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Rent tax break for retailers comes into effect
The government has temporarily waived value added tax (VAT) on retail rent in view of the latest extension to the PPKM, but industry associations and retailers say more can be done to help the ailing sector.
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A security guard makes his rounds on June 16, 2020 past shuttered shops at the ITC BSD Serpong shopping center in Serpong, South Tangerang, Banten. The pandemic and related restrictions have incurred a heavy cost burden for retailers, with businesses now bracing for additional impacts as the four-tier public activity restrictions (PPKM) was extended through to Aug. 9, 2021. (Antara/Muhammad Iqbal)
T
he Finance Ministry has temporarily waived value added tax (VAT) on commercial property rent to alleviate the financial burden on retailers after the latest public activity restrictions (PPKM) were extended yet again to Aug. 9.
Fiscal Policy Agency (BKF) head Febrio Kacaribu said in a statement on Tuesday that the government would waive 10 percent VAT on commercial rent from August to October as stipulated in Finance Ministry Regulation No. 102/2021, which came into effect on July 31.
The tax break covers retail tenants in shopping malls, traditional markets and shopping complexes, as well as apartments, hotels, educational institutions, office buildings and public transportation facilities.
“The government hopes this incentive can further alleviate the burden on the retail sector during the pandemic,” Febrio said, adding that the BKF hoped the tax break would help minimize job loss in the sector.
The retail sector employed more than 25.16 million workers in February, according to the latest data from Statistics Indonesia (BPS).
The Finance Ministry’s tax relief has wider coverage than a similar scheme announced on July 25 by Coordinating Economic Affairs Minister Airlangga Hartarto, who promised a tax cut on retail rent from June to August, but only for tenants in shopping malls.
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