Overseas savings taxed

JAKARTA (JP): The Ministry of Finance reaffirmed yesterday the interest received or accrued from deposits and savings held overseas through banks established in Indonesia or foreign banks operating in Indonesia would remain subject to 15 percent income tax.

"This is in line with government regulation No.51/1994 which implements the 1994 Income Tax Law," the ministry's spokesman, Agus Haryanto, said.

Agus said the reaffirmation was made because of the aggressive promotion by several banks here to attract short-term deposits for placement at banks overseas.

He said the minister of finance, under decree No.652/1994, obliges the head offices of Indonesian banks to withhold the 15 percent income tax on the interest on deposits or savings placed at their overseas branches.

The same decree requires foreign bank branches operating in Indonesia to withhold the 15 percent income tax on the interest on deposits and savings placed overseas through their offices.

Time deposits and Bank Indonesia certificates (SBI) have become the most favored instrument for short-term investment after the central bank raised its one-month SBI rate to 30 percent to tighten liquidity and discourage speculative attacks on the rupiah. (vin)