Tax break benefits labor-intensive firms
Tax break benefits labor-intensive firms
Rendi Witular, The Jakarta Post, Jakarta
Businesspeople have hailed a new government policy that
exempts tax payments for workers who are paid the minimum wage,
saying it will not only help ease the financial burden of labor-
intensive industries but also reduce the tax administration
workload.
Indonesian Association of Food and Beverages (GAPMI) chairman
Thomas Darmawan told The Jakarta Post on Sunday that since many
companies paid the income tax of their workers, the tax break
amid current rising utility prices would be much welcomed,
particularly by those with a large workforce.
He said the policy would not only provide financial benefit,
but also help companies avoid being squeezed by corrupt tax
officials for administrative errors.
Thomas said that the workload of administering the tax
obligation of a large number of workers was so huge and
complicated that companies could sometimes make mistakes, giving
an opportunity to corrupt tax officials to either extort money
from the companies or collude with them.
He said that many businesspeople had long called for such a
policy.
The government last week announced a fiscal stimulus package
that includes the income tax break for a particular class of
workers to help ease the burden of both the companies and the
workers from the difficulties created by the hike in fuel prices,
electricity rates and telephone charges.
Under the policy, the government will cover the 5 percent tax
obligation of workers with a salary of less than or equal to the
provincial minimum wage.
The details of the policy have yet to be finalized, but
reports say that workers with an annual income of more than the
minimum wage would only pay tax only on the difference.
Indonesian Footwear Association (APRISINDO) chairman Anton
Supit concurred with Thomas.
"I don't think the nominal value (saved) is that significant
for small and medium-scale companies, but it will help reduce the
administrative work and firms can avoid falling victim to crooked
tax officials," he said.
Elsewhere, Thomas said the government and GAPMI were scheduled
to hold a meeting on Monday to discuss a fiscal stimulus package
for the food industry.
Previous tax breaks benefited electronics manufacturers.
Thomas said the food and beverages association had proposed
luxury tax exemption for soft drinks, yogurt and other fermented
milk products, and canned and extracted fruit products.
He said that the above products should not be categorized as
luxury goods.