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  • The Retrograde Tax

    Greetings

    First let me state I think 1. Indonesia is great and 2. The total GDP drain of corruption and kickbacks is just as bad in the West, except it is better hidden and begins at a high salary bracket. The retort "This is Indonesia" usually has a calming effect on me, but having imported the latest high technology in the form of a credit card sized ARM processor computer, I had to cry out in disbelief when I got the import tax bill.

    I was expecting 10 % Sales Tax and zero import duty because electronics/computers are exempt. What flabbergasted me was the appearance of the laughably named Income Tax at 7.5%. How can a sale and import generate an income tax when no income is generated? The tax was especially annoying for me as a foreigner with Indonesian family as I am virtually outlawed by Manpower from earning an income.

    Research on the internet revealed similar practices by nations not very high in the development league: Zambia and Myanmar. The Zambia link below explains that Zambia call it an Advanced Income Tax and it is designed to intercept all those unregistered companies importing cheap clothes for example, who declare no Income Tax.

    What do Indonesian members of this forum think of this? To me it appears a retrograde tax because of:

    1.Taxing the innocent majority - those people without undeclared import companies.
    2.Taxing industry in general in Indonesia, making Indonesia less competitive.
    3.Failing to address the root problem - undeclared businesses. Surely it is a simple matter to follow high volume imports to the address of the importer to find out if the are legal companies.
    4.Encouraging tax evasion, since people who import will consider they have already paid Income Tax. Tax evasion by not declaring Income Tax or by declaring very low Income. Tax evasion by importing through foreign companies prepared to doctor the declared value downwards.

    I also provided a link to the Duty Calculator website - very useful.
    Including Income Tax, Duty Calculator showed a tax rate of 17.5% in my case.
    Actually I was taxed at 35% but that is another story.

    Best wishes to all.

    http://www.dutycalculator.com/
    https://www.zra.org.zm/download.htm?...2013123147.pdf

    [COLOR=#000000][FONT=Georgia]”I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” Winston Churchill[/FONT][/COLOR]
    Last edited by spacegoat; 03-05-14, 18:25.

  • #2
    You're just lucky it wasn't makeup.
    Sasa Bule is having a bayi!

    Comment


    • #3
      I agree it often seems unfair and not good for development. But whining about a 7.5% tax? You got off lightly.

      Comment


      • #4
        Well, he said 35% was the final bill. Not so lucky.

        Comment


        • #5
          Originally posted by spacegoat View Post
          Greetings

          First let me state I think 1. Indonesia is great and 2. The total GDP drain of corruption and kickbacks is just as bad in the West, except it is better hidden and begins at a high salary bracket. The retort "This is Indonesia" usually has a calming effect on me, but having imported the latest high technology in the form of a credit card sized ARM processor computer, I had to cry out in disbelief when I got the import tax bill.

          I was expecting 10 % Sales Tax and zero import duty because electronics/computers are exempt. What flabbergasted me was the appearance of the laughably named Income Tax at 7.5%. How can a sale and import generate an income tax when no income is generated? The tax was especially annoying for me as a foreigner with Indonesian family as I am virtually outlawed by Manpower from earning an income.

          Research on the internet revealed similar practices by nations not very high in the development league: Zambia and Myanmar. The Zambia link below explains that Zambia call it an Advanced Income Tax and it is designed to intercept all those unregistered companies importing cheap clothes for example, who declare no Income Tax.

          What do Indonesian members of this forum think of this? To me it appears a retrograde tax because of:

          1.Taxing the innocent majority - those people without undeclared import companies.
          2.Taxing industry in general in Indonesia, making Indonesia less competitive.
          3.Failing to address the root problem - undeclared businesses. Surely it is a simple matter to follow high volume imports to the address of the importer to find out if the are legal companies.
          4.Encouraging tax evasion, since people who import will consider they have already paid Income Tax. Tax evasion by not declaring Income Tax or by declaring very low Income. Tax evasion by importing through foreign companies prepared to doctor the declared value downwards.

          I also provided a link to the Duty Calculator website - very useful.
          Including Income Tax, Duty Calculator showed a tax rate of 17.5% in my case.
          Actually I was taxed at 35% but that is another story.

          Best wishes to all.

          http://www.dutycalculator.com/
          https://www.zra.org.zm/download.htm?...2013123147.pdf

          [COLOR=#000000][FONT=Georgia]”I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” Winston Churchill[/FONT][/COLOR]
          I can see by your opening remark you formulated your response to Indonesia's often onerous and unpredictable import duties from a researched, unbiased perspective. Nevertheless, I am thinking perhaps you missed the latest Transparency International report on world wide corruption. Although the "West" is a big diverse place, the rankings indicate that those who do business across the globe reserve the least corrupt slots at the top of the list for Western democracies for the most part with a few exceptions, such as Singapore. Indonesia is ranked near the bottom. http://www.transparency.org/

          It is understandable that you are peeved by your experience. But before you author another victim's rant, consider doing a bit more "research on the internet" in advance of your next business venture.

