Indonesia offers tax incentive for firms to revaluate fixed assets

Friday, 23 October 2015 00:00 - - {{hitsCtrl.values.hits}}

JAKARTA (Reuters): Indonesia on Thursday announced a tax incentive intended to get companies to revalue their fixed assets, which many firms have reported unchanged for years.

Under Indonesian rules, companies that revalue fixed assets, either to increase their borrowing leverage or for other purposes, pay a 10% tax on the amount of the increase.

Many state and private companies have kept their level of fixed assets constant for years, meaning little tax has been paid on revaluations.

Effective immediately, the Finance Ministry said companies that submit proposals for fixed asset revaluation before Dec. 31 will only pay 3% tax on the increased amount.

The incentive rate would go up to 4% for firms submitting proposal in the first half of next year and 6% for the second half. The scale is meant to encourage companies to revaluate the assets soon.

Imam Apriyanto Putro, secretary of the State-Owned Enterprises Ministry, said state firms can benefit from the tax incentive.

“Some state firms’ fixed assets are currently undervalued because they were obtained decades ago. (Their value) is far below current market prices. Asset revaluation can increase their leverage significantly,” he said.

The tax office said if more companies are doing revaluation, it can help boost tax collection. Indonesia expect a tax revenue to be nearly $11 billion less than its 2015 target.