Jokowi to Cut Corporate Tax

The government will propose a corporate income tax rate cut in the Income Tax Acts revision. The corporate income tax rate cut will increase the economic competitiveness and improve the profitability of the companies in Indonesia.

President Joko Widodo said that Indonesia’s corporate tax rate is too high by 25% compared to Singapore’s rate which is by 17%. “How are we going to compete when in Singapore we pay 17% and in Indonesia we pay 25%?” said President Joko Widodo. The government will decrease the corporate income tax rate gradually, for example, from 25% to 20% and then to 17%.

The revision of the Income Tax Law, the Law on Value Added Tax (VAT), and the Law on General Provisions and Tax Procedures is the government’s priority after the publication of the Tax Amnesty. The revision of these three laws is targeted to be finished by 2017. The contribution on corporate income tax revenue is estimated to reach 35% to 40% or approximately 358.4 trillion IDR to 409.64 trillion IDR. The income tax cut is expected to attract more foreign investments into Indonesia. (*)

Corporate Income Tax Rate

Country                  Corporate Income Tax Rate

Philippines            30%

Indonesia               25%

Malaysia                 25%

Vietnam                 22%

Thailand                 20%

Singapore              17%