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Indonesia extends tax cuts to bolster faltering economic recovery

In anticipation of a downturn precipitated by the "second wave" of COVID-19 infections across Java, the Finance Ministry has decided to extend its tax incentives while fine-tuning their targeted sectors.

Vincent Fabian Thomas (The Jakarta Post)
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Jakarta
Tue, June 22, 2021

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Indonesia extends tax cuts to bolster faltering economic recovery Finance Minister Sri Mulyani Indrawati speaks at an online press conference about the state budget on June 21, 2021. The minister announced the extension of tax incentives introduced to support economic activity during the coronavirus pandemic.. (Finance Ministry/screenshot)

T

he Finance Ministry has extended its tax incentives to bolster economic recovery efforts against the impending risk of a downturn following the recent COVID-19 surge across Java.

The incentives would be extended to the end of the year from an initial expiry date of June 30, Finance Minister Sri Mulyani Indrawati said on Monday.

However, the government is aiming for more targeted use of the incentives, meaning that they would no longer be applicable to every sector.

“We will only provide [incentives] for those sectors that still need support,” Sri Mulyani told a virtual press conference on Monday. “We will study which sectors still need it.”

Read also: The big fiscal dilemma

While announcing the extension of the tax incentives, the government also warned that the surge in COVID-19 cases would hamper economic growth, especially in the second quarter.

The ministry had targeted gross domestic product growth of between 7.1 percent and 8.3 percent for this year, but the prolonged pandemic has prompted it to lower the upper end of that range.

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