Covid-19: Indonesia waives income tax for manufacturing workers for six months


JAKARTA (The Jakarta Post/ANN): Workers in the manufacturing industry will not have to pay income taxes for six months as the government has announced measures to shield the economy from weakening economic activity against the backdrop of the Covid-19 pandemic.

Finance Minister Sri Mulyani Indrawati said the move to temporarily exempt manufacturing workers from income tax payment (PPh 21) took aim at relieving workers' burden caused by the pandemic. Manufacturing industries have complained of raw material supply disruption that has crippled factories across Indonesia.

Twenty to 50 per cent of raw materials for the country’s industries are sourced from China, Indonesia’s biggest trade partner.

"This aims for all industries to have [breathing] space in this tight situation," Sri Mulyani told reporters in Jakarta. "Their burden is being minimized by the government."

Sri Mulyani said the government was also set to delay import tax, corporate income tax as well as expedite overpaid tax repayment in the second stimulus package. She, however, declined to say how much revenue the government was expected to lose from the new stimulus package.

The minister has warned that economic growth could weaken to 4.7 per cent this year from 5.02 per cent in 2019 amid increasing business disruptions caused by the pandemic. Meanwhile, Bank Indonesia (BI) has said that it was likely to trim economic growth outlook in 2020 at this month's board of governors meeting on March 18 and March 19.

The government collected Rp 103.7 trillion in state revenue in January, down 4.6 per cent from the same month last year. It collected Rp 84.7 trillion in taxes, down six per cent compared to the same period last year.

Meanwhile, government spending reached Rp 139.8 trillion, down 9.1 per cent, from the same period last year. It resulted in a budget deficit of Rp 36.1 trillion, 0.21 per cent of gross domestic product (GDP) in January.

Economists have predicted that the fiscal deficit could soar this year as the government spends more to cushion the negative effects of the coronavirus but at the same time state income will be lower than expected as business activities weaken amid the pandemic.

The government introduced a Rp 10.3 trillion (US$717.87 million) fiscal stimulus package to support the tourist industry and improve consumer spending to counter the economic impacts of the outbreak.

The World Health Organization (WHO) declared Covid-19 a new pandemic on Wednesday as it had shuttered factories, disrupted travel and supply chain, delayed conferences and sporting events and infected more than 120,000 people worldwide. More than 4,300 people have died.

Indonesia announced its first death from the virus on Wednesday as 34 individuals had tested positive for Covid-19 in the country. - The Jakarta Post/Asia News Network

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Next In Regional

Covid-19: Cases up by 2,253 bringing total to 295,951 (updated daily)
Non-Muslim wedding ceremonies allowed in MCO, CMCO, RMCO areas, says NRD
Former Kuaishou executive arrested for alleged corruption amid anti-bribery pressure on China’s Big Tech
Self-made South Korean billionaires promise to give half away
Malaysia’s exports up 6.6% to nearly RM90b in January
EPF launches world’s first and largest Shariah PE fund of RM2.43b
A million people have registered for Covid-19 vaccine via MySejahtera, says Khairy
Drought hits Taiwan drive to plug global chip shortage
Coup chaos in Myanmar leaves employers fretting over paying staff
No cuts, only jabs: Covid-19 vaccinations will not have any jumping of queues, says Health DG

Stories You'll Enjoy


Vouchers