The government is preparing various tax incentives to encourage investment and exports. Some tax incentives have been decided and the regulations are ready to be issued. The various tax incentives were discussed at a limited meeting with President Joko Widodo.
Minister of Finance Sri Mulyani Indrawati stated that the President wanted more tax incentives. “Which will not just become an instrument, but more importantly can be implemented in the field,” she said after attending a closed meeting at the Presidential Office, Jakarta, Wednesday (6/19).
She stated that several regulations had been discussed, such as super deduction taxes and taxes on energy-efficient motorized vehicles, including electric cars. “We hope that the incorporation will be completed and can come out this week or early next week,” she said.
The interest income tax rate for infrastructure bonds has also been decided. The plan is that the tariff will be reduced from 15% to 5%. In addition, she mentioned the exemption of value added tax (VAT) for leasing of aircraft from overseas.
As for the tax allowance, the ministry is still awaiting the review from the Coordinating Ministry for Economic Affairs regarding what industries that are entitled to that facility. Beyond that, the government is preparing changes to the Income Tax Law to support the plan to reduce Corporate Income Tax to 20%.
From the property sector, Sri Mulyani revealed that the government plans to increase the non-VAT limit for simple houses by region. Previously, the government had decided on increasing the limit for luxury residential value subject to income tax and luxury goods sales tax (PPnBM).
The value limit for luxury housing will increase from IDR 5-10 billion to IDR 30 billion. “The tariff is 20%,” she said. While Article 22 Income Tax for Luxury Housing will decrease from 5% to 1%.
In particular, the Minister of Industry Airlangga Hartanto explained, tax incentives in the form of mini-tax holidays and super-deductible taxes will be given to are export-oriented industries that support vocational, innovation and labor-oriented industries.
He elaborated, super-deduction tax for industries that support the vocations program can reach 200% and those that support innovations reach 300%. “For labor-intensive industries, the industry will be assessed by industry,” he said.
Regarding electric cars, he explained there would be incentives to accelerate development. “One of the accelerations can be from Luxury Goods Sales Tax, but if it is driven by a local brand, we can provide additional incentives,” he said.
In a closed meeting, President Jokowi reminded that export and investment issues had been discussed in meetings six times. He also gave an ultimatum so that there should immediately be a policy so that Indonesia will be able to take advantage of the current global economic momentum.
“I ask that the policies relating to investment and exports be truly concrete, and executed while taking into the consideration the difficulties experienced by the involved parties,” Jokowi said.