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Tax incentives to cost state more than budgeted
The measures are meant to alleviate the economic pressure on businesses and employees during the pandemic.
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Finance Minister Sri Mulyani Indrawati (left) and Deputy Finance Minister Suahasil Nazara (right) show reporters electronic receipts on their mobile phones after filing their tax returns in Jakarta on March 10, 2020. (Courtesy of the Taxation Directorate General/-)
T
he Finance Ministry plans to raise the allocation for tax incentives in the national economic recovery (PEN) budget as demand exceeds expectations.
Deputy Finance Minister Suahasil Nazara said on Monday that the government had disbursed more than Rp 62.47 trillion (US$4.37 billion) for tax incentives as of Friday, which was 99.4 percent of the full-year budget, as economic activity had recovered.
With the end of 2021 still more than a month away, he said he expected an additional allocation to be necessary as more claims and applications for the incentive come in.
The prevailing stimulus measures include a temporary luxury tax break on the sale of smaller cars, reduced value-added tax (VAT) on new houses, lower corporate income tax, personal income tax exemptions for employees in certain sectors and more.
The measures are meant to alleviate the economic pressure on businesses and employees during the pandemic.
“What about [the remainder] of the year? Most likely, [the spending need] will pass 100 percent, but we will accommodate it with the state budget so that economic activity may continue to roll,” Suahasil told the audience at a webinar.
“How much exactly [is the additional allocation]? We’ll see that in December."
