Nontaxable income to be raised by 66.67%

JAKARTA (JP): A married taxpayer with three children who earns only up to Rp 8.64 million (US$664 at the current rate) a year will be exempt from income tax beginning next year, according to a new tax ruling announced by the finance ministry yesterday.

The ministry said in a statement that the maximum nontaxable income would be increased by 66.67 percent from the current level.

"This higher tax exemption is intended to help taxpayers meet rising living costs as a result of the steep increases in the prices of basic staples," the ministry said in a statement.

The ministry said the maximum nontaxable income was Rp 2.88 million (US$221 at the current rate) per annum for a single taxpayer, Rp 4.32 million for a married taxpayer and Rp 5.76 million for a married taxpayer whose wife has income from business or professional work that is unrelated to the business of her husband or other members of the family.

The nontaxable income of a married taxpayer could be increased by Rp 1.44 million for each direct family member or relative by marriage, including any adopted child who is a full dependent, but limited to a maximum of three children per family, the statement said.

Hence, the maximum nontaxable income for a married taxpayer with three children will increase from Rp 5.18 million this year to Rp 8.64 million next year. The amount could increase to Rp 10 million for a married taxpayer whose wife has her own income.

The ministry said the new ruling was based on a ministerial decree dated July 27.

It said that since the introduction of the January 1984 tax law, the maximum nontaxable income had been readjusted twice, in 1990 and 1994.

The nontaxable income was increased in 1994 to Rp 1.73 million for a single taxpayer and to Rp 5.18 million for a married taxpayer with three fully dependent family members. (rei)