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.
Govt to press ahead with tax reform despite challenges
The government has reiterated its commitment to carrying out tax reform despite its short-term focus on closing the gap in the current account deficit and stabilizing the country’s currency
Change Size
T
he government has reiterated its commitment to carrying out tax reform despite its short-term focus on closing the gap in the current account deficit and stabilizing the country’s currency.
In recent weeks, the government rolled out several measures to put the brakes on increased import growth, including the expansion of 20 percent blended biodiesel to the non-public service obligation sector as well as the imposition of a higher import tax on 1,147 consumer goods that have local equivalents or deemed non-essential to the economy.
On the orders of President Joko “Jokowi” Widodo, relevant ministries have temporarily halted infrastructure projects that have a high amount of imported content, with the full list of delayed projects to be announced soon.
The government remains committed to tax reform despite its short-term focus on cutting the deficit, the Finance Ministry’s fiscal policy head Suahasil Nazara said.
“I believe both [tax reform and measures to cut the deficit] will work hand in hand,” said Suahasil in a recent interview.
Suahasil added the tax authorities had moved to speed up issuing tax refunds for those entitled to it as well as conducting a joint audit carried out by tax and customs authorities, which was intended to increase taxpayer compliance.
He said improving compliance would be the focus rather than raising taxes.
Data from the Finance Ministry shows that the tax authority recorded 16.5 percent year-on-year growth in tax revenue in the first eight months of this year.
From January to August, the government collected Rp 799.5 trillion (US$54 billion) in tax revenue, or 56.1 percent of the
Rp 1.42 quadrillion target set in the 2018 state budget. Revenue from customs and excise, meanwhile, amounted to Rp 108.1 trillion over the same period, equal to 55.7 percent of this year’s target of Rp 194.1 trillion.
Leaders from the Indonesian Chamber of Commerce and Industry (Kadin) and Indonesian Employers Association (Apindo) have urged the government to continue its tax reform agenda, especially after the conclusion of the tax amnesty that ran from July 2016 to March 2017.
Kadin chairman Rosan P. Roeslani urged the government to build on the momentum of the successful tax amnesty, while calling for a cut in corporation tax.
“Businesses are waiting for a reduction in corporate tax, which has been discussed with the government,” said Rosan, urging the government to pick up the pace on tax reform in the wake of the tax amnesty.
While acknowledging that a cut in corporate tax would reduce state revenue, Rosan said the move would allow business to expand and create jobs.
Finance Minister Sri Mulyani Indrawati said the government was finalizing a draft regulation that will replace the prevailing law on taxation.
“Globally, corporate taxes are being cut, so we are evaluating and preparing [a draft regulation],” said Sri Mulyani, adding that she had presented several scenarios to President Jokowi on the impact of tax reform.
Reforming existing regulations is one of the five pillars of tax reform, aside from improving the tax authority’s organizational structure, human resources, business processes, databases and IT systems.
Meanwhile, Apindo chairman Hariyadi Sukamdani said businesses would continue talking with the government and discuss problems in tax regulation.
“We hope that [from the talks] the government will implement policies that truly boosts the efficiency of our economy,” said Hariyadi.
