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Jakarta Post

Luxury tax cut to keep Indonesians out of S'€™pore stores

  • Satria Sambijantoro

    The Jakarta Post

Jakarta   /   Thu, June 11, 2015   /  08:46 pm

The government will slash luxury tax slapped on branded items, such as those produced by Gucci, Louis Vuitton and Hermes, to encourage wealthy Indonesians to shop at home instead of overseas, particularly in Singapore.

Finance Minister Bambang Brodjonegoro said on Thursday that many Indonesians preferred go on shopping sprees overseas because branded items sold in Indonesia were considered overly expensive because of the high luxury tax.

"If we lower the tax, people will no longer shop in Singapore," said Bambang.

Bambang explained that the items bought in Singapore were exempt from luxury tax and that the customs office could not levy a similar tax once the items arrived in Indonesia as a result of a lack of supervision.

"Supervision is difficult. A shopper can carry one or two (luxury) bags into Indonesia and claim they are for personal use. But in reality, they re-sell them here," he said.

Bambang also said that a low tax on luxury items would also draw foreign tourists to Indonesia.

According to Bambang, the government will lower the tax by 40 percent, with the new policy to take effect this month.

The policy is part of a package to help bolster the rupiah and kick-start the sluggish economy, which is mostly fueled by domestic consumption. (ren)

 

Luxury tax to be exempt or reduced on following items:

- Electronics: refrigerators, televisions, water heaters, video recorders, microwaves, washing machines, driers, air conditioning units for cars, cameras and projectors.

- Sports items: equipment for fishing, golf, diving, surfing and shooting.

- Music items: pianos and electronic equipment.

- High-end branded items: perfume, bags, wristwatches, horse saddles, jewelry, footwear.

- Home and office appliances: Carpets, chairs, cabinets, lamps, porcelain and floor tiles.

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