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Today's Headlines Tax

  • World Bank Cuts Forecast for Indonesia's 2016 GDP Growth to 5.1%

    World Bank Cuts Forecast for Indonesia's 2016 GDP Growth to 5.1%

    In its March 2016 Indonesia Economic Quarterly, titled "Private Investment is Essential", the World Bank cut its forecast for Indonesia's economic growth in 2016 to 5.1 percent year-on-year (y/y) from an earlier estimate of 5.3 percent (y/y). This downward revision was made due to weaker-than-expected global economic conditions, further weakening commodity prices, and limitations to Indonesian government spending brought about by a looming shortfall in tax revenue.

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  • Delayed Tax Amnesty Bill Talks Impact on Indonesia's Tax Target

    Delayed Tax Amnesty Bill Talks Impact on Indonesia's Tax Target

    After it was decided to postpone talks between the Indonesian government and the House of Representatives (DPR) about the tax amnesty bill (talks have been postponed until April 2016), the government is in need of formulating a new tax revenue target as the late implementation of the tax amnesty program could mean the government will miss out on tens of trillions of rupiah (billions of US dollars) in tax revenue this year. Indonesia's tax amnesty bill, proposed last year, will make it easier for tax evaders to come clean and repatriate their funds into Indonesia.

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  • Tax in Indonesia: Asset Revaluation Generates Additional Tax Revenue

    Tax in Indonesia: Asset Revaluation Generates Additional Tax Revenue

    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.

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  • Tax Revenue Indonesia: Shortfall in 2015, Target 2016 Revised

    Tax Revenue Indonesia: Shortfall in 2015, Target 2016 Revised

    The government of Indonesia is in the final phase of revising its tax collection target of 2016 from IDR 1,360.2 trillion (approx. USD $98.5 billion) to IDR 1,226.9 trillion (approx. USD $89 billion). Indonesian Finance Minister Bambang Brodjonegoro said the new 2016 tax target is based on a 10 percent year-on-year (y/y) growth of last year's tax realization plus an estimated IDR 60 trillion (approx. USD $4.3 billion) generated through the government's planned tax amnesty bill.

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  • Challenges Continue for Indonesia's Cigarette Producers

    Challenges Continue for Indonesia's Cigarette Producers

    The year 2015 has been a tough year for Indonesia's tobacco industry due to an 8.7 percent increase in excise on tobacco products in early 2015 and people's weakening purchasing power amid the country's economic slowdown. During the first nine months of 2015 sales of cigarettes in Indonesia fell 1.3 percent (y/y) to 232 billion cigarettes. Next year, challenges will remain as the Indonesian government prepares another tobacco tax hike (23 percent). However, people's purchasing power is estimated to improve as economic growth may accelerate.

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  • Indonesia's Plan to Impose Soda Excise Tax Meets Resistance

    Indonesia's Plan to Impose Soda Excise Tax Meets Resistance

    The plan of Indonesia's government to set an excise tax of between IDR 2,000 and IDR 3,000 (approx. USD $0.18) per liter on carbonated (soda) drinks met fierce resistance from several institutions. Based on Indonesian law, consumption of goods that have a negative impact on consumers' health or the environment need to be controlled and monitored. The Soft Drinks Industry Association (Asrim), Indonesian Food and Beverage Association (Gapmmi),  and Indonesian Employers Association (Apindo) all consider this move to be negative for the country's soft drinks industry.

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  • Budget Deficit Indonesia Can Widen to 2.78% of Gross Domestic Product

    Budget Deficit Indonesia Can Widen to 2.78% of Gross Domestic Product

    As Indonesia's budget deficit may widen to 2.78 percent of gross domestic product (GDP) in 2015, the government is ready to seek USD $5 billion through multilateral loans and private placement. Scenaider Siahaan, Director for Strategy and Debt Portfolio at the Finance Ministry's Directorate General of Debt Management, said it involves standby loans that can be disbursed in the two weeks ahead if needed. The main reason why the budget deficit may be wider than expected is Indonesia's weaker-than-estimated tax revenue.

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  • Income Tax Cut & Street Vendors' Leasehold Certificates in Indonesia's 7th Package

    Income Tax Cut & Street Vendors' Leasehold Certificates in Indonesia's 7th Package

    In the seventh economic stimulus package, the Indonesian government cuts income tax (up to 50 percent) for employees in labor-intensive industries who earn less than IDR 50 million (approx. USD $3,600) per year. This facility, unveiled on Friday (04/12), aims to combat financial pressures on companies caused by the economic slowdown and next year's higher minimum wages (in order to avert a rise in unemployment as companies may feel the need to sack employees). This tax incentive will be offered for a period of two years and - if successful - will be extended.

