(MENAFNEditorial)
Tax Allowance: Indonesia Promises To Accelerate The Process
JAKARTA Thursday 22 Janyary 2015 — Government promised acceleration on tax allowance facility bureaucracy by maximum 2 months from previously no time certainty.
The government expects that the acceleration together with revision on President Regulation No 52/2011 which loosens the requirement to get tax allowance facility can attract more companies to apply for it.
The Acting Head of Fiscal Policy Board Andin Hadiyanto said the government had actually formed verification team last year to represent Coordinating Board of Capital Investment (BKPM) and Directorate General of Tax. The team was assigned to assess whether a company is feasible to get the facility.
According to President Regulation No 52/2011 Indonesia gives tax allowance facilty with 4 requirements.
1.Total net taxable income is reduced to 30% of the total investment value over the course of six years at 5% percent tax payable each year.
2.Accelerated depreciation and amortization of assets.
3.For dividends paid to offshore taxpayers an income tax rate of 10% or lower.
4.Ability to carry forward losses by at least 5 years and up to 10 years depending on certain conditions:
a. Further one year if the investment is located in a bonded industry zone
b. Further one year if the investment employs at least 500 Indonesian national workers for five consecutive years
c. Further one year if the investment requires at least 10 billion RP in spending on economic and social infrastructure for its relevant business area
d. Further one year if at least 5% of the investment value is spent on research and development in Indonesia to develop products and promote efficiency in the production process over 5 years
e. Further one year should the investment procure at least 50% of its raw materials and/or output components from Indonesia’s domestic market.
Tax allowance is an incentive in form if tax reduction provided in the form of compensation for losses loss for more than 5 years. The loss within those 5 years will be deduction for income tax liability after the company gathered profit. Read more
Indonesia Business Daily (http://business.bisnis.com)
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sutarno@bisnis.co.id
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