          Comment


          • #6
            Actually, Bill, I took exception with the last half of the sentence you highlighted -- it is the low bracket people who suffer more often here. Only in recent years have fees for KTP, birth cert, driver's license, etc. been eliminated or streamlined to be sans bribery.

            There is plenty of corruption at the top levels of finance in every country I've heard of. In the US, there is Wall Street advice for the certification of bonds (e.g., Enron scandal), directors on boards being consulted to establish compensation standards for other boards of directors (mutual back-rubbing), and of course lobbyists in Washington. But you do not pay baksheesh to get your marriage license, driver's license, etc.
            Last edited by martindo; 04-05-14, 08:21.

            Comment


            • #7
              The USA is not among those at the top of the least corrupt list. Eron and S & P and other rating outfits are not the government. My point was that if you start off a screed with an obviously biased and untrue remark, anything further is suspect.

              Its a relative thing. Even if a country is at the top of the least corrupt list, its not free of corruption. The point again: Indonesia is near the bottom of the list; here corruption is much worse than in large swatches of the "West." If you think its the same as elsewhere the only difference being that it is more blatant, it will be difficult to make informed business decisions.

              Comment


              • #8
                Originally posted by spacegoat View Post
                (1) ... I was expecting 10 % Sales Tax and zero import duty because electronics/computers are exempt.

                (2) What flabbergasted me was the appearance of the laughably named Income Tax at 7.5%.[COLOR=#000000]..[/COLOR][COLOR=#000000][FONT=Georgia][/FONT][/COLOR]

                (1) Could tell us from where you got this info that electronics/computer has only the 10% Sales Tax ?

                (2) I never heard before of Indonesian income tax on imported goods . It is not mentioned at any of the 2 references below .

                http://ems.posindonesia.co.id/custom.html

                http://www.kemlu.go.id/singapore/Pag...px?IDP=85&l=en (Import Tariff list - year 2007)

                Comment


                • #9
                  there is normally ppn and pph on imports in addition of the customs tariff. you should ask for the pib which is the official list of fees from customs.

                  Comment


                  • #10
                    Suck it up and quit ya bitching - try luxury tax at 40% !!!

                    Comment


                    • #11
                      spacegoat,
                      May I ask how you ship the goods in? by using shipping forwarder? container cargo or loss cargo? from which country and which city you import to. If by forwarder, did they report the list of items to customs before goods arrival to Indonesia? Who determine decide what value put in the report and invoices for the goods? How you pay the tax as you mentioned? You report by your self or forwarder handle it for you? all this are important factor.

                      Comment


                      • #12
                        For those unaware of the Import "Income Tax"
                        http://www.kpmg.com/ID/en/IssuesAndI...t-Feb-2014.pdf


                        To those who tried to rottweiler my opening paragraph, careful reading will reveal it was predicated on " total GDP drain". The internet published survey this person refers to is based on questionnaires - thus frequency. It is beyond me how such surveys can receive an answer "yes I am being blackmailed" by CEO's of businesses who's business depends on the continuance of the immoral contract.


                        To the person miffed about corruption at the low end, sorry, in the West we do not see any incidents of public hand to hand bribery as we may see in Indonesia. Bravo to Indonesia that it has been lowered, but is still endemic.


                        To those who's only concern was expat oriented luxury item import, I restate my interest in what Indonesians think of Import "Income Tax" - standing shoulder to shoulder with Zambia, making a nonsense of language (no income is involved) and making Indonesia business relying on components from abroad 7.5% higher, unless one goes in person to the point of entry to argue the law.:
                        "Goods subject to Income Tax Article 22 of 7.5% of import value are: a. Goods not used to produce local products"


                        To [email protected] , the air courier was Fedex who used a sub-contractor. Full details if I ever get them from the supplier who engaged Fedex.
                        Last edited by spacegoat; 05-05-14, 14:14.

                        Comment


                        • #13
                          Yes, now I see "total GDP drain." My mistake. Its beyond my how such a well read and perceptive importer got snookered.

                          Comment


                          • #14
                            Originally posted by spacegoat View Post
                            The internet published survey this person refers to is based on questionnaires - thus frequency. It is beyond me how such surveys can receive an answer "yes I am being blackmailed" by CEO's of businesses who's business depends on the continuance of the immoral contract.
                            I already apologized in PM for misreading one of your sentences. However, the Transparency International survey is confidential, so why the worry that a CEO would not be honest? How else could they express their frustration? Supposedly the TI survey began when a CEO in India was hit up for a large bribe. He refused. The next day he discovered stereo and other expensive electronic equipment had been stolen from his residence. When he calculated the value of the loss, it was almost exactly equal to the amount of the extortion attempt. So, he found a way to fight back by publishing ratings of corruption. However, the TI founder who was the prime mover, Peter Eigen, was based in Africa, so maybe this is an urban legend.

                            Comment


                            • #15
                              @waarmstrong

                              The items were samples.
                              No big deal if government procedure went wild.
                              Better to learn by living than internet learning .

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