Rp10tn Potential Tax Loss from Rupiah Rescue Policy
16 March 2015 16:00 WIB
TEMPO.CO, Jakarta – The tax incentives in Joko Widodo's so-called rupiah rescue policy package are expected to result in a loss of tax revenue.
"There will be a potential loss of tax revenue. According to my estimation, the amount would be Rp5 trillion to Rp10 trillion," tax observer Yustinus Prastowo, who is also the tax adviser to the Presidential Chief of Staff, told Tempo yesterday.
Although they may lead to tax revenue loss, Yustinus said the incentives given will have variety of benefits that can stimulate investment growth. The tax revenue loss is a short-term effect, and in the long run the effect would be positive such as job creation that will garner higher tax revenues in the future.
Coordinating Minister for the Economy Djalil said the government will announce the president's policy package this week. They had planned on announcing it last week but decided to postpone it to allow some time to discuss about the legal umbrellas for the policy, such as government regulations, presidential decrees, and ministerial regulations.
The policies stipulated in Joko Widodo's rupiah stabilization package are:
1. The provision of tax allowances
2. Collaborating with the Indonesian National Shipowners Association (INSA) to overcome deficits in the shipping sector by designing a fairer tax system for shipowners.
3. Improving the financial balance by urging SOEs to buy reinsurance.
4. The Ministry of Finance issued a regulation on temporary dumping and safeguarding duties for imported products with dumping indications.
5. Tax allowance for companies with 30 percent or more products destined for export markets.
6. Issuing government regulations to stop imposing VATs to shipyards in a bid to reduce shipping imports.
7. Increase biofuel components to reduce the import of oil and fuel oil.
8. Giving tax incentives to foreign companies that do not send annual dividends of 100 percent to parent companies in their home countries.
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