Finance Ministry to review tax ratio

Jakarta (ANTARA News) – The Indonesian Finance Ministry is set to conduct a careful study to define the tax ratio following a plan to revise the threshold of untaxed income, Finance Minister Sri Mulyani Indrawati said.

“I have asked the Directorate General of Taxation to study the components that should be included to calculate the tax ratio,” she stated at the parliament building compound here on Wednesday night.

The higher the threshold of untaxed income, the lower the tax base will influence tax ratio.

“I have sought time to compare our tax ratio with those of other countries. Other countries incorporate components such as royalties, regional taxes, and even social security (to their tax ratio),” she revealed.

As the components of tax ratios differ from one another, Indonesias untaxed income cannot be compared with those of other ASEAN member states, she remarked.

“It is similar to how we cannot compare one mango with another,” she explained.

Sri Mulyani, who is the former managing director of the World Bank, said that if Indonesias tax ratio can be compared with those of other countries, then it should be different from those of other countries.

She stated that Indonesias untaxed income was higher than those of other ASEAN member states, although its per capita income was lower than those of Thailand, Vietnam, Malaysia, and Singapore.

In addition, the ministry will also review the effectiveness of value-added tax, because state revenues from value-added tax receipts in other countries are higher, although their tariffs are lower.

Source: Antara News