Until March, 2020, the Financial Services Authority recorded 13 issuers has raised funds Rp21.55 trillion (US$1.35 billion) amid the COVID-19 outbreak - Photo: Special

JAKARTA (TheInsiderStories) – Indonesian government continues to encourage more companies to take floor on the stock market through incentives and tax facilities senior officials said on Monday (04/29). This year, Indonesia Stock Exchange (IDX) was expected 45 companies list its shares.

According to Chief of Regulation Section Directorate General of Taxation Riztiar Arinta, the provision of tax incentives aims to increase the role of capital markets in the Indonesian economy and to encourage transparency and corporate governance, including in terms of tax compliance

The government, he said, provides incentives for reducing corporate income tax for companies that are on the stock exchange with more than 40 percent of shares distributed in the stock market. He continued, since 1983, the issuer can get incentives in the form of reducing corporate income tax by 5 percent of the total that should be paid.

This regulation is stated in Law Number 36 Year 2008 concerning Income Tax. In addition, the government also provides incentives for shareholders whose listed company shares by give transaction tax of 0.1 percent of the transaction value +0.5 percent of the initial public offering (IPO) value for the founding shareholders or 0.1 percent of the transaction value for other shareholders.

Arinta explained, companies going public get many benefits, among others the reduction in the corporate income tax rate by 5 percent, from the 25 percent currently in force. He added, “The condition is that companies must trade at least 40 percent of their shares and a minimum of 300 shares owned.”

Second, the final income tax on the sale of shares on the exchange is only 0.1 percent of the transaction value, plus 0.5 percent of the value of the shares for the sale of the shares of the founder. Third, the calculation of income tax installment article 25 can also be done based on quarterly reports in accordance with business conditions.

“For companies that are on the market, they can use book value in order to spin off, or expand their business,” he continued.

Meanwhile, Director of the Indonesia Stock Exchange I Gede Nyoman Yetna said that in the past few years, the number of companies that went public increased. It was noted, in 2018 there were 57 companies that had been listed on the stock exchange.

“With the existence of tax incentives and tax amnesty, it is a breath of fresh air for the development of the Indonesian capital market,” he said.

However, Yetna stressed that Indonesia was still pursuing so that more companies would go public because Indonesia still inferior to neighboring countries, such as India whose company went public had reached 6,000 companies.

“Overall we now have 627 companies going public, but still losing to India,” he said.

Of the 627 companies, there are 117 bonds with a total market capital of Rp7,401.7 trillion (US$521.25 billion). While the average daily trading equity reached Rp9.65 trillion and the bond trading average was Rp17.8 trillion.

“This year, there are 17 companies that have pipelines to enter the stock exchange. The hope is that more and more people will want an IPO next year,” Yetna stated.

This was justified by IDX’ Executive Vice President Saptono Adi Junarso, that said that this year the government is targeting a minimum of 75 companies that want to market on the stock exchange, and will continue to target so that more private companies will work together to build a better Indonesian economy.

“From those companies there are Bali United football clubs who have also submitted bids. Our target for the year will be 75-100 companies that intend to floor the market. We don’t set a higher target because the Financial Services Authority itself targets 100 companies,” he said.

But he firmed that his parties continues to strive to continue to find a way out, not only by providing incentives, but with strategies that further ease the company. Of course, this was done in collaboration with the Directorate General of Taxes and the Fiscal Policy Agency of the Ministry of Finance.

Written by Daniel Deha, Email: daniel@theinsiderstories.com