Tax-break rulings for industries issued
Tax-break rulings for industries issued
The Jakarta Post, Jakarta
The government has finally issued tax-break facilities for
certain industries as part of a stimulus package for the business
sector.
The facilities were stipulated under three rulings which took
effect on Aug. 13. The House of Representatives approved the
tax-break plan in May.
The first ruling, Government Regulation No. 46/2003, waives
value-added tax (VAT) on the import of capital goods (mainly
machinery and factory equipment, excluding spare parts) by
strategic industries.
The second ruling, Government Regulation No. 43/2003, scraps
luxury tax in the import of certain automotive products.
Under the ruling, motorcycles with the capacity of below 250
cc, vehicles for goods delivery and commercial vehicles that can
carry at least 16 people are all exempt from luxury tax.
Bambang Trisulo, chairman of Indonesia's Association of
Automotive Manufacturers (Gaikindo), welcomed on Wednesday the
ruling as it showed the government's seriousness in helping
revive ailing domestic industries.
Bambang told The Jakarta Post that it could reduce business
costs, increasing the industry's competitiveness, thus in turn
encouraging more investments in the sector.
The two government regulations are part of the fiscal stimulus
promised by the government to help boost investments in certain
industries.
Meanwhile, the government has also issued Regulation No.
38/2003 which would also waive VAT on certain goods. The ruling
allows VAT exemption for imports or the purchase of goods to be
used by the Army or the National Police.
The VAT exemption can also be applied on the import and the
purchase of spare parts for airplanes to be used by national air
transportation companies.
Minister of Finance Boediono had previously said that the
policy should bring a lot of revenue for the government, more
than enough to offset the estimated Rp 1 trillion in potential
losses in tax collection, as a result of the tax-break
facilities.
Business groups have long lobbied the government for such a
stimulus package, saying that domestic companies, especially the
export-oriented ones, were facing difficulties in competing head-
on in the international market with competitors from China and
other countries, which are regarded as more efficient.
The new tax-break facility is the second fiscal-stimulus
measure introduced by the government this year. The first, worth
around Rp 6 trillion, was issued in January, in which the luxury
tax on 45 products -- mainly electronics -- was eliminated.