Business lobby groups support tax amnesty bill

Business lobby groups support tax amnesty bill

The proposed Tax Amnesty Bill has received support from business lobby groups as they hope it will have a multiplier effect on job creation, economic improvement and tax compliance. House of Representatives Commission XI, which oversees finance and banking, held the session to hear feedback from Apindo, the Indonesian Young Entrepreneurs Association (Hipmi) and the Indonesian Chamber of Commerce and Industry (Kadin).

Indonesian Employers Association (Apindo) said in a hearing session on Tuesday (19/4) that the organization was in favor of the bill. Apindo told lawmakers that any information the government receives when tax dodgers repatriate their assets from abroad during the tax amnesty initiative should be used to expand the tax office's database.

The business representatives also said the government might need to include the tax amnesty initiative as a part of the country's taxation reform through the General Taxation Provisions and Procedures (KUP) Law revision, meaning that they want a discussion of the Tax Amnesty Bill and the KUP Law amendment to proceed simultaneously.

The latest known draft of the Tax Amnesty Law states that taxpayers only need to pay between 1 percent and 3 percent tax on their net wealth increase, if they agreed to repatriate their money. The Tax Amnesty Bill is currently under discussion as Commission XI holds a series of hearing sessions with experts, business leaders and other stakeholders. The government hopes that the bill will come into effect in June.

Minister of Transportation declined Adhi’s request to be the LRT operator

The minister of transportation, Mr. Jonan

The minister of transportation, Mr. Jonan, decided to decline Adhi Karya’s (ADHI) request to be the LRT operator. The minister stated that his main reason to decline was due to Adhi’s lack of experience in the train operator business. Therefore, KAI will be the sole operator of the LRT. Instead of the operator, the minister offered Adhi Karya to be the transit oriented development (TOD) developer around the LRT area.

Grocery price survey showed the tendency of deflation

Grocery price survey, which is conducted by Bank Indonesia in the third week of February 2016, showed the tendency of deflation by 0.13% MoM. The result is very consistent with the survey in the first and the second week, which was 0.15% MoM and 0.14% MoM respectively. The Bank Indonesia predicts the inflation to increase by 3% to 5% YoY this year. In addition, target inflation within the macro state budget 2016 is 4.7%. Since 2010, the inflation in February is relative low compared to the other months. The highest inflation in February was in 2013, which was 0.75% MoM.

Government prepares new scenario of revised state budget

Government is preparing a new scenario of the revised state budget by excluding income from tax amnesty as discussion over tax amnesty was delayed. Vice President, Mr. Jusuf Kalla, admitted that the Government must adjust the state budget realistically, since tax income might decrease significantly.

Uncertainty in the 30% Local Content Regulation for 4G Mobile Phones

The Ministry of Industry is now considering five schemes for the 30% local content regulation for the 4G LTE mobile phones (see the table below). Previously, the local content regulation only consisted of manufacturing aspect and R&D/software aspects with composition of 80% and 20%, respectively. The Indonesia Association of Indonesia Telematics Devices Industry (AIPTI) has voiced its opposition for the 100% software scheme (which would benefit Apple as it still does not have manufacturing plant in Indonesia) because the 100% software scheme will put mobile phone manufacturers which already setup their manufacturing plants in Indonesia (such as Samsung) at disadvantage.

Figure: Five Schemes Proposed by Ministry of Industry Regarding the 30% Local Content for 4G Mobile Phones

Hardware	Software
0%	100%
25%	75%
50%	50%
75%	25%
100%	0%

BPJS Health is expected to have larger deficit in 2016

BPJS Health (the operator of the Indonesia Universal Healthcare) is expected to experience deficit of IDR9.8 trn (versus c. IDR4 trn in 2015). To overcome the increasing deficit, BPJS plans to increase the monthly premiums as follows: a) Subsidized low income segments from IDR19,000 to IDR23,000,Class 2 segments from IDR25,500 to IDR30,000, and Class 3 segments from IDR42,500 to IDR50,000. As of Feb 2016, BPJS Health already has 162 million people (c.65% of Indonesian people) enrolled in the program.