Environment tax levied by Indonesian government on businesses

2008-07-16 05:01:42 (GMT) (WiredPRNews.com - Green)

Jakarta (WiredPRNews.com) — Indonesia’s government might soon begin levying taxes on the industries causing environmental damages. The tax will essentially include the mining industry and the manufacturing industry.

According to Budi Sitepu, the Finance Minister of the Regional Tax and Retribution, the tax will amount to approximately 0.5 percent of the company’s income and will be included under the amendment to the 2000 law on regional tax and retribution presently under consideration at the House of Representatives.

The environment is in critical condition even though various industries have begun protection efforts on environmental damage during their operation, and there are chances that the industries might damage the environment.

Under the law of micro (MSMEs), small and medium enterprises, as well as small industries are classified as enterprises having yearly gross income between $300 million and $3 billion, whereas medium enterprises are those whose annual income is between $2 billion and $50 billion. Sitepu said, “Small and medium enterprises would also have to be responsible for environmental damage.”

Tukijo, the chairperson of the house’s working committee, added that the environment tax is greatly expecting to assist the local government to eradicate all sorts of environmental damages. According to Sofyan Wanandi, the chairman of the Indonesian Employers Association, the environment will further reduce Indonesia’s cutthroat competitiveness.

Under the law on the restricted liability companies, businesses are obliged to execute the corporate social responsibility programs. There are laws on restricted liability enterprise under which taxes associated with the environment have to be paid.

Sofyan also added that the government must make a plain rule of which tax can be imposed on the business in order to cerate a competitive and healthy business environment in Indonesia.

The government and the House have to approve the bill to lessen the income tax from the present 35 percent to 28 percent.

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