JAKARTA (TheInsiderStories) – Indonesian government plans to collect new levy on vehicles still use carbon dioxide and plastic, said the government official today (02/19). The nation has potential revenues more than Rp17 trillion (US$1.23 billion) from the imposing.
The new policy has been submitted by finance minister, Sri Mulyani Indrawati, to Commission XI of House of Representatives on Wednesday. The excise tax will be imposed on local manufacturers and importers. The imposing excise duty will be passed on to consumers who buy it.
The exemption gives to vehicle that do not use fuel, public and government needs, special purpose vehicles like ambulances and fire trucks, and for export needs. Also, motorcycles less than 250cc are not subject to the value added tax (VAT).
While for plastic bags, the government decided to put the levy to reduce a negative impact on the environment and health. The country proposed to put levy Rp30,000 per kilogram or Rp200 per unit and appllicates the policy for producers not consumers
Excise tax will be paid when the goods leave the factory or for imported goods at the port and that enter Indonesian customs territory. She added, “The inflation impact is 0.045 percent with a potential revenue of Rp1.61 trillion,” adds by Indrawati.
In addition, the new excise objects are sugar-sweetened drinks and artificial sweeteners that are ready for consumption still requires a dilution process, for example sachet coffee and energy-powered drinks. The levy is excluded for sweet drinks made by non-factory, honey, vegetable juices without added sugar, and if the products for exported needs, damaged, or destroyed.
The ministry hope the tax revenues could grow around 12 percent in 2020 from the realization values Rp in 2019. Last year, she decided to widen the 2019 State Budget deficit, from the initial planned at 1.84 percent of gross domestic product (GDP) amid the low tax revenues.
In 2019, the government tax revenues is estimating will records shortfall Rp140 trillion from the initial targets Rp1,786.4 trillion. She admitted there is a potential negative impact from the government’ import policies has been implemented during last year.
To improve this year’ tax revenues, the government has proposed the most-anticipated tax omnibus law draft on Jan. 28. The tax bill is one of three omnibus laws that President Joko Widodo has been launched in a bid to revise swathes of existing legislation that hamper investment in South-east Asia’ largest economy.
Indrawati has said the taxation law bill consisting of six clusters, 28 articles but amending several laws includes the income tax law, value-added tax law, the general provisions and tax procedures law, local taxes and local user fees.
First, the bill will allow the government to slash the tax rate on corporates to 20 percent from 25 percent now. This will be done in phases starting 2021-2023. Also, reduce the tax rates to 17 percent from the previous 22 percent for the go public companies. The new bill will also pave the way for the abolition of dividend tax if it’s reinvested and also cover tax breaks extended to various sectors.
The second cluster, the territorial system, is how foreign dividend income will be tax-free, as long as it is invested in Indonesia. For foreigners who are subject to domestic taxes, the tax obligations are specific to their domestic income.
The third cluster deals with the subject of personal tax. This distinguishes foreigners and Indonesian citizens. Indonesians who live abroad 183 days, they can turn into foreign tax subjects, so they don’t pay their taxes in Indonesia. For foreigners who have lived in Indonesia for more than 183 days, they are subject to domestic taxes and pay their taxes in Indonesia from their income from Indonesia.
The fourth cluster, on how to improve tax compliance, is to rearrange sanctions and interest rewards. Tax sanctions so far, if late, underpaid, or they violate the sanctions is the interest is quite high 2 percent to 24 months so that interest rates can reach 48 percent. Now, using interest rates that apply in the market, plus little administrative sanctions.
The fifth cluster, for the digital economy, is the taxation of electronic transactions that are made the same as ordinary taxes. This includes the appointment of a digital platform for collecting VAT and those who do not have a permanent establishment in Indonesia will still be taxed. This is mainly to respond to digital companies that do not exist in Indonesia but they get income from Indonesia such as Netflix, Amazon, Others.
The sixth cluster, are tax incentives such as tax holidays, super deduction, tax allowance, special economic zones, income tax for securities, and local tax incentives from local governments, according to Indrawati.
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