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View all search resultsFree meal, cooperative programs may lead to subpar tax revenue
Tax Director General Bimo Wijayanto said there was an ambiguity in the issuance of a National Nutrition Agency (BGN) head circular which classifies the funds used by the programs’ kitchens as grants that are not subject to tax.
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Bimo Wijayanto gives a statement on May 20, 2025, after meeting with President Prabowo Subianto at the Presidential Palace complex in Jakarta. Bimo was given a mandate to lead the Taxation Directorate General at the Finance Ministry to improve the tax system in Indonesia. (ANTARA FOTO/Hafidz Mubarak A)
T
he tax office has expressed concerns that the free nutritious meal program and Red and White Rural Cooperatives (KDMP) program will result in low tax revenue because of a recent regulation issued by the National Nutrition Agency (BGN), suboptimal budget absorption and foul play.
Tax Director General Bimo Wijayanto said there was an ambiguity in the issuance of a BGN head circular which classifies the funds used by the programs’ kitchens as grants that are not subject to tax.
“While the purpose is to determine which goods are taxable and which are not, it should be prescribed through law,” Bimo said on Thursday, as quoted by Kontan.
The circular in question was not made publicly available but Bimo suggested that it was issued during the tenure of Dadan Hindayana, the former BGN head who was imprisoned earlier this month under graft suspicion.
Bimo said he “understands” why the circular was issued and is currently working with the BGN to “resolve it together” because the arrangement could mean a potential loss in tax revenue.
Prevailing regulations prescribe that grants are subject to income tax with exemptions for certain conditions, for instance if the grant is a gift between parents and their children or if it is given to social, educational or religious foundations.
A grant becomes taxable when it is linked to business activity, part of a commercial arrangement, received by a taxpayer as employment compensation or if it does not meet the exemption criteria under tax law in general.
