Tax office moves ahead with new plan

The Jakarta Post, Jakarta

In relation to plans to raise income tax on stock transactions, the Directorate General of Taxation will soon meet with related institutions, including business associations, to hear views on the issue.

Hadi Purnomo, the tax office head, said on Monday the meeting was necessary so as not to create unnecessary impact, such as heavy shocks to the rising industry.

"We will talk with relevant parties -- including investors, industry players and the Capital Market Supervisory Agency (Bapepam)," Hadi said, adding the planned rise of tax income for stock dealings to 0.2 percent was, therefore, not as yet final.

"The plan is still in the early stage of discussion, so we need that meeting to accommodate their views, which would serve all interests."

Hadi added, the 0.2 percent figure was just one among figures the tax office was considering. At present, a government regulation stipulates that share transactions are subject to 0.1 percent tax income.

While the regulation has stood for more than 10 years, the tax office felt the need to come up with the hike plan to better reflect the current conditions, Hadi added.

However, the plan has so far met with criticism, mostly from industry players who say that it creates negative sentiment. It is also seen as detrimental to efforts to boost the performance of the country's stock market.

"That's why we're planning to meet them, it's that kind of impact that we are trying to avoid," said Hadi, who has been quite active in introducing various policies that could boost tax revenue -- the largest contributor to the state budget.

This year, the office has targeted to raise some Rp 260.2 trillion worth of tax revenue, which would account for 13 percent of the gross domestic product (GDP).

Among policies being planned by the tax office is the tax on mutual fund transactions, which has been booming here for the past few years.

Hadi refused to provide a clear timetable as to when the new policy would to come into effect, but said it was likely to happen in the near future as his office needed only a government regulation to put it into effect.

"The meeting will be held as soon as possible, so that we can move fast. But, it should not take too long as it only needs a government regulation to be effective," he said.