New Tax Holiday Policy A Breath of Fresh Air for Business

The government is offering tax holiday with some new terms and conditions for investors. The policy is believed to boost investment, as companies will be burdened with less tax and thus can use the money to expand their business instead.

"The easier it is to earn tax holiday, the more investors can join mini tax holiday," Indonesian Employers Association (APINDO) Chair Hariyadi B. Sukamdani told Bisnis Indonesia, Thursday (May 17).

Some of the revisions in the policy include the criteria of investors, the percentage of tax reduction, time period, transition time, and industry type.

For the criteria of investors, for instance, the regulation previously said that only investors who are new taxpayers can get tax holiday. Now, existing investors expanding their business can also apply for tax holiday.

The percentage of tax reduction is also more certain now. In the old regulation, the tax reduction was between 10% and 100%, depending on committee's decision. Now, investors are guaranteed to get 100% reduction.

The same thing happens with time period; the calculation becomes more certain. Previously, tax holiday's time period was between 5 and 10 years and could be extended if the committee approved. After the revision, the time period will depend on the amount of investment.

"This will give certainty to the investors, 'If I invest this much, then I will get this much tax holiday'. Previously it all depended on the committee's analysis results. This (new regulation) is more precise," Finance Ministry Taxation Director General Robert Pakpahan said, as quoted from Liputan6 website, Monday (April 2).

For instance, an entity investing Rp500 billion-Rp1 trillion is entitled to a 5-year tax holiday, while Rp1 trillion-Rp5 trillion gets 7 years, Rp5 trillion-Rp15 trillion gets 10 years, Rp15 trillion-Rp30 trillion gets 15 years, and more than Rp30 trillion gets 20 years of tax holiday.

"So when an entity is filing for an investment promising Rp30 trillion, they will automatically get Principle Permit for 20-year Tax Holiday as long as the investment is in the included sector," Robert said.

More industry sectors are entitled for a tax holiday. Previously, only eight sectors were included, but the number has been increased to 17.

The regulation now also establishes a rule about transition time. The government will grant 50% tax reduction for two years after an investor’s tax holiday ends.

"So, for instance, the investor got a 20-year tax holiday. When it ends, in the 21st year, they must pay 50% of their due corporate income tax; in the 22nd year, still pay 50%; then the following year,they pay 100%," he said.

Thus, the policy is deemed able to encourage investment in industry. Businesses will be benefited because the money that's supposed to be used for paying taxes can be allocated for capital expenditure.

Many things can be done to strengthen a business, including investing in the management of better transportation for corporate purposes.

For any company, the need for transportation is inevitable. Most commonly, a company needs vehicles to support the operations of their highly mobile employees or the transport of goods and equipment. However, managing vehicle assets is not simple, not to mention monitoring their use.

When earning a tax holiday, a business can consider renting vehicles from a trusted transportation service provider that guarantees prime-condition vehicles, reliable drivers, and clearly measured transportation management system.

For that need, partnering with a trusted transportation service provider is just the right thing to do. TRAC, a subsidiary of PT Serasi Autoraya (SERA) under the wings of Astra, offers an integrated transport service solution for companies.

Not only car rental and driver service, TRAC also offers integrated Transportation Management System (TMS).

The TMS also includes the management of fuel costs, which covers its use, administration process, and even analysis on it.

Other expenditures are also monitored, to ensure that they are controlled and can be accounted for. When a driver cannot go to work for the day, for instance, then a substitute driver can be quickly appointed.

All the needs mentioned above can be provided as one package. However, TRAC also allows company to choose only the services they need. TRAC as a trusted transportation provider can also customize the service according to the client's needs.

TRAC can also give an overall, integrated transportation solution service. A company no longer needs to think about the purchase and maintenance of vehicles, the training of drivers, and the management of related assets.

The company can focus on expanding their core business without having to bother taking care of the need for operating vehicles. Therefore, the money from tax holiday can be used well to boost the business.