Indonesia’s Upstream Textile Firms Request Tax Exemption

2017/09 05 10:09

Indonesia’s upstream textile industry has urged the fiscal policy office to exempt raw materials supplied locally from value-added tax (VAT). Tax exemption is offered for imported raw materials to firms obtaining the ‘ease of import facility for export purposes’ permission on the condition that the cheaper raw materials are used for output shipped abroad. Domestic manufacturers supplying raw materials to factory owners with such permission are subject to a 10 per cent VAT, which affects their competitiveness. Domestic manufacturers are currently preparing to respond to a government directive asking them to submit reports on their ability to supply quality raw materials in adequate volumes for export-oriented textile industries. As scrapping the 10 percent VAT will boost demand for local raw materials, the Indonesian Synthetic Fiber Producers Association (APSyFI), is in the forefront backing such a move, according to Indonesian media reports. APSyFI estimates domestic consumption of local raw materials in the textile industry could replace 100,000 tonnes of imports, thereby saving up to $500 million in foreign exchange and generating employment. (DS)

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