Indonesia president renews pledge to cut corporate taxes if re-elected

  • Indonesia’s President Joko Widodo has renewed a pledge to cut corporate tax rates in Southeast Asia’s biggest economy if he is re-elected in Apr 19, an economic adviser said on 31 Jan 19, following a similar promise by his election opponent.
  • “Tax reforms will be continued in the second period of Mr. Jokowi if he is re-elected. This includes a cut to corporate tax rates,” Denni Purbasari, Widodo’s deputy chief of staff, told reporters, referring to the president’s widely used nickname.
  • In 2016, Widodo had promised he would follow a tax amnesty program with a corporate tax cut, possibly bringing the level down to as low as the 17% in neighboring Singapore.
  • Indonesia currently taxes corporate profits at 25%, or 20% for publicly listed companies.
  • “If he is re-elected, after 17 Apr 19, he will launch more structural reforms. He will not wait until Oct 19 (when the new presidential term begins),” Purbasari said.
  • Widodo’s opponent, ex-general Prabowo Subianto, plans to cut corporate tax rates by up to 8% to boost economic growth if he wins, Harryadin Mahardika, an economist in his campaign team has said.
  • Prabowo, as he is commonly known as in Indonesia, also wants to cut personal tax rates to make them fairer, Mahardika said. During his term, Widodo has twice raised the threshold when individuals start to pay income tax, effectively giving tax cuts to people on low income.
  • The finance ministry’s tax department has promised to upgrade its technology and purchase new software to analyze a trove of data gathered during the amnesty and from a global transparency drive of sharing data with other jurisdictions.
  • The procurement did not happen in 2018, though officials said it would be done in 2019.

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