Pricey Indonesian Tax for Overseas Travel to Expire Next Year

Dion Bisara & Ririn Radiawati Kusuma | October 24, 2010

Jakarta. The “fiscal” tax charged to Indonesian citizens traveling overseas will be a thing of the past next year after the policy expires on Dec. 31, a spokesman from the directorate general of taxation said on Sunday.

The tax, which was increased in 2009, was an attempt by the government to boost revenue by charging non-taxpaying citizens a fee for leaving the country.

Before 2009, all overseas travelers were compelled to pay the tax, known as a fiscal, of Rp 1 million ($112) before proceeding to their boarding gate.

Following a tax law that became effective Jan. 1, 2009, tax card holders were exempted from that fee, while those without a tax card had to pay a fiscal of Rp 2.5 million.

“Fiscal exemption would [now] apply to everyone at the airport,” said Iqbal Alamsyah, director of outreach and public relations at the directorate.

The provision, which was aimed at persuading more people to register on the tax rolls, has been hailed as a success.

The number of registered taxpayers increased by more than 5.23 million in 2009 to 15.9 million — the fastest annual growth recorded, data from the tax office showed.

But the airport tax provision is only valid until Dec. 31, and beginning in the new year, the government will cease collecting fees from travelers whether they are card-carrying taxpayers or not.

According to Iqbal, the abrupt ending of the fiscal policy will result in a loss of some Rp 39.57 billion in tax revenue next year.

“It’s roughly what we would lose next year,” Iqbal said.

But not all agree that ending the policy means less tax revenue for the government.

Tax analyst Darusalam said that if the government didn’t accrue revenue through taxes, it would get it through other means.

“In theory, a fiscal tax is an upfront payment of one’s income tax, so in the end the government will get their share,” Darusalam said.

Still, he acknowledged that the fiscal tax policy had been an effective tool in swelling the number of registered taxpayers.

“That was a good incentive, attracting more taxpayers, which in turn increased revenue,” he said.

“But from now on, the tax office is going to have to work harder to promote tax compliance. It may also impose more rigorous checking of individual tax reports to ensure that nothing escapes from the government.”

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