Businessmen request for tax tariff reduction

JAKARTA. Businessmen expect that President Joko Widodo fulfills his promise to use the tax amnesty as the moment to launch tax reform. According to the businessmen, the tax reform needs to include revisions over some tax regulations, mainly in terms of tax tariff, as the tax tariff in Indonesia is relatively higher compared to the tariff in Malaysia, Singapore, and Thailand.

Chief Executive Officer of Sintesa Shinta Widjaja Kamdani expects for reduction in the tariff of income tax from 25% to 17%.  Meanwhile, Managing Director of Ciputra Group Harun Hajadi also expects government to cut the income tax tariff; however, he did not specify the ideal income tax rate.

Under the tax reform scheme, government may revise the Law on General Provisions and Procedures for Taxation, as well as the Law on Income Tax.

Aside of income tax tariff, Association of Indonesian Automotive Manufacturers (Gaikindo) also request government to cut luxurious tax tariff from 35% to 10%, or similar to the tax tariff for multi-purpose vehicle (MPV). “Indonesia is the basis for the world’s MPV production”, said Gaikindo Chairman Jongkie Sugiharto.

It takes longer time to see the effect of the tariff cut to automotive industry. The tariff cut is expected to boost sedan or saloon car market so that this will attract more investments at the segment of saloon car.

However, textile enterprises are pessimistic that the tax reform will be effective. According to Chairman of Indonesian Textile Association, Sudradjat Usman the existing taxation regulations tend to be in favor of foreign enterprises rather than the local ones.

For an example, the procurement of domestic raw materials is subject to income tax, while the similar condition does not affect import products. “It (the tax reform) sounds like an impossible dream”, Sudradjat Usman.

(Muhammad Farid/Translator)