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C. Incentives
1. Import
Duties
All
investment projects under PMA and PMDN projects (including
existing and expansion projects to produce similar
products in excess of 30% of installed capacities
or diversifying their products) approved by the Investment
Coordinating Board or by the Office of the Investment
in the respective districts, will be granted of the
following facilities:
Relief
from import duty so that the final tariffs become
5%. In the case of tariffs of import duty which are
mentioned in the Indonesian Customs Tariff Book (BTBMI)
being 5% or lower, the effective tariff shall be those
in BTBMI:
On
the importation of capital goods such as machinery,
equipment, spare parts and auxiliary
equipment
for an import period of 2 (two) years, started from
the date of stipulation of decisions on import duty;
On
the importation of goods and raw materials regardless
of their types and composition, which are used as
materials or components to produce finished goods
for the purpose of two years full production (accumulated
types and composition, which are used as materials
or components to produce finished goods for the purpose
of two years full production, accumulated production
time),
Exemption
from Transfer of Ownership Fee for ship registration
deed/certificate made for the first time in Indonesia.
2. Tax
Facilities
The
government has introduced a Tax Bill Nos. 17, 18,
19 and 20 of 2000 and took effect on January 1, 2001.
Based on this tax law, the domestic and foreign investor
will be granted tax allowances in certain sector and/or
area as follow
An
Investment Tax Allowances in the form of taxable income
reduction as much as 30% of the realized investment
expansion in 6 (six) years
Accelerated
depreciation and amortization;
A
loss carried forward for a period of not more than
10 (ten) years
A
10% income tax on dividends, and possibly being lower
if stipulated in the provision of an existing particular
tax treaty.
The
government also introduced provision Nos. 146 of 2000
and 12 of 2001 on the importation and/or delivery
of Selected Taxable Goods, and/or the provision of
Selected Taxable Services as well as the importation
and or delivery of Selected Strategic Goods which
are exempted from Value Added Tax.
3. Export
Manufacturing
There
are many incentive provided for exporting manufactured
products. Some of these incentives are as follows:
Restitution
(drawback) of import duty on the importation of goods
and materials needed to manufacture the exported finished
products.
Exemption
from Value Added Tax and Sales Tax on luxury goods
and materials purchased domestically, to be used in
the manufacturing of the exported products.
The
company can import raw materials required regardless
of the availability of comparable domestic products.
4. Bonded
Zones
The
industrial companies which are located in the bonded
areas are provided with many incentives as follows:
Exemption
from import duty, excise, income tax of Article 22,
Value Added Tax and Sales Tax on Luxury Goods on the
importation of capital goods and equipment including
raw materials for the production process.
Allowed
to divert their products amounted to 50% of their
export (in terms of value) for final products and
100% of their export (in terms of value) for other
than final products to the Indonesian customs area,
through normal import procedure including payment
of customs duties.
Allowed
to lend their own machinery and equipment to their
sub-contractors located outside bonded zones for not
longer than 2 (two) years in order to further process
their own products.
Exemption
of Value Added Tax and Sales Tax on Luxury Goods on
the delivery of products for further processing from
bonded zones to their sub-contractors outside the
bonded zones and vice-versa as well as among other
companies in these areas
Allowed
to sell scrap or waste to Indonesian custom area as
long as it contains the highest tolerance of 5% of
the amount of the material used in the production
process.
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