Hans David Tampubolon, Jakarta – Investors are not taking advantage of existing tax breaks, despite their claims that they need additional fiscal incentives, according to Finance Ministry officials.
Speaking to reporters in Jakarta on Thursday, interim Finance Ministry fiscal policy agency (BKF) chief Bambang Brodjonegoro said only a few companies had applied for existing tax incentives.
Bambang said that investors were simply not aware of the existence of the programs. "The need for fiscal incentives in the past was also low, because investment was not as much as it is today," he added.
Current tax breaks for businesses include a reduction in taxable income to 30 percent of total investment carried over 6 years, accelerated depreciation and amortization, a 10 percent cap on income tax for offshore taxpayers and extending the period in which losses can be carried forward from five to 10 years.
According to reports, only 85 investors applied for the tax breaks since the government established the allowances by regulation in 2007. Out of the 85 applicants, 78 were granted the incentives.
The government regulation originally stipulated that 72 types of businesses could apply for the tax breaks, which was increased to 101 under government regulation No. 62/2008.
A further revision followed in 2011, when the government issued regulation No. 52/2011, which further expanded the types of businesses eligible for the incentives.
Separately, Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman Bambang Sujagad said that businesses welcomed the tax incentives, describing the government's measures as positive for promoting investment and likely to create more jobs.
"However, the government's good intentions must also be supported by the actions of the bureaucracy. Businesses will not be interested if they see that it will take too long to settle bureaucratic requirements," Sujagad said. "So far, we have seen many bureaucratic reforms. However, there are still many overlapping regulations that can create bottlenecks," he added.
BKF state income policy head Astera Primanto Bhakti said that the government was committed to finalizing a decision on tax allowance applications within 15 working days.
"The BKPM only needs five working days to process proposals from businesses and then submit them to the Finance Ministry's taxation office to gain final approval," Tamba Hutapea, BKPM's deputy director for investment planning, said.