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New Income Tax Bill – details — Orbitax Tax News & Alerts

It has been reported that the government and the House of Representatives are at the final stages of issuing a new Income Tax Bill, which offers lowered tax rates and business incentives to curb widespread tax evasion and improve investor confidence. The Bill is expected to be enacted in August 2008 and implemented in 2009. The Bill provides for the following changes to the current tax regime:

Corporate tax

-   The current progressive tax rates of 10% to 35% will be replaced by a flat tax of 28% in 2009 and 25% in 2010.
-   Micro, small and medium-sized businesses (i.e. with annual earnings of less than IDR 50 billion) that are incorporated in Indonesia will enjoy a 50% reduction in tax rates.
-   Publicly-listed companies which list at least 40% of their shares on the Indonesian Stock Exchange will enjoy a 5% reduction in tax rates
-   Withholding tax on dividends paid to non-residents will be reduced from 20% to a maximum of 10%. However, privately-held companies must not distribute dividends more than once in every 3 years, whereas publicly-listed companies must distribute dividends at least once a year (this matter has yet to be finalized).