TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Tax incentive from asset revaluation hailed a win-win
(Kompas
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
(Kompas.com/Riza Fathoni) (Kompas.com/Riza Fathoni)
(Kompas.com/Riza Fathoni)
The government's plan to offer tax incentives to companies that conduct asset revaluations, announced in its fifth economic policy package, will benefit both businesspeople and state revenue, an expert has said.
Tax expert Darussalam from the University of Indonesia said that the tax incentive had been long awaited by the industry because many companies with undervalued assets had been avoiding a revaluation of their assets because of a burdensome 10 percent income tax rate (PPh).
"This is definitely weighing on companies with inhibited cash flows amid the economic slowdown. So, the reduction of tax rates will encourage a revaluation of assets, especially if the revaluation is proposed this year," Darussalam told thejakartapost.com on Friday.
Based on the new policy, a company that files for an asset revaluation this year will be subjected to just 3 percent income tax, down from the previous rate of 10 percent.
If the proposal is registered in the first half of 2016, income tax will be 4 percent, and in the second half of next year, 6 percent.
Asset revaluations, said Darussalam, can increase a company's equity, helping them get in line with the Finance Ministry's rule obliging private firms to maintain a good debt-to-equity ratio amid increasing foreign debt.
According to the ministry's regulation 169/PMK.010/2015, the minimum debt-to-equity ratio is set at 4:1 for the 2016 fiscal year.
"This [tax incentive] will encourage companies to revalue their assets and improve their equity," said Darussalam.
Darussalam added that the more firms, including private firms and state-owned enterprises (BUMNs), that revalue their assets, the higher tax revenue would be.
"There will be an additional tax income for the government as many firms will apply to revalue their assets when the tax rate cut to 3 percent this year," he said.
The ministry's tax office spokesperson Mekar Satria Utama said the new tax incentive would be regulated under the Finance Minister's regulation No.191/PMK.010/2015. She estimated that there would be more than Rp 10 trillion (US$733 million) of potential addition tax revenue as a result of the new policy.
"[Additional tax revenue] from large BUMNs alone could reach Rp 10 trillion [and] many private companies have expressed their interest also,' said Mekar as quoted by kompas.com. (ags/kes)(++++)
