The Indonesian parliament will vote on Thursday on whether to back the government's proposals for one of the country's most ambitious tax overhauls, including raising the VAT rate, a new carbon tax and cancelling a planned corporate tax cut.
The government has said the Tax Harmonisation bill is aimed at optimising revenue collection, while ensuring a fairer tax system, after state coffers took a big hit last year due to the COVID-19 pandemic.
It would also keep the corporate tax rate unchanged at 22%, compared with a earlier plan to cut it to 20% next year. Other measures in the bill include a higher income tax rate for wealthy individuals, an income tax cut for most other people, a new carbon tax and a new tax amnesty programme. The changes from the original proposals were positive for public finances and the economic recovery, said Myrdal Gunarto, an economist with Maybank Indonesia.
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