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The Lure of Traveling Abroad

Removal of Fiscal Tax on January 1, 2011 Expected to Hurt Indonesian Domestic Tourism.

(12/11/2010) The Directorate General of Taxation is estimating that the introduction of the free fiscal tax policy on January 1, 2011, will have a significant impact on domestic tourism.

Speaking at a tax socialization seminar in Bogor, West Java, on December 4, 2010, Robert Pakpahan, the director of business transformation at the tax office, said: "Before, the fiscal tax was put in place to dissuade people from shopping and traveling abroad; urging them to take domestic holidays instead."

Quoted by Waspada On Line, Pakpahan warned the removal of the fiscal tax may increase the possibility that Indonesians will now travel abroad. Adding: "But we cannot restrain the forces of globalization. All we can do is to try to make domestic tourism more appealing."

Pakpahan admitted the fiscal tax charged to departing Indonesian residents was a practice peculiar to Indonesia, with most countries only charging an airport tax. "Over time, we have to be embarrassed by this (fiscal) policy. But with each departure there is now the concern that more people will prefer to shop and holiday overseas," he said.

He explained how the tax office had used the fiscal policy in early 2009 as a tactic to persuade people to register themselves with an official tax number (NPWP). Elaborating, Pakpahan said: "At this point in time, the number of registered tax payers has reached 18 million people. This compares to 2008 when only 8.81 tax payers were registered, increasing to 13.86 million in 2009."

He said the latest surge in tax registrations was due to the introduction of a "sunset policy" for delinquent tax payers; the introduction of a "free fiscal" policy for registered tax payers; and differential tax rates for people with NPWP and those with no tax registration.

At present early 60% of Bali's tourism arrivals originate from the Indonesia domestic travel market.

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