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Jakarta Post

It is difficult to cut sale taxes for sedans: Sri Mulyani

  • News Desk

    The Jakarta Post

Jakarta   /   Mon, February 19, 2018   /   11:45 am
It is difficult to cut sale taxes for sedans: Sri Mulyani Finance Minister Sri Mulyani Indrawati speaks on Feb. 7 at the Mandiri Investment Forum (MIF) in Jakarta. (Antara/Muhammad Adimaja)

The Finance Ministry is discussing a proposal from the automotive industry demanding a reduction in sale taxes on sedans, says Minister Sri Mulyani Indrawati.

She, however, indicated that it would be difficult to meet the demand. Instead, she preferred imposing entry taxes on  imported sedans to improve the competitiveness of locally manufactured sedans.

“If the objective is to reduce imports, we may impose an entry tax on imported sedans,” said Sri Mulyani in Jakarta over the weekend as quoted by kontan.com.

In response, Indonesian Automotive Industry Association (Gaikindo) chairman Jongkie D. Sugiarto said the government should not only focus on reducing imports but also encourage Indonesian automotive manufacturers to export their products.

“Currently, we only export multi-purpose vehicles [MPV]. We also want sedans, SUVs and pickups that we produce to be exported as well,” he said on Sunday, adding that 30 percent sale tax on sedans could not compete in the international market.

Meanwhile, the government imposes between 10 and 20 percent sales tax on non-sedan cars.

Sri Mulyani said the tax reduction was being discussed by a team at the Fiscal Policy Agency (BKF).

Gaikindo recorded a significant increase in vehicle exports, from 85,769 in 2010 to 316,538 in 2017. The exports reached a peak in 2015 at 397,023 vehicles.  However, the number was small compared to export figures in Thailand, which was recorded at between 1.2 and 1.5 million in the last several years. (bbn)