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Today's Headlines Tax

  • Indonesia Investments' Research Report Released: February 2019 Edition

    Indonesia Investments' Research Report Released: February 2019 Edition

    On Tuesday (05/03) Indonesia Investments released the February 2019 edition of its monthly research report. The report aims to inform the reader of the key political, economic and social developments that occurred in Indonesia in the month of February 2019 and also touches upon key international developments that impacted on the Indonesian economy.

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  • Indonesia Investments' Research Report Released: January 2019 Edition

    Indonesia Investments' Research Report Released: January 2019 Edition

    On Friday (08/02) Indonesia Investments released the January 2019 edition of its monthly research report. The report aims to inform the reader of the key political, economic and social developments that occurred in Indonesia in the month of January 2019 and also touches upon key international developments that impacted on the Indonesian economy.

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  • OECD Released Corporate Tax Statistics Report, Lets Zoom in on Indonesia

    OECD Released Corporate Tax Statistics Report, Lets Zoom in on Indonesia

    Last week, the Organisation for Economic Co-operation and Development (OECD) released its Corporate Tax Statistics report. Several interesting conclusions were made in the report. Firstly, (corporate) taxes that are paid by legal entities (specifically companies) remain a key source of government revenues, particularly in developing nations. Secondly, over the past two decades there is a clear worldwide trend visible, namely: falling corporate tax rates.

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  • Finance Update: Preliminary Data Show Improving Conditions in 2018

    Finance Update: Preliminary Data Show Improving Conditions in 2018

    Despite challenging circumstances that trigger capital outflows from emerging markets – mostly related to the ongoing tariff war between the United States and China, monetary tightening in developed nations, US President Donald Trump’s unpredictable style of leadership, and rising crude oil prices in the first three quarters of the year (that cause pressure on net oil importers) – Indonesia ended 2018 in good financial health.

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  • New Tax Rules in Indonesia to Speed Up Freeport Indonesia Deal

    New Tax Rules in Indonesia to Speed Up Freeport Indonesia Deal

    After the much publicized signing by the Indonesian government and US mining giant Freeport McMoRan of the Heads of Agreement regarding the sale of a stake in Freeport Indonesia (the operator of the lucrative Grasberg mine in Papua) on 12 July 2018, we have not heard much about the deal that is valued at USD $3.85 billion.

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  • Tax Revenue Realization Growth of Indonesia Strong So Far in 2018

    Tax revenue collection is showing good growth in Indonesia so far in 2018. However, due to the ambitious target set by the central government chances of another tax shortfall remain highly probable at the end of the year. Based on data from Indonesia's Finance Ministry, non-oil & gas tax revenue realization grew 19.1 percent year-on-year (y/y) to IDR 156.8 trillion (approx. USD $11.4 billion) between 1 January and 7 March 2018, from IDR 131.7 trillion in the same period one year earlier.

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  • Tax Income Indonesia: Sliding Tax Ratio & Tax Buoyancy in 2017

    Indonesia's tax revenue realization grew 12.3 percent year-on-year to IDR 78.5 trillion (approx. USD $5.8 billion) - which includes tax income from the oil & gas sector - in January 2018 supported by accelerating economic growth and higher commodity prices. However, there remain major concerns about Indonesia's tax revenue realization and the country's tax buoyancy as well as tax-to-GDP ratio.

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  • IMF Sees Room for Rising Tax-to-GDP Ratio for Indonesia

    IMF Sees Room for Rising Tax-to-GDP Ratio for Indonesia

    The International Monetary Fund (IMF) sees room for Indonesia's tax ratio to rise up to 15 percent of gross domestic product (GDP). Luis Breuer, IMF Mission Chief for Indonesia, expects to see an improvement in Indonesia's tax ratio - from the weak level of 10 percent of GDP in 2017 - on the back of Indonesia's improving economic growth. Accelerating economic growth should boost tax revenue realization.

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  • Despite Tax Shortfall, Indonesia's 2017 Customs & Excise Target Met

    Despite Tax Shortfall, Indonesia's 2017 Customs & Excise Target Met

    Although tax revenue realization will not achieve the target that was set by the Indonesian government in the (revised) 2017 state budget, the government's customs and excise revenue target has been achieved this year. Data from the Directorate General of Customs and Excise show that IDR 189.36 trillion (approx. USD $14 billion) was collected in customs and excise revenue up to 28 December 2017, equivalent to 100.11 percent of the full-year target.

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Latest Columns Tax

  • Tax Amnesty Program Indonesia: Investment Instruments II

    Tax Amnesty Program Indonesia: Investment Instruments II

    The government of Indonesia is preparing various investment instruments in order to absorb the (potentially large) inflow of capital following the launch of the tax amnesty program earlier this month. Besides government bonds, state-owned enterprises' bonds, real estate investment trusts (REITs), and property investment through private equity schemes (RDPTs), the government is also preparing trustees and zero coupon bonds. Without such investment instruments, bubbles are expected to appear due to the large inflow of funds into Indonesia's financial markets.

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  • Tax Amnesty Program Indonesia Launched: Which Investment Instruments?

    Tax Amnesty Program Indonesia Launched: Which Investment Instruments?

    Without giving too much insight into the details and regulations, Indonesian President Joko Widodo launched the tax amnesty program on Friday (01/07) during a speech in front of hundreds of businessmen and officials at Indonesia's tax office headquarters in Jakarta. The tax amnesty program - approved by the House of Representatives in late June - is a strategy to boost state tax income by (temporarily) granting amnesty as well as offering attractive incentives to (former) tax evaders. In return, the tax dodgers have to declare and (if wanted) repatriate their offshore assets into Indonesia.

