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Govt hopes tax incentives can make more companies go public
The government has already offered a 5 percent reduction in corporate income tax for companies listed on the stock exchange.
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A man passes a share price display at the Indonesian Stock Exchange (IDX) in Jakarta (Antara/Sigid Kurniawan)
T
he government has expressed hope that a number of fiscal incentives such as income tax reductions and low transaction taxes will further encourage local companies to hold initial public offerings (IPO) and float their shares on the Indonesia Stock Exchange (IDX).
“The more firms that go public, the better it is for our national economy as well as for the credibility of our capital market,” Taxation Directorate General spokesman Hestu Yoga Saksama told businessmen at a seminar in Jakarta recently. “If that happens, we are optimistic that tax revenue will be even better.”
The government has already offered a 5 percent reduction in corporate income tax for companies listed on the stock exchange as stipulated by Government Regulation No. 56/2015. The tax cut will be applied if at least 40 percent of the companies’ shares are held by more than 300 public investors, with share ownership of up to 5 percent.
In addition, the sale of the shares listed on the local stock market is only subject to a final tax of 0.1 percent of the transaction value. The sale of founder shares is also subject to an additional final tax of 0.5 percent on the share value at the time of an IPO. For comparison, shareholders of private companies have to pay between a 5 and 30 percent capital gains tax if they sell their shares.
The tax authority has also set up a special tax office for publicly listed companies to ease tax payment procedures for them, said the tax office’s section head of corporate income tax regulation Riztiar Arinta.
“With the administrations [for listed companies] brought together under one tax office, we hope that any taxation issues [faced by listed companies] could be solved immediately,” said Riztiar.
Ten companies have listed their shares on the IDX this year, raising Rp 1.59 trillion (US$112.06 million), IDX vice president Saptono Adi Junarso said on the same occasion. He added that around 27 more firms were preparing to list their shares on the bourse.
