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The Indonesian government is planning to lift the import income tax (PPh) in an effort to curtail import, which in turn might improve the country’s current account deficit.

Import income tax is an additional tax besides import duty.

Import income tax is chargeable to all imported goods and currently divided into two categories. Companies with importer identification number (API) are paying 2.5 per cent import income tax while those without the API would have to bear 7.5 per cent.

The government is proposing that a flat rate of 7.5 per cent should be implemented on all type of importers, regardless of the presence of the API.

The government has not set the implementation date, as its Ministry of Finance would have to issue a new ministerial regulation before putting it into practice.