Update COVID-19 in Indonesia: 497,668 confirmed infections, 15,884 deaths (23 November 2020)
23 November 2020 (closed)
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So far this year, a total of 108 Indonesian companies have taken advantage of the tax incentive offered by the government of Indonesia through its fifth economic stimulus package (released on 22 October 2015). This tax incentive makes it more attractive for companies to revalue their fixed assets. With higher-valued assets as well as larger capital, these companies can borrow more funds from banks, hence having more room to invest. This should then boost overall economic growth of Southeast Asia's largest economy.
In the first month of 2016 the Indonesian government generated IDR 20.56 billion (approx. USD $1.5 million) in tax money from the revaluation of companies' fixed assets. Mekar Satria Utama, Director of Counseling, Service and Public Relations at the Finance Ministry's Tax Directorate General, said a total of 108 companies have revalued their fixed assets in January. Among these companies are three state-owned companies. However, Utama declined to mention the names of these companies. He said the government is currently calculating how much tax money can be generated in total in 2016 through this tax incentive.
Prior to this tax incentive, companies had to pay a 10 percent tax rate on the company's fixed asset growth. This figure made many companies hesitant to increase the level of their fixed assets. Therefore, the government cut the tax rate to 3 percent provided that companies submitted their proposals for fixed asset revaluation before the end of 2015. If companies submit their proposals in the first half of 2016, then these companies are required to pay a 4 percent tax rate, while a 6 percent tax rate applies to those that submit proposals in the second half of 2016.
In the last quarter of 2015 the government generated IDR 20.14 trillion (approx. USD $1.5 billion) in additional tax money through this incentive, higher than the IDR 10 trillion target that the government had set.
Meanwhile, it will still require about two or three months before Indonesia's (controversial) tax amnesty bill can be implemented as this bill still needs to be discussed by the House of Representatives (DPR) and the government. The proposed bill will give tax amnesty to those tax dodgers that have not been declaring their wealth (that is parked abroad). They will only have to pay a tax rate between 1 and 3 percent on their net wealth growth. In case they refuse to bring their wealth back to the home country, then they would need to pay a tax rate between 2 - 6 percent.
Previously, Indonesia's Finance Ministry said this bill could generate USD $4.4 billion in tax money in 2016. The government estimates that around IDR 3,000 trillion or approximately USD $221 billion in funds is secretly stored overseas.