The Indonesian government has scrapped value added tax (VAT) on land and water transport services to reduce the tax burden of the public transport sector, the finance ministry said.
Under the finance minister`s regulation number 80/PMK.03/2012, VAT-free land transport services include those of trains and motor vehicles carrying yellow plates with police numbers written in black, the ministry said in a press statement issued on Tuesday.
The VAT-free water transport services include those of sea, river and lake transport means and ferry boats.
But the VAT exemption facilities do not apply to the services of rented trains and ships. The services of rented motor vehicles carrying yellow plates with police numbers written in black are not subject to VAT.
The statement said the ministerial regulation is intended to give the public, particularly public transport users and providers legal certainty about the imposition of VAT as well as to reduce tax administrative burden.
Earlier, Finance Minister Agus Martowardojo said one of the reasons for the issuance of the regulation is to enable the public transport service industry to compete with foreign rivals.
He expressed hope the public transport service sector will be able to better compete with foreign rivals following the issuance of this regulation.
Source : Antara (12.06.12)