.
The law to determine the status is still being prepared.
Batam Island in the Riau archipelago near Singapore was
declared an industrial-bonded zone by the government in 1978 to
attract foreign investment.
In 1998, the government decided to introduce luxury tax on the
island because, despite its status as an industrial-bonded zone,
Batam also has noncommercial inhabitants.
Massive protests from Batam residents and foreign investors
prompted the cancellation of the decision, which was originally
to take effect in April last year.
Hadi said that the delay would not create much effect on the
2001 tax revenue target because the luxury tax from Batam Island
was only expected to be around Rp 100 billion.
But former director general of taxes Machfud Sidik said
previously that the tax loss would be around Rp 300 billion.
The government also decided to postpone earlier plans to
impose VAT on agricultural products amid protests from farmers
and to collect income tax from the central bank. The VAT is
feared to make local agricultural products less competitive in
the international market.
But the government raised the flat income tax on the interest
income of time deposits to 20 percent late last year from 15
percent.
The decision received strong protest with some bankers warning
that the measure would trigger capital outflow. But the new rate
remains effective.
Minister of Finance Prijadi Praptosuhardjo has said that tax
revenue would play a critical role in the 2001 state budget amid
signs that the budget deficit would be greater than initially
projected due to the weakening of the rupiah and the rising
domestic interest rate.(rei)