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This week’s tax updates: Treaty with Singapore, omnibus bill submission
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President Joko “Jokowi” Widodo (left) and Singaporean President Halimah Yacob inspect the honor guard at Bogor Palace, West Java, on Tuesday. (Antara/Hafidz Mubarak A)
T
he government is amplifying tax collection efforts by submitting an omnibus bill on taxation to the House of Representatives this week as well as signing a double-tax avoidance agreement with Singapore.
Finance Minister Sri Mulyani Indrawati said the bill, which would reduce corporate income tax and make internet giants pay taxes, was waiting for approval from the House before its implementation.
“Though we cut the corporate tax rate, we will widen our tax base and maximize our spending so that there is no economic shock,” Sri Mulyani told reporters on Wednesday. “This must be maintained because of the global economic slowdown.”
Indonesia collected Rp 1.33 quadrillion in tax revenue last year, or 84.4 percent of the full-year target, causing a shortfall of Rp 245.5 trillion, the worst in at least five years. This caused the state budget deficit to rise to 2.2 percent of the gross domestic product (GDP) in 2019, far above the government’s target of 1.8 percent.
Read also: Indonesia’s 2019 budget deficit widens to 2.2 percent amid tax revenue short fall
The omnibus bill will introduce new regulations forcing internet companies operating in Indonesia to pay 10 percent value added tax (VAT) regardless of where they are based.
