On Monday (11/05) it was reported - quoting an Indonesian tax official - that Indonesian President Joko Widodo had already ordered to cut the country’s corporate tax rate from 25 percent currently to below 18 percent in a bid to attract more investment and to make Indonesia’s business environment more competitive (for example, Singapore’s corporate tax is currently 17 percent). One day later, however, Finance Minister Bambang Brodjonegoro stated that, if the corporate tax is to be revised, it will be next year at the earliest.
Today (12/05), it was also reported that the government of Indonesia plans to lift taxes on several imported raw materials that are used by domestic manufacturers to produce output that contains at least 40 percent of local content. This move is part of a larger plan of the government to make Indonesia’s tax system more attractive for investment as President Widodo is eager to make investment realization one of the key drivers for economic growth. Since 2011 Indonesia’s GDP growth has slowed. In the first quarter of 2015, growth slowed to a five-year low of 4.71 percent (y/y).