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Corporate income tax cut not imminent: Government
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Tax campaign: People pass by a banner promoting the government's tax amnesty at Tanah Abang textile market in Jakarta. (Antara Photo/Wahyu Putro a)
T
he government’s plan to push for a tax reform next year would likely drop an option to lower the level of corporate income tax, which currently stands at 25 percent, a senior official said.
The Finance Ministry's fiscal policy agency head Suahasil Nazara said the proposed reform would likely focus on improving tax collection and compliance as well as facilitating the upcoming implementation of the Automatic Exchange of Information (AEOI), a part of a coordinated global effort to eradicate tax evasion.
Suahasil said there was a plan to reduce tariffs but the government would not introduce a low tax regime.
“Our guideline is not the tax rate competition because the roles of tax in Indonesia are different than in other countries," he said during DBS Asian Insights Conference 2016 in Jakarta on Thursday.
Suahasil said Indonesia, home to more than 250 million people, still needed to develop many infrastructure projects. Thus it was not the right time for the country to make a major slash cut in the current tax rates.
As of October, tax authorities only managed to collect Rp 870.95 trillion (US$65.2 billion) in taxes, or 64.27 percent of its annual target of Rp 1.36 quadrillion, amid the pinch of a global economic slowdown. (hwa)
