Shipping sector gets value-added tax breaks

Shipping sector gets value-added tax breaks

JAKARTA (JP): The government has exempted imports and domestic
purchases of all types of ships, except those to be privately
owned by individuals, from a 10 percent value-added tax.

The tax exemption facility is stipulated in the Minister of
Finance's Decree No. 326/KMK.04/1996, which was issued yesterday
in support of the deregulation measures in the shipping industry
announced in January.

The facility also covers almost all activities in the shipping
services, including those in renting, agency and repair
activities.

Port services for passenger and cargo ships serving both
domestic and international routes are also exempted from value-
added tax, the decree stated.

Port services, according to the new decree, cover almost all
services provided by port operators such as ship tugging,
guiding, anchoring and docking.

The use of port facilities, such as land and budge cranes,
forklifts and tractors are also freed from value-added tax, the
minister declared in the decree.

The minister of transportation has also cut licensing
procedures for vessel procurement from foreign countries to
support the deregulation measures.

Director General of Taxes Fuad Bawazier said in a statement
yesterday he hoped the tax incentive would enable the dwindling
local shipping companies to take advantage of the growing
outbound and inbound cargo services, which are now dominated by
foreign shipping companies. (hen)