Illustrative image (Photo: Jakarta Post)
Jakarta (VNA) – Indonesia’s state revenue isexpected to decline significantly this year as the government rolls out taxincentives, including corporate income tax cuts, amid the COVID-19 pandemicthat has triggered declines in commodity prices and business output.
Finance Minister Sri Mulyani Indrawati said on April 6 thatthe state revenue would amount to 1.76 quadrillion IDR (65 billion USD) thisyear, a year-on-year decline of 10 percent compared to last year. The figure isalso lower than the 2020 state budget target of 2.23 quadrillion IDR.
Tax income will fall 5.4 percent year-on-year, while non-taxincome will contract 26.5 percent due to lower oil and coal prices.
Indonesian President Joko Widodo has signed a governmentregulation that activates crisis protocols, such as widening the state budgetdeficit beyond the legal limit of 3 percent of GDP, as part of efforts tocushion the economy in the face of a global recession caused by the pandemic.
The regulation slashes corporate income tax from 25 percentto 22 percent for the years 2020 and 2021 and will be further reduced to 20percent starting 2022. The government will provide additional rate cuts of 3percent for public companies with at least 40 percent of their stock traded onthe stock market.
It also exempts workers whose annual salary is below 200million IDR from paying income tax for six months, as well as deferring importtax payments for six months for 19 manufacturing industries. It will also speedup the repayment of overpaid taxes.
Indonesia has declared a public health emergency and orderedlarge-scale social distancing as the virus spreads rapidly.
The government now expects the country’s economy to grow 2.3percent this year, the lowest since 1999, and even contract 0.4 percent in theworst-case scenario as the virus disrupts business activity./.
