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Jakarta Post

Cut in tax rate to benefit banks most

  • Harry Su

    Economist

  /   Wed, January 28 2009   /  03:23 pm

Starting in 2009, the government and the parliament have agreed to lower Indonesia's personal income tax upper-bracket from 35 percent to 30 percent This is being implemented to create a more competitive tax rate compared to regional peers. It is worth pointing out that Indonesia's maximum tax bracket is now lower than both Thailand and the Philippines. Nonetheless, the Indonesian tax committee has stated that the personal income tax upper-bracket could fall still further to the 25 percent level in the future. The new tax ruling has raised the maximum tax bracket to those with incomes of more than Rp 500 million (US$45,500) per annum from Rp 250 million previously. The next bracket (Rp 250 - Rp 500 million) will be taxed at 25 percent, followed by 15 percent for those in the Rp 50 - Rp 250 million bracket. Those making below Rp 50 million will be taxed at 5 per...