Nontaxable income to be raised by 66.67%

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)