JAKARTA (TheInsiderStories) - The Indonesia government cuts personal tax income for workers in bonded zone industries by up to 50 percent to boost public spending, said one senior minister on Friday. Currently, the government sets personal income tax at between 5 to 30 percent, as set out in the ministerial decree No. 21/2015.
Coordinating minister for Economic Affairs Darmin Nasution, said the new policy is part of the seventh economic policy announced on Friday. The new policy, he added, focuses on tax allowance for labor intensive industries and incentives for farmers.
“President asks me to announce the new policy package today,” he said, by adding that the company that can get this facility employ at least 2,000 labors, registered at Social Security Administrator (BPJS) and comply to regional minimum wage (UMR) requirement.
In addition to the reduction of personal income tax, previously Chairman of the Investment Coordinating Board (BKPM) has asked the Ministry of Finance to relax the requirements of tax allowance for labor-intensive industries.
According to government regulation No. 18/2015, the company located outside Java is not allowed to get the tax relief. In fact, during this time a lot of labor-intensive industries are located on Java Island.
BKPM recorded that labor-intensive investment in January to September 2015 period, decreased by 11.74 percent year on year to Rp41.55 trillion, from Rp47.08 trillion in the same period last year. The figure consists of four sectors namely textiles, foot-wear, food & beverages and furniture. The sector that showed a most severe decline was the food and beverage industry which recorded a 19.85 percent decline.
The other incentives is land certification for farmers, incentives for small medium enterprises (SMEs) product for export and logistics. (*)