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Jakarta Post

Govt caps deductible revenue for tobacco firms

  • Aditya Suharmoko and Benget Besalicto Tnb.

    The Jakarta Post

Jakarta   /   Wed, July 1 2009   /  08:53 am

The Finance Ministry has issued a regulation that caps the amount of promotional and distribution costs that can be deducted from the annual revenues of cigarette and pharmaceutical companies. In a statement issued Tuesday, the ministry said deductible revenues tied to such costs for companies with sales of up to Rp 500 billion (US$49 million) annually must not exceed 3 percent of total sales or Rp 10 billion. Those with sales from Rp 500 billion to Rp 5 trillion must not exceed 2 percent of sales or Rp 30 billion, while those with sales above Rp 5 trillion must not exceed 1 percent of sales or Rp 100 billion. The cap for pharmaceutical companies falls in one category, no more than 2 percent of sales or Rp 25 billion. The companies are also obliged to submit a report on their promotional and distribution spending plans or they will be unable to subtract the costs fr...