Indonesia considers new tax incentives for employees: Minister

Indonesian Coordinating Minister for Economics Darmin Nasution.
Indonesian Coordinating Minister for Economics Darmin Nasution. PHOTO: AFP

JAKARTA (REUTERS)- Indonesia is considering offering tax incentives for employees as part of the country's current efforts to spur economic growth through changes to its tax regime, Coordinating Minister for Economics Darmin Nasution said on Tuesday (Nov 17).

The government of South-east Asia's largest economy has introduced several other incentives this year. These include increasing the threshold for income tax, offering up to 25 years of free corporate tax for some investors, removing double taxation on real estate investment trusts and cutting the tax rate on asset revaluation.

Mr Nasution told reporters the government is currently looking at options to change rules on the pay-as-you-earn tax, but did not provide any details. "This would be an effort to increase purchasing power and also to help employers," he said.

An employee's salaries, if higher than the new 36 million rupiah (S$3,734.03) per year threshold, is currently subject to 5 to 30 per cent income tax in Indonesia.

The Finance Ministry will soon offer a tax amnesty - a discount on the tax rate for undisclosed wealth - pending parliamentary approval. The ministry has also said it plans to cut income tax rate after the amnesty period.

Officials have said the various tax incentives has not had any effect on state revenue this year, which is expected to come in about US$11 billion below target.