Indonesian challenger Prabowo Subianto promises tax cut that will put the nation ‘on par with Singapore’
- Indonesia has one of the region’s lowest tax-to-GDP ratios of about 11 per cent and a poor record of tax compliance
Indonesian presidential candidate Prabowo Subianto will slash corporate and personal income taxes if he comes to power, part of a plan to compete with low-tax neighbours like Singapore in luring more investment to Southeast Asia’s biggest economy.
Tax reform is one of the key economic programmes that Prabowo, as the former general is known, will outline in his election campaign against President Joko Widodo ahead of the April vote, according to Dradjad Wibowo, a politician from the National Mandate Party who is helping to formulate policy for the Prabowo camp.
The plan, which may be rolled out over 10 years, is yet to be finalised, Wibowo said. While he didn’t disclose possible tax rates, he said the aim is to lower them “on par with Singapore”.
Indonesia currently has a top personal income tax rate of 30 per cent and a corporate tax rate of 25 per cent. Singapore has a corporate tax rate of 17 per cent and a top individual rate of 22 per cent for residents.
“Our nominal tax rate is too high,” Wibowo said in an interview in Jakarta on Wednesday. Tax reform is needed to attract more foreign business as well as to encourage compliance, he said.
Our policy will be more pro-growth, more pro-business and also take equity and sustainability very seriously
Neither side has released a detailed economic policy plan yet. At a briefing on Friday, Wibowo said a Probowo government would seek to raise the non-taxable income threshold and reduce income tax, beginning with rates that apply to individuals.