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Gov`t Mulls to Increase Cigarette VAT to 9.1 Percent
Tuesday, 20 December, 2016 | 19:08 WIB
Gov`t Mulls to Increase Cigarette VAT to 9.1 Percent

TEMPO.CO, Jakarta - Finance Ministry's head of fiscal policy agency Suahasil Nazara said that the government is planning to set a new value added tax (VAT) for cigarette companies and distributors.

According to Suahasil, the law stipulates that the value added tax is set at 10 percent.

"But since the VAT is collected at the manufacturer level, the VAT is set at 8.7 percent," Suahasil said in Jakarta onDecember 20, 2016.

Suahasil argued that the VAT for cigarettes should be imposed like other goods from the upstream sector to the downstream one.

"The amount of the VAT is still being considered. Hopefully we will have it within a few weeks. The Supreme Audit Agency (BPK) said that the VAT could be set at 9.1 percent. We’re still looking at possibilities of responses that might occur," Suahasil added.

The cigarette industry has called on the government to give them two years to prepare the distribution line.

"They are preparing the production chain, which may result in taxes. It means that all companies involved in the distribution line must own valid tax registration number (NPWP)," Suahasil said.

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