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Departure Tax to Be Abolished?

Government Taking Steps that Would End Tax Paid by Indonesians and Residents Traveling Overseas.

(8/23/2004) According to press reports carried in most major Indonesian papers, the Rp. 1 million (approximately US$ 111) advance tax payment levied on all Indonesian citizens and local residents traveling abroad will cease to exist sometime in 2005.

Just a Matter of Time

State Secretary, Bambang Kesowo, told local press last week, "It (the abolition of the departure tax) is just a matter of time."

In anticipation of this step, the Government is preparing a presidential decree to abolish the departure tax and the 2005 state budget is being compiled without a revenue line for the departure tax, known locally as the surat fiskal.

Technically a pre-tax payment that can later be deducted on personal and company income tax payments, the fiskal was introduced by the Government in 1994 as a means to discourage foreign travel and the resulting loss of foreign exchange. The ability to claim back the fee against income tax payments was also introduced to encourage personal and corporate tax registration.

The tax measure has been widely criticized by the national travel industry and among Indonesia's fellow members in the 10-country Association of Southeast Asian Nations (ASEAN) who saw the policy as inimical to efforts to foster inter-regional travel and tourism.

Current revenues produced for the Government by the fiskal tax are reported to total Rp. 1.2 trillion a year (approximately US$ 133 million).