Gov’t Adjusts Income Tax Tariff to 1,147 Commodity Items to Control Deficit

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation
Date 5 September 2018
Category: News
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Minister of Finance Sri Mulyani Indrawati

Minister of Finance Sri Mulyani Indrawati

In a bid to maintain fundamentals of the Indonesian economy, the Government deemed it necessary to control current account deficit of the first semester of 2018 which was at US$13.5 billion or 2.6 percent of Gross Domestic Product (GDP).

“The Government has implemented several policy mixes, among others, by monitoring infrastructure projects particularly the national strategic projects, implementing the use of Biodiesel (B20), and evaluating policy of import income tax, “Coordinating Minister for the Economy Darmin Nasution said in a press conference of an event adopting theme ‘The Government Policies in Controlling Current Account Deficit (CAD)’, held in Jakarta, on Wednesday (5/9).

Minister of Finance Sri Mulyani Indrawati asserted that the Government adjusts the import income tax or PPh Article 22 tariff to 1,147 tariff post, with these following details:

  1. 210 commodity items including CBU luxury cars and large motorcycles experienced an increase in PPh Article 22 tariffs from 7.5 percent to 10 percent.
  2. 218 commodity items including consumer goods that have been mostly produced domestically such as electronic goods (water dispensers, air conditioners, lamps), daily necessities such as shampoo, soap, cosmetics, and cooking / kitchen utensils experienced an increase in PPh Article 22 tariffs from 2.5 percent to 10 percent.
  3. 719 commodity items including all items used in the process of consumption and other purposes, such as ceramics, tires, audio-visual electronic devices, and textile products (overcoat, polo shirt, swim wear) experienced an increase in PPh Article 22 tariffs from 2.5 percent to 7.5 percent.

The Minister affirmed that the policy to control imports by implementing Income Tax (PPh) policy is not new for the Government.

“The Government had implemented similar policy back in 2013 and 2015,” Sri Mulyani said adding that at that time the Government raised PPh Article 22 tariffs from 2.5 to 7.5 percent to 502 commodity items.

Meanwhile in 2015, the Government raised PPh Article 22 tariffs to 240 commodity items from the previous 7.5 to 10 percent to certain consumer goods that its luxury goods tax (PPnBM) was abolished.

According to the Minister, payment of PPh Article 22 means Income Tax to be paid in arrears which also can be credited to pay PPh due in the end of tax year.

“Thus, the increase of PPh Article 22 tariff  will basically not burden manufacturing industry,” the Minister firmly said. (Finance Ministry PR Division/ES) (RAS/YM/Naster)

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