Indonesian seeks VAT exemption

Indonesia: The Indonesian textile industry has called the Fiscal Policy Office of the country to exempt the raw materials provided by local manufacturers from Value Added Tax (VAT). The Government of Indonesia gives tax exemption on imported raw materials to textile companies that have the ‘ease of import facility for export purposes’ approval.

Indonesia: The Indonesian textile industry has called the Fiscal Policy Office of the country to exempt the raw materials provided by local manufacturers from Value Added Tax (VAT). The Government of Indonesia gives tax exemption on imported raw materials to textile companies that have the ‘ease of import facility for export purposes’ approval.

The permission is given to the companies on the basis that the (comparatively) cheaper raw materials are used for products transported to the overseas markets.

The local manufacturers who supply raw materials to units with such permission have to pay 10 per cent VAT. This ultimately impacts their competitiveness in the market, the industry claims.

The Indonesian Synthetic Fibre Producers Association (APSyFI) is also supporting the move.

The association feels that the removal of 10 per cent VAT will increase the demand for local raw materials. This will save around US $ 500 million in foreign exchange.

APSyFI states that domestic consumption of raw materials in the textile industry of the country can replace 100,000 tonnes of imports.