Overseas savings taxed

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)