Tax incentives sought for companies
Tax incentives sought for companies
The Jakarta Post, Jakarta
Tax incentives are one of the most feasible government policies
to encourage more organizations and corporations to get involved
in community development programs and support further sustainable
development, a United Nations' special envoy says.
"The reality is that several non-governmental organizations
and corporations have performed services that should have been
provided by the government with tax revenue," UN Special
Ambassador for the Millennium Development Goals (MDG) for Asia
and Pacific Erna Witoelar said during a seminar on Thursday.
"The government should show their appreciation by providing
various incentives, including tax reforms."
She suggested that Indonesia follow the example set by other
countries that have provisions in their tax laws that allowed
companies to deduct costs associated with environmental and
community development programs from their taxable income.
Under the MDG, Indonesia is seeking to halve the number of
people living below the poverty line by 2015.
The draft of an amendment to the tax law, which is being
finalized by the Ministry of Finance, introduces new allowances
for deductions on taxable income in six areas: community
development programs, mining costs, currency losses,
special loan provisions, scholarships and charitable
contributions for natural disasters.
Under the existing tax law, corporations are only able to
deduct direct business-related expenses.
The chief of the ministry's corporate income tax section,
Danny Sirait, however, said that it would be difficult to
implement such incentives.
"The problem is how to verify that the funds are used for
community development projects," he said.
He said that because of this it would be better if the
government continued to collect and use the funds instead of
handing money over to the private sector through tax incentives.
"Who do you trust more, the government or the private sector?
Obviously the government," he asserted.
He added that corporations should not need any tax incentives
to carry out community development programs.
"If corporations want to help the community, they are free to
do so," he said. "However, they should still pay full taxes. They
shouldn't enjoy state money by asking for incentives."
Erna insisted that verification of the expenses for various
community development projects could be conducted by an
independent party.
"A third party, such as a public accountant, should verify
whether the corporations were using the funds for their intended
purposes," she said.
Golkar Party legislator, Harry Azhar Azis, agreed with Erna,
saying corporations that allocated part of their revenues for
social interests deserved incentives in the form of tax
deductions.
"We should have a tax deductible scheme," said Harry, who sits
on Commission XI for banking and finance. "The amendment must
have these provisions."
He said that his party, which holds the most House of
Representatives seats, would fully support the tax deduction
provisions.
He said that the provisions were needed partly because the
current system did not ensure transparency on how taxes were
calculated and distributed.
"The government is incompetent when it comes to allocating tax
revenue to those who need it," he said. "That's why the money
(for corporate community development programs) should no longer
go to the tax office."