Tax & Revenue

Finance Ministry mulls Income Tax Reduction on Corporate Taxpayers

Date: 08 January 2019; Type: Legal News; Source: Antara

Jakarta, Jan 8 (ANTARA News) - The Finance Ministry is considering a reduction in the tariff of income tax on corporate taxpayers to improve the competitive edge of the national industry.

"We are considering the reduction of income tax on corporate taxpayers. Compared to that of emerging countries, our tax tariff of 25 percent is really not high and is not the lowest one," Finance Minister Sri Mulyani Indrawati said here on Tuesday.

The tariff of income tax on corporate taxpayers in Indonesia is higher than those of neighboring countries, such as Singapore at 17 percent, Thailand at 20 percent, Vietnam at 22 percent, and Malaysia at 24 percent, she stated.

In fact, the adjustment of the income tax tariff will offer incentives to business agents because it will encourage export-oriented manufacturing industries.

"Compared to Malaysia and Thailand, we are not worse. But we are lower than the Philippines which imposes higher tariffs at 30 percent," she noted.

To set the tariff of income tax on corporate taxpayers, Law No. 36 of 2008 on Income Tax should be revised because it cannot be decided based upon presidential instruction or finance minister's regulation, she added.

"We have conducted evaluation and study. The income tax on corporate taxpayers needs the amendment of the law. Hence, there is political and legislative process with the House of Representatives (DPR). It cannot be decided by virtue of presidential instruction and finance minister's regulation," she remarked.

To encourage domestic industry, the government has prepared other tax incentives, including tax holiday and tax allowance.

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