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)