Nearly 400,000 taxpayers apply for incentives as COVID-19 hits economy

29-Jun-2020 Intellasia | JakartaPost | 6:50 AM Print This Post

Nearly 400,000 individual and corporate taxpayers have applied for tax incentives as the coronavirus pandemic has disrupted economic activity, according to the tax office.

The Taxation directorate general’s director for tax compliance and income, Ihsan Priyawibawa, said the government had agreed to grant the incentives to 360,818 or 93 percent of the applicants, adding that the office had rejected the rest of the applications over administrative issues.

“These tax incentives are given to stabilise the economy, as well as to boost purchasing power and productivity,” Ihsan told reporters during a press briefing on Thursday.

The incentives will take the form of individual income tax exemptions, import tax deferral and corporate income tax cuts from 25 percent to 22 percent this year and to 20 percent starting 2022, among other incentives, for almost all business sectors.

According to the ministry’s data, the trade sector received more than 50 percent of the incentives, followed by manufacturing, services as well as food and beverage.

Around 150,000 individual taxpayers have received individual income tax exemption, while nearly 200,000 micro, small and medium enterprises received the government’s relief.

The Indonesian government has allocated Rp 695.2 trillion (US$49.3 billion) worth of COVID-19 spending to boost economic growth and strengthen the healthcare system amid the pandemic. This includes Rp 120.61 trillion allocated by the government to provide tax relief for individuals and businesses affected by the pandemic.

The coronavirus pandemic has ravaged the country’s economy, which government officials expect to contract 0.4 percent this year under a worst-case scenario or grow by 1 percent under the baseline scenario. Indonesia’s gross domestic product (GDP) grew by 2.97 percent year-on-year (yoy) in the first quarter, the weakest rate since 2001.

At the same time, the government has been struggling to collect more revenue to fund its cash-strapped budget as the COVID-19 pandemic hits almost all business sectors. Ministry data show that state revenue this year has reached Rp 664.3 trillion as of May, down 9 percent yoy, as tax income dropped 10.8 percent yoy to Rp 444.6 trillion.

The government expects this year’s budget deficit to reach 6.34 percent as it ramps up spending to fight the coronavirus amid slumping income.


Category: Indonesia

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