Gov't Plans to Lower Income Tax Rate, Businesses: Good News

TEMPO.CO, Jakarta - President Director of PT Lippo Karawaci Tbk. Ketut Budi Wijaya welcomed the government's plan to reduce corporate income tax from the initial 25 percent to 20 percent. The reduction is said to bring good tidings for Indonesian businesses.

"It is very good. It is the government's effort to reduce tax rate," Budi said after a gathering event on Thursday, June 20, 2019.

The plan was made as a response to Finance Minister Sri Mulyani’s statement, who said that the government is currently studying a plan to reduce corporate income tax rate from 25 percent to 20 percent.

According to Minister Sri Mulyani, the plan to reduce corporate income tax rate is in line with other tax incentives such as tax holiday and tax allowance. Therefore, the government is currently urging for a revision on Law No. 36 of 2008 on the Fourth Amendment on Law No. 7 of 1983 on Income Tax.

Budi said that the plan can help to improve state income from the tax sector "with more people paying tax and more incentives for new investments."

"I think this is the hope of all of us and also the hope of the government," Budi added.

Furthermore, Budi asserted that with the reduction of corporate income tax, it does not necessarily meant there will be a reduction in state income. However, he explained that by expanding tax coverage, it will generally increase tax revenue.

Despite the positive move, Budi said that the 20 percent rate is still less competitive compared to the 17 percent rate applied in Singapore.

EKO WAHYUDI