Govt To Reduce Tax On Interest From Exporters' Time Deposits

Jakarta (Antara Bali) - The Indonesian government is finalizing a policy which will offer a reduced rate of tax on interest income from time deposits to exporters who put their export earnings in domestic banks.

The incentive is part of the efforts to attract export earnings which are now being put in foreign banks, Finance Minister Bambang Brodjonegoro said here on Monday.

If they put their export earnings in domestic banks, the government and Bank Indonesia will be able to increase the supply of foreign currencies, particularly the US dollar, to the domestic market and the country's foreign exchange reserves will increase accordingly, he said.

"As such, our foreign exchange reserves will increasingly become stronger. Given the current global economic conditions, the government cannot force them but it must offer them incentives," he said.

With the foreign exchange reserves increasingly becoming stronger, the monetary authorities will find it easier to anticipate the continued depreciation of the rupiah's exchange rate against the dollar, he said.

 The government is still discussing the extent to which tax on interest income from time deposits be reduced, he said.

"In principle, exporters who exchange the greatest amount of export earnings for rupiah will receive the greatest incentives," he said.

The head of the Fiscal Policy Board at the Finance Ministry, Suahasil Nazara, said the tax incentives will be announced this week. (WDY)