“We don’t want tax holiday [applications] to concern tax allowances. The tax holiday will remain limited,” Bambang added.
However, investors remain unsure of the financial benefits of the policy relative to the lengthy administrative procedures involved.
“A tax holiday is just a dessert. Without it, businesses can still eat,” said Yustinus Prastowo, an executive director at the Center for Indonesia Taxation Analysis (CITA), citing a survey placing taxation as investors’ sixth biggest concern.
“It’s ineffective to maintain a tax holiday as an incentive model,” said the former member of the Tax Revenues Optimization Team (TOPP), citing legal certainty, political stability and low logistics costs as more concrete incentives for investors.
BKPM deputy head Azhar Lubis said the board welcomed the Finance Ministry’s plan and would work to ensure that the revision covers priority sectors that “employ large numbers, strengthen the structure of the economy, support exports, substitute imports, downstream mineral products, boost fisheries and agriculture and make contributions, especially outside Java”.
“Insentif Pajak sebaiknya ditimbang lagi efektivitasnya, jangan justru hanya cek kosong yang menggerus potensi penerimaan pajak dan tidak memberikan manfaat yang optimal bagi negara.”