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  • Budget Deficit of Indonesia Safe on non-Optimal Government Spending

    Budget Deficit of Indonesia Safe on non-Optimal Government Spending

    One advantage of Indonesia's non-optimal government spending is that it somewhat covers for the shortfall of tax revenue that is expected to occur in 2015. The shortfall in tax collection may reach up to IDR 250 trillion (approx. USD $18 billion) and this failure to meet the government's tax collection target in the 2015 State Budget was the reason behind the resignation of Sigit Priadi Pramudito as Director General of Indonesia's Tax Office. But with government spending estimated to reach only about 90 percent of this year's target, the budget deficit should not go beyond the 2.7 percent of gross domestic product (GDP) mark.

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  • Tax Collection to Miss Target in 2015, Indonesia's Tax Chief Resigns

    The Director General of Indonesia's Tax Office, Sigit Priadi Pramudito, unexpectedly resigned from his post on Tuesday (01/12) as it became increasingly clear that there will be a big shortfall, perhaps up to IDR 250 trillion (approx. USD $18 billion), in the country's tax collection this year. In the Revised 2015 State Budget the Indonesian government targets to collect IDR 1,294.3 trillion (approx. USD $94 billion). Pramudito is the first tax chief to resign from his post in the modern history of Indonesia.

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Latest Columns Tax

  • Government of Indonesia Plans to Raise Royalties for Coal Miners

    Indonesia's Ministry of Energy and Mineral Resources plans to set royalties for all types of coal at 13.5 percent (of net sales) as part of a revision of Government Regulation No. 9 - 2012 on Tariff and Types of Non-Tax Revenue. Currently, the percentage of royalty depends on the quality of the coal that is extracted as well as the type of permit that is issued to the coal miner. Apart from higher coal royalties, the Indonesian government also proposes a windfall profits tax in case there is a sharp upward price correction.

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  • Government of Indonesia Targets to Implement 3 More New Policies in 2013

    Government of Indonesia Targets to Implement 3 New Policies in 2013

    Indonesia's Finance Minister Chatib Basri stated that the government of Indonesia is busy preparing three new policies that aim to restore financial stability as well as attract foreign direct investments. These three new policies involve the higher sales tax on imported luxury cars, a revision of Indonesia's negative investment list, and the higher income tax on imported consumption goods. These three new policies are in addition to the policy package that was introduced by the Indonesian government in August 2013.

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  • Revised Tax Holiday and Tax Allowance to Attract Investments in Indonesia

    Revised Tax Holiday and Tax Allowance to Attract Investments in Indonesia

    Apart from the five tax incentives that I have mentioned in a previous column, the Indonesian government also intends to ease two other tax rules in order to boost investments in Indonesia from 2014 onwards. These are the tax holiday and tax allowance. Relaxation of the tax holiday involves an alteration to the period as well as the size of the investment, and relaxation of procedural difficulties. Relaxation of the tax allowance involves the revision of the number of sectors that are eligible and a relaxation of procedures in the form of tax clearance.

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  • Indonesian Government Prepares Seven Incentives to Spur Investments

    The government of Indonesia is busy preparing seven tax incentives to boost investment flows in 2014. Investments currently account for approximately 32 percent of the country's gross domestic product (GDP). Only domestic consumption owns a larger stake towards the economy with 55 percent. The regulatory framework related to the seven incentives is expected to be finalized by the end of this year. The incentives consist of five new ones and the relaxation of two older incentives, namely the tax holiday and tax allowance.

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  • Indonesia's Budget Deficit Reaches IDR 25.9 trillion as of May 2013

    Data released by a department of Indonesia's Ministry of Finance showed that the country's budget deficit amounted to IDR 25.9 trillion (USD $2.64 billion) on 31 May 2013. This figure is equivalent to 16.9 percent of the target that is set in the 2013 State Budget (IDR 153.3 trillion). The IDR 25.9 trillion deficit translates to 0.27 percent of Indonesia's gross domestic product (GDP). The maximum amount of deficit - as stipulated by the State Budget Law of 2013 - that is allowed to be maintained is equivalent to 1.65 percent of GDP.

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  • Indonesia's Government Revises Down Tax Revenue Target of 2013

    In the revised state budget, Indonesia's government has lowered its forecast for tax revenue in 2013. Originally, the government expected to receive IDR 1,193.0 trillion (USD $122.4 billion) but the figure has been tuned down to IDR 1,139.3 trillion (USD $116.9 billion). Minister of Finance Chatib Basri stated that the forecast for tax revenue has been revised down by IDR 55.1 trillion, while the figure for export duties has been raised by IDR 1.4 trillion. Indonesia's tax-to-GDP ratio in 2013 has been changed to 12.11 percent from 12.87 percent.

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  • Fiscal Incentives to Stimulate Investments in Indonesia's Oil and Gas Exploration

    Fiscal Incentives to Stimulate Investments in Indonesia's Oil and Gas Exploration

    The Indonesian government - through its Energy and Mineral Resources Ministry - has stated to provide fiscal incentives to encourage oil and gas exploration in Indonesia. Indonesia, a former OPEC member, has recorded a declining oil production since the 1990s due to a lack of exploration and investments in this sector. To reverse this situation, the government will provide a number of tax exemptions.

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