Ten more tax rulings announced

Ten more tax rulings announced

JAKARTA (JP): The government announced on Saturday another 10
regulations that will support the implementation of the newly-
amended tax laws.

The regulations cover the tax treatment of venture capital,
the abolition of value-added tax on the sale of low-cost houses
and the deductible reserves in banks and insurance companies.

Guidelines on the collection of income tax on share
transactions and the classification of fixed assets are also
regulated in the new rulings, which are part of 38 regulations
issued to support the implementation of the new tax laws.

Tax Director General Fuad Bawazier said that the tax on the
sale or divestment of a venture capital company's shares in
start-up firms is set at 0.1 percent of the gross transaction
value.

The tax rate of 0.1 percent imposed on the sale or divestment
of a venture capital firm's shares is not all that significant as
compared to the 5.1 percent tax on transactions involving
founders' shares in publicly-listed companies.

"It is one of the government's incentives for the operation of
venture capital companies in the country," Fuad said of the low
tax rate imposed on the transactions involving venture capital
firms' shares.

Raising the number of venture capital companies is one of
development priorities set by the government to help the
financing of small-scale companies, which often face difficulties
in raising investment funds from banks.

The new tax regulations also include the abolition of value-
added tax on the sale of houses smaller than 70 square meters as
well as student dormitories.

Share transaction

Other important aspects of the new regulations include the
issuance of guidelines on the collection of tax on stock exchange
transactions.

The tax rate is 0.1 percent of the gross transaction value on
the sale of shares owned by the investing public and 5.1 percent
on the sale of shares owned by founders.

Fuad explained that founders' shares are shares which were
bought by founders before the listing of their company on the
stock market at a price level of less than 90 percent of the
price set during the initial public offering.

The tax is collected by the stock exchange operator through
existing brokerage companies and is paid monthly to appointed
banks.

The tax regulations issued on Saturday also include the tax
director general's circular letter supporting Bank Indonesia's
ruling which requires taxpayers to include their tax returns and
balance sheets when making loan application.

The requirement is imposed on applications for loans of Rp 30
million (around $14,000) and above.

"I really support the central bank's policy," Fuad said,
adding that the central bank's move is essential to encourage
business transparency in the country.

The tax director general acknowledged that taxpayers often
manipulate their financial statements to enable them to raise
loans much higher than their financial capacity.

"It is not only good for banks but also for the government,"
he said, adding that the policy would also prevent taxpayers from
making false statements in their tax returns, as a low tax
payment will disqualify them for all but the smallest loans.(hen)