Indonesia mulling tax cuts to attract bond investors – official

• Oct 19, 2018

JAKARTA – Indonesia is considering cutting the tax on gains made from its sovereign bonds, as part of plans to attract more investors to the debt market of Southeast Asia’s biggest economy, the country’s director general of taxes said on Thursday.

Robert Pakpahan said the government is looking at cutting the tax rate on Indonesian bonds from the current 15 percent for local investors and 20 percent for foreign investors from countries not sharing a tax treaty pay.

The new regulation is due to be released at the end of this year, Pakpahan told reporters.

Pakpahan also noted plans for taxes on infrastructure and property funds to be capped at 5 percent, while allowing investments of less than 500 billion rupiah ($33 million) to be eligible for a tax holiday.

At the same event, Finance Minister Sri Mulyani Indrawati said the government was reviewing incentives for financial and investment instruments to attract foreign funds.

“We are aiming to make our capital markets more attractive for household investors as well as professionals,” she said.

Indrawati also said the government was looking at whether to wave value-added tax in the service sector and current income tax and luxury tax applied to property, without elaborating.

Indonesian policy makers have been weighing up a series of measures aimed at deepening the country’s capital markets and supporting growth in certain sectors.

The plans have taken on new urgency due to pressure on the rupiah currency and spiking bond yields amid a broader selloff across emerging markets.

The recent market turbulence has highlighted Indonesia’s heavy dependence on inflows to plug a yawning current account deficit, with foreign holdings of bonds at around 37 percent, or $56 billion, on Oct 16, according to government data.

($1 = 15,185.0000 rupiah) REUTERS

Source: https://www.todayonline.com/world/indonesia-mulling-tax-cuts-attract-bond-investors-official