Gov’t Prepares Bill on Taxation to Create More Competitive Business Environment

Finance Minister Sri Mulyani Indrawati (center) listens to directives of President Jokowi and Vice President Jusuf Kalla prior to a limited meeting at the Presidential Office, Jakarta, Tuesday (3/9). (Photo by: Rahmat/PR)

In response to dynamic and rapidly changing economic needs, the Government will propose a new Bill on taxation which is related to three previous laws, namely Law on Income Tax (PPh), Law on Value Added Tax (VAT), and Law on General Provisions and Tax Procedures (KUP).

Minister of Finance Sri Mulyani Indrawati, on Tuesday (3/9), said that there are several substances in the Bill proposed, including lower enterprise income tax rate, elimination of income tax on dividend for domestic or foreign enterprises which have invested in Indonesia, and tax procedures for digital enterprises which are not incorporated in Indonesia.

“The Bill aims to make Indonesia’s economy more competitive. In addition, we must maintain Indonesia’s economic growth to thrive amidst global economic slowdown,” Sri Mulyani told reporters after attending a Limited Meeting on Tax Reform for the Improvement of Economic Competitiveness, at the Presidential Office, Jakarta.

The Minister added that if some regions of the global economy suffer from recession, the Government must ensure that economic resources in the country are resilient to that condition.

“We must maintain consumption, increase investment, and maintain export value in this unfavorable environment,” she added.

The Minister went on to say that President Joko “Jokowi” Widodo has asked to establish policies on investment and trade that help to ease investment and performance of export from Indonesia. Thus, all obstacles should be removed.

For that reason, Sri added, the Ministry of Finance will work on the taxation in order to create a more competitive zone for economy. ‘Indonesia means business’ since the country welcomes any productive economy activities.

There are two choices for enterprises or individual earning income or having resources during this time. They will not be subject to income tax as long as their resources are used for investment or if they invest in Indonesia. On the contrary, they will be subject to income tax if the money is kept in the forms of income, bank saving, or other forms.

“It sent signal that Indonesia is a pro-investment country. Therefore, we scrap obstacle for investment including income tax and VAT,” the Minister said.

On that occasion, the Minister expressed hope that the Bill will be proposed to the House of Representatives (DPR) immediately to be reviewed and approved. As for today’s limited meeting, the results will be finalized and will be followed by a public consultation to compile academic draft and formulate the Bill which will be proposed by the President to the House.

“We hope the process will be started immediately by bearing in mind that the House is in transition. Nevertheless, it will not disrupt the House in carrying out its legislative function,” Sri concluded. (MAY/FID/RAH/ES)

Translated by : Rany Anjany Subachrum
Edited by : Mia Medyana Bonaedy