"(The changes) are giving our clients a lot to think about," he told ST. Related Story Indonesia seeks higher tax for the rich to boost revenues amid pandemicĮxperts say that high-net-worth individuals and companies with cross-border transactions in particular are feeling the pinch.įast-changing regulations, such as new tax rules in last year's omnibus job creation law, including discounts for research and development, residency for tax purposes and changes to the VAT, have also triggered inquiries, said Mr Bambang. In addition to a tax amnesty in 2016, the country is now offering a second partial reprieve, waiving penalties for assets accumulated over the three years to 2019. That leaves the tax authorities needing to be more thorough with the tax base they have. "If the tax Bill is not completed now, we may have missed the opportunity before the next election." "Capital markets are going to need to see revenues pick up again," Mr Joseph Incalcaterra, chief Asean economist for HSBC in Hong Kong told ST. The government is also mulling a carbon tax of 75,000 rupiah a tonne.Īnalysts say time is running out for the Bill, with Mr Widodo nearly midway through his second and final term as president. That is less than half the previous threshold of 4.8 billion rupiah. The Bill would require smaller companies earning at least 1.8 billion rupiah (S$171,000) in revenue to charge the VAT. The Bill also seeks to hike by 2 percentage points to 12 per cent the value-added tax (VAT). The measures being proposed include a minimum one per cent so-called alternative minimum tax on gross earnings even for firms reporting a loss. Related Story For cash-strapped Asian governments, global tax pact offers respite from cutsĮven so, a Bill on raising taxes, introducing new ones and tightening loopholes is facing opposition in Parliament. Moody's rates Indonesia's debt one notch above its lowest investment grade with a "stable" outlook. In July, with Covid-19 infections at a record, debt ratings agency Moody's warned that the pandemic may "challenge government plans to reduce the fiscal deficit to pre-pandemic levels", stopping short of putting Indonesia on a negative watch. While borrowing will ease next year, Indonesia's budget deficit will still weigh in at 4.8 per cent of GDP by the end of 2022 - well north of the 3 per cent legal limit.Īnalysts were already concerned before the government unveiled its plans.
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Last month, the government in Jakarta said that it would extend a programme to sell bonds to its central bank, which bought them with - effectively - printed money and agreed to pay below market interest rates. In 2020, revenues dropped to less than 10 per cent from 11.6 per cent the year earlier.īy comparison, the Philippines' tax take during the first six months of 2021 was just shy of 15 per cent despite the pandemic. Like many countries, Indonesia's tax take - already low by international standards - shrunk last year as a percentage of gross domestic product (GDP).