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Jakarta Post

Revising corporation tax, VAT rates not enough

  • Haryo Kuncoro
    Haryo Kuncoro

    Research director at the Socio-Economic & Educational Business Institute (SEEBI)

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Jakarta   /   Thu, July 4, 2019   /  01:34 pm
Revising corporation tax, VAT rates not enough A building of the Directorate General of Taxation in Jakarta (kontan.co.id/File)

The instability of tax revenues over the last four years has prompted the government to fiddle with tax rates. A simulation is being carried out on the 25 percent corporation tax rate, which will be cut to 20-22 percent and the 10 percent value added tax (VAT) rate, which will be increased to 12 percent. This tax counterbalancing strategy is unremarkable and can be done when the economy is slowing down. The main objective is to boost government tax revenues especially when tax extensification is hard to achieve. The reduction in the corporation tax rate is expected to encourage business competitiveness in combating transfer pricing practices and to attract foreign companies. Hence, job opportunities are created and technology transfers will occur. However, the effectiveness of lowering corporation tax rates on the government tax revenues depends on the taxpayer responsiven...



Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.