Tax incentive for banks

Tax incentive for banks

JAKARTA (JP): Funds accumulated by banks and leasing companies for the provision of bad debts or unpaid claims are now tax deductible, the Ministry of Finance announced yesterday.

According to the Finance Minister's Decree No: 80/KMK.04/1995 issued yesterday, the deductible contingency reserve is three percent of the productive assets for banks, while that for leasing firms is 2.5 percent of the average value of contracts.

The ruling also gives a similar tax treatment to insurance and mining companies but the amount of deductible expenses is calculated under different parameters. (hen)