Tuesday, 30 September 2014


Facilitation of tax holiday was designed to drum up long term investment to Indonesia to drum up long term investment to Indonesia, especially new investment in pioneer industries in Indonesia which would accelerate growth of pioneer industry in Indonesia. Within the context of tax holiday, the pioneer industry was an industry of broad linkages, giving added value and high externality, introducing new technology and having strategic value to national economy,

Considering the importance of the policy in sustaining investment in Indonesia, the Government was today revising the regulation related to tax holiday. In revising this policy, the Government planned to prolong the period for tax exemption to become more than 10 years. But the Government underscored that facilitation of tax incentive for more than 10 years was only applicable to strategic industry.

As footnote, in the Regulation effective today, i.e. the Regulation of the Ministry of Finance [PMK] No. 130/PMK.011/2011 on facilitating exemption of Income Tax it was stated that exemption of income tax [Pph] given to recipient industry was 5 years and maximum 10 fiscal years, effective as per beginning of commercial production.

Arryanto Sagala, Head of the industry Climate and Quality Analyzing Board [BPKIMI], Ministry of Industry in Jakarta on Tuesday [9/9] expected that tax holiday could be a form of symbiosis mutualism between Government and investors. On the one hand Indonesia needed additional capital but businesspeople wished to have fiscal facilitating so they could make profit. The Government finally decided to extend facilitation of tax holiday for another year. The reason was that such facilities were still needed. “The Government and needed each other” Arryanto stated.

Arrayanto made sure that extention of tax holiday did not change the content of PMK 130/2011. One of the articles of the Regulation stated that corporations having of Income Tax Free incentives for 5 to 10 years. He elaborated that through the period of tax holiday, companies were still entitled to 50% reduction of PPh due for 2 years. One thing was sure that to obtain this fiscal incentives, producers must be ready to undergo complicated burreucratic procedure. Tax holiday was tax incentive. All countries in need of investment growth would offer fiscal easing as such.

He further disclosed that the Ministry of Industry had recommended that capital good industry and non-auxillary goods be given lenience in tax paying. While extending period of tax incentives, he said, the Government would also lessen prerequirements for strategic industries.

Arrianto explained that in the present policy it was mentioned that taxpayers who were entitled to tax holiday were those who planned to invet fresh capital at leat Rp1 trillion. The revision was expected to drum up foreign investors needed by Indonesia to reduce dependency on import.

Arryanto believed that tax holiday needed be revised because many reports stated that the process to obtain tax holiday was not too tight. Arrianto added on that the Coordination Minister of Economy had asked for trimming of the bureaucracy structure. The task was mandated to the Ministry of Finance, aided by the Ministry of Industry, BKPM, and the Ministry of Trade. (SS)

Business News - September 12, 2014

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