Minister of finance, Sri Mulyani Indrawati, has extended the tax incentives for the health sector in Indonesia, including the pharmaceutical industry until June 2021 - Photo by Xinhua

JAKARTA (TheInsiderStories) – Minister of finance, Sri Mulyani Indrawati, has extended the tax incentives for the health sector in Indonesia, including the pharmaceutical industry until June 2021. Initially, the policy ended on Dec. 31, 2020 based on the ministerial decree Number 143 of 2020 concerning on the handling of COVID-19.

The purpose of the policy is to support the availability of vaccination equipment in the country. In the new regulation, the ministry ruled the value added tax (VAT) and import tax incentives given to the pharmaceutical industry that produce vaccines or drugs after get a recommendation letter from the ministry of health.

Article 2 stated that VAT incentives are given to the importers and pharmaceutical industry for the production of vaccines or drug raw materials, and the taxpayers. The certain parties included the government agencies, hospital, or Other parties. The taxable Goods are medicines, vaccines and vaccination support equipment, laboratory equipment, also detection equipment.

Second, the exemption from income tax in Article 22. However, to get the incentives terms and conditions applied. Exemption from Article 22 is granted after the drug-makers has obtained a recommendation letter from the ministry of health, which at least contains identity of the company, seller, names and quantities of goods, also a statement that the raw materials to be purchased are raw materials for the production of vaccines or drugs to handle the virus.

Third, the exemption of Article 21 for individual domestic taxpayers who receive or receive the compensation for providing services needed in the context of handling the pandemic is contained in Article 7. Fourth, Article 23 exemption is given to the technical services, management services, consulting services, and other services.

Previously, deputy minister of finance, Suahasil Nazara admitted that the implementation of tax breaks in the context of handling the virus was not optimally used by the community. He explained that Indonesia has placed a tax break of 0.5 percent to 0.7 percent of GDP in the form of tax relief.

“The number of economic actions in the midst of a depressed economy has made tax breaks not optimal. Tax relief occured amid a low tax to GDP ratio. And we know this is our obstacle, in the medium term we must ensure that fiscal consolidation can also run smoothly,” he said last week.

Written by Editorial Staff, Email: theinsiderstories@gmail.com