Indonesia Considers Tax on Corporate Foreign Debt
Indonesia plans to impose a tax on companies borrowing money from overseas, as part of an effort to control the private sector’s foreign debt, Bisnis Indonesia reported on Wednesday, quoting a high level official at the finance ministry.
Bambang Brodjonegoro, head of the ministry’s fiscal policy unit, said the finance ministry will coordinate with the central bank, Bank Indonesia, to monitor withdrawals of foreign debt by the private sector.
He said the government will design a tax instrument that will be linked with a company’s debt to equity ratio.
“Hopefully, it can help monitor, reduce chances for corporate foreign debt to soar,” he said, as quoted by Bisnis.
In early move, the government will ask companies to report their foreign debts, Bambang said.
Bank Indonesia Governor Darmin Nasution said the central bank has not decided what kind of monetary policy that would be implemented to prevent corporate foreign debt to soar.
He, however, acknowledged that such debt grew fast last year. According to data from the central bank, as of Sept. 2012, the outstanding figure of the private sector’s foreign debt stood at $123.27 billion.
As a comparison the government’s foreign debt last year was recorded at Rp 1,900 trillion ($196.8 billion).
Darmin said the aggregate figure looks safe. However, individual company assesments, may show some problems.
He said the government will design a tax instrument that will be linked with a company’s debt to equity ratio.
“Hopefully, it can help monitor, reduce chances for corporate foreign debt to soar,” he said, as quoted by Bisnis.
In early move, the government will ask companies to report their foreign debts, Bambang said.
Bank Indonesia Governor Darmin Nasution said the central bank has not decided what kind of monetary policy that would be implemented to prevent corporate foreign debt to soar.
He, however, acknowledged that such debt grew fast last year. According to data from the central bank, as of Sept. 2012, the outstanding figure of the private sector’s foreign debt stood at $123.27 billion.
As a comparison the government’s foreign debt last year was recorded at Rp 1,900 trillion ($196.8 billion).
Darmin said the aggregate figure looks safe. However, individual company assesments, may show some problems.
Source: Bisnis Indonesia (Jan. 2, 2013) Page: 3