JAKARTA. Minister of Finance Sri Mulyani plans to add a layer of taxable income, for individual taxpayers who earn above IDR 5 billion per year will be subject to an income tax of 35%.
Quoting kontan.co.id, the step of imposing a new layer is aimed at targeting taxpayers from the High Wealth Individual (HWI) group or groups of people with high incomes or super-rich, who are not affected by the Covid-19 pandemic.
This change is planned to be carried out through the Revised Law on Taxation General Provisions and Procedures (KUP) which is included in National Legislation Program (Prolegnas) this year.
No Changes in Other Layers of Taxable Income
Meanwhile, other layers of taxable income will not be changed. Under the current regulation, there are only four layers of taxable income.
The first layer for income of IDR 50 million per year and below is subject to income tax of 5%. The second layer for the taxable income layer above IDR 50 million to IDR 250 million is subject to a 15% rate. The next layer for income of more than IDR 250 million to IDR 500 million is subject to a 25% income tax rate. Meanwhile, for taxable income above IDR 500 million, the tax rate is 30%.
IMF Recommendations
Previously, the international monetary institution or the International Monetary Fund (IMF) suggested to each country to increase tax revenues from the super-rich group through the application of a wealth tax.
This step is considered effective to increase state revenues in the short term after the Covid-19 pandemic. Several countries that have implemented a Wealth Tax include France, Norway, Spain, and Switzerland.
