The government is finalizing a new regulation that would require proceeds from the export of natural resources including mining commodities to be parked in the “Indonesian financial system.”
News portal kontan.co.id quoted Secretary of the Office of the Coordinating Minister for Economic Affairs, Susiwijono Moegiarso as saying that the new government regulation will strengthen existing regulations issued by related ministries and the central bank including recent Minister of Trade regulation requiring miners to use the letter of credit (L/C) system opened with domestic banks or their overseas branches in facilitating export.
Meanwhile, Bank Indonesia Governor Perry Warjiyo said that the central bank will issue new regulation on the opening up of special accounts in domestic banks to accommodate proceeds from export of natural resources including mining commodities, and encourage the exporters to convert the foreign exchange revenue into rupiah.
Perry said that under the planned new central bank regulation, which will be also supported by new regulation to be issued by the ministry of finance, export proceeds parked in the special bank accounts and converted into the rupiah will carry lower final income tax rate than if the proceeds are maintained in hard currencies.
According to Perry, around 90 percent of the export proceeds have now been parked in domestic banks, but only around 15 percent is converted into rupiah.
He said that export proceeds converted into the rupiah in one-month deposit will carry tax rate of 7.5 percent, and in three-month deposit will carry tax rate of 5 percent, and zero percent tax rate for deposit of six months or longer.
In comparison, export proceeds in US dollars carry tax rate of 10 percent for the one-month deposit, 7.5 percent for three-month, and 2.5 percent for six-month, and zero percent for more than six-month deposit.
Susiwijono said that the new regulation is expected to help encourage the conversion of the export proceeds into the rupiah.
He said that the new government regulation will also contain sanctions for non-compliance including export ban, penalties, and annulment of business permit.
Susiwijono said that the new government regulation is expected to be completed this week, and hopefully can start effective January 1, 2019.
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