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  • Indonesia's House Passes Tax Amnesty Bill & Revised State Budget

    In a plenary session on Tuesday (28/06), Indonesia's House of Representatives (DPR) passed the controversial Tax Amnesty Bill into law as well as the revised 2016 state budget. The Indonesian government will be relieved to see the Tax Amnesty Bill come into effect on 1 July 2016 (ending in May 2017) as it expects the bill to boost tax revenue this year by IDR 165 trillion (approx. USD $12.4 billion). Through tax incentives and the pardoning of tax crimes, the tax amnesty program makes it attractive for tax evaders to declare their offshore assets and repatriate these into Indonesia.

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  • Reforming Indonesia's Tax System is Key to Unlock S&P's Investment Grade

    Reforming Indonesia's Tax System is Key to Unlock S&P's Investment Grade

    In the past two weeks, two of the big international credit rating agencies released new reports about Indonesia's fiscal situation. Both agencies affirmed Indonesia's sovereign debt rating: Fitch Ratings kept Indonesia at BBB-/stable (investment grade class) and Standard & Poor's (S&P) maintained Indonesia at BB+/positive (highest junk level, one notch below investment grade). S&P's decision to keep Indonesia within the junk level category was met with disappointment among investors and Indonesian government officials but perhaps not that surprisingly.

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  • Fiscal Update Indonesia: Government Wants to Revise 2016 State Budget

    Fiscal Update Indonesia: Government Wants to Revise 2016 State Budget

    The government of Indonesia proposes to cut the state revenue target by IDR 88 trillion (approx. USD $6.5 billion) in the Revised 2016 State Budget. Indonesian Finance Minister Bambang Brodjonegoro announced the government has sent the proposal to the House of Representatives’ Budget Committee (Banggar) on Thursday (02/06). Expectations of lower government revenue is the result of weaker-than-estimated tax collection, the lower-than-initially-assumed Indonesian crude oil price as well as the lower-than- estimated oil and gas production in Indonesia.

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  • Government Revenue Collection Indonesia at 23% of 2016 Target in Early May

    Government Revenue Collection Indonesia at 23% of 2016 Target in Early May

    So far this year, realization of government revenue in Indonesia (up to 8 May 2016) has reached IDR 419.2 trillion (approx. USD $32 billion), roughly 23 percent of the full-year revenue target in 2016 (IDR 1,822.5 trillion). This result is weaker compared to last year when the government collected IDR 476.3 trillion in the period 1 January - 15 May 2015, or 27 percent of the full-year target. Meanwhile, government spending reached IDR 586.8 trillion between 1 January and 8 May 2016, or 28 percent of the full-year target (IDR 2,095.7 trillion), roughly the same as government spending during the same period last year.

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  • Tax System Indonesia: Plans to Cut Corporate Income Tax to 20%

    Tax System Indonesia: Plans to Cut Corporate Income Tax to 20%

    More changes to Indonesia's tax system are in the pipeline. Today (11/04), Indonesia's Finance Minister Bambang Brodjonegoro said Southeast Asia's largest economy plans to cut the corporate income tax rate to 20 percent this year (from 25 percent currently). According to Brodjonegoro a 20 percent corporate tax rate is more competitive and will attract investment. Indonesia's finance minister expressed this plan in a meeting with the nation's parliamentary commission overseeing taxes (an income tax rate cut requires parliamentary approval).

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  • Indonesia Does Not Revise 2016 Tax Revenue Target, Realistic or Not?

    Indonesia Does Not Revise 2016 Tax Revenue Target, Realistic or Not?

    Indonesia's Finance Ministry said it will not revise the tax revenue target set in the 2016 State Budget. The Indonesian government targets to collect IDR 1,360.2 trillion (approx. USD $100 billion) worth of tax revenue in 2016, a 28.9 percent rise from tax revenue realization in 2015. However, although it is good to aim high - hence setting an ambitious target - it is also important to be realistic (to avoid budgetary turmoil and gain fiscal credibility, important for Indonesia to be eligible for a credit rating upgrade). How realistic is Indonesia's 2016 tax revenue target?

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  • Infrastructure Development Indonesia: Gaining Momentum in 2016

    Infrastructure Development Indonesia: Gaining Momentum in 2016

    After having grown rapidly in the years 2010-2013, infrastructure development in Indonesia lost its momentum in 2014. This was due to limited available government funds, uncertainty caused by the legislative and presidential elections, and the nation's slowing economic growth. After Joko Widodo became Indonesia's seventh president in October 2014, it was expected that infrastructure development would revive. However, it didn't. But Widodo made one important move by seriously reducing energy subsidies, hence making more funds available for infrastructure development.

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  • Government of Indonesia to Cut Personal & Corporate Income Tax

    Government of Indonesia Plans to Cut Personal & Corporate Income Tax

    Good news for taxpayers in Indonesia. The Indonesian government plans to lower personal income tax, which currently ranges between 5 and 30 percent, in early 2016. Indonesian Finance Minister Bambang Brodjonegoro said lower personal income tax will make it easier for taxpayers to comply with the tax law, while giving a boost to Indonesians' purchasing power. However, he declined to inform to what extent personal income tax will be cut as this is still being studied.

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