Indonesia Advisory

Aiming to encourage middle- to upper-income resident to pay taxes, the Indonesian government announced a new tax policy -the exit tax for those aged 21 years and above departing from airports will be raised from Rp 1 million (US$91) to Rp 2.5 million, and for those traveling by sea from Rp 500,000 to Rp 1 million, effective from Jan. 1, 2009, to Dec. 31, 2010. All of the country's international gateways will feature a line for each of the three types of tax-exempt travelers — registered taxpayers, those below 21 years of age, and those with supporting documents.
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The tax will apply only to those not in any of the three groups. How about social activists and affected people? Paying around USD 100 additional cost for inviting Indonesian activists and affected people before, was already considered expensive, with this new tax policy of USD 250, it is really horrible. It could be a way to prevent social justice activists and affected people for going abroad for advocacy and campaign purposes.

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Those exempt from paying exit tax directly: .

1. People below 21 years of age

2. Foreigners staying in Indonesia no more than 183 days within the last 12 months

3. Diplomats and people working for the diplomatic corps

4. International organization officials, including families

5. Indonesian citizens with residency permits from a foreign country

6. Haj pilgrims

7. Indonesian citizens working abroad

8. People departing Indonesia by land

9. NPWP holders and their dependents

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However, the tax office previously said if the NPWP (registered tax payers) was rejected by port officials, travelers would have to pay the tax. So, be ready with USD 250 in the pocket.

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Those exempt from paying exit tax, with supporting documents:

1. Foreign students in Indonesia

2. Foreigners involved in research in science and culture, cooperation in technology, religious and humanitarian missions

3. Foreigners working in Batam, Bintan and Karimun and liable to pay income tax as per Article 21 or Article 26.

4. Disabled and ill people seeking medical treatment abroad paid for by social organizations

5. Members of art, culture and sport missions who represent Indonesia abroad

6. Students in a student-exchange program7. Indonesian citizens working abroad with approval from the Manpower and Transmigration Ministry

JakartaPost:

As businesses are crippled by the global economic crisis, forcing companies to lay off workers, the tax office has come up with a new regulation to cut taxes imposed on businesses hard-hit by the downturn.
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Issued last week, the regulation allows eligible companies a reduction of up to 25 percent in their income tax during the January-June period.
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The cut is derived from the amount of taxes businesses will pay under Article 25 of the Income Tax Law.
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The amount businesses must pay for the January-June period is calculated using as a benchmark the amount of income tax they paid the previous December, tax office chief Darmin Nasution said in the regulation.
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However, for businesses that have submitted their 2009 tax reports, the amount of Article 25 tax they must pay will be based on the tax report.
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Article 25 tax is an annual tax paid by businesses in monthly installments, to reduce the burden to businesses of having to pay large amounts of tax by the year's end.
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If businesses end up paying more tax than they are supposed to, they will get a refund at the end of the year.
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The tax office added certain businesses would not be eligible for the Article 25 tax cut.
These include banks, state- and regional-owned firms, publicly listed companies, and other companies that are legally required to file regular financial reports publicly.
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The new regulation is valid for six months, but can be extended until the end of the year.
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Should businesses believe they will not be able to meet their tax obligations for the July-December period, they can submit a written proposal, in June at the latest, showing their tax obligations will drop by a maximum 25 percent from their previous estimates.
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Businesses also need to submit their latest revenue figures a month before they submit the written proposals, and their estimated revenue figures until the next December.
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The tax office will then study the proposals and come up with a decision within 15 days.
The newly introduced tax relief is one of several tax incentives planned by the government to help businesses at least maintain current production capacity, amid rapidly weakening worldwide demand.
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By reducing the burden on the private sector, the government expects to minimize layoffs and keep the economy growing at a respectable level of between 4.5 and 5.5 percent.
Last year, the economy was predicted to have expanded by 6.2 percent.
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However, critics say the government's commitment to preventing layoffs, which would boost unemployment and poverty rates, has more to do with trying to maintain or even increase its popularity ahead of the upcoming general elections this April.
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The National Development Planning Agency (Bappenas) estimates the number of people living under the poverty line may rise to 33.71 million, or 14.87 percent of the total population, by the time official figures on unemployment and poverty are revealed in March by the Central Statistics Agency (BPS).
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The figure is based on the assumption that inflation hovers at around 9 percent.
For the full year, however, Bappenas forecasts poverty to reach 13.28 percent, or 29.99 million people, as inflation declines to 6 percent and economic growth to 4.5 percent.

Indonesia plans to maintain its zero percent palm oil export tax until the end of the year in a bid to shore up palm oil exports amid an expected slowing demand due to global economic weakness, an official said on Wednesday.

"We will implement the zero tax from Nov. 1. By our calculation, it will remain zero for November and December due to the price fall," Bayu Krisnamurthi, deputy to the chief economic minister, told reporters.

The government previously set a 2.5 percent tax rate for palm oil exports in November, down from 7.5 percent for October. [ID:nSP80301]

However, Finance Minister Sri Mulyani Indrawati said on Tuesday that the export tax on crude palm oil had been cut to zero percent, as part of a package of measures intended to shore up confidence in the financial markets. [ID:NSP392946]

Indonesia, the world's top producer of palm oil -- used in a wide range of products, from soap to biodiesel -- is forecast to produce 18.6 million tonnes of crude palm oil this year, compared with 17.2 million tonnes in 2007.

"By removing the tax, it is expected to help exporters and support the price of oil palm fruit for farmers," Agriculture Minister Anton Apriyantono told reporters on Wednesday.

The government also plans to remove import taxes for cocoa powder used in the food and beverages industry and carbon black, a raw material derived from petroleum, used by the tyre industry, to help cut costs to those industries, Apriyantono said.

Cocoa powder -- used to make biscuits and chocolate drinks -- has a 5-15 percent import tax and carbon black, which is imported from South Korea, Thailand and India, is subject to an anti-dumping import duty of 7-10 percent.