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Tax Investigation Techniques

Tue, 08 Dec 2009 09:27:27 +0000

There are two kinds of tax inspection techniques that are widely used by various countries, namely Net worth method and expenditure method.

NET WORTH METHOD

This method is an indirect method. The formula of this method uses the entire income tax payers as a means of proof. The formula of this method can be described as follows.
Suppose that net worth in the first year is X, then the net worth in the year X is the entire assets minus debts. The same is done for the second year. Further net worth the first year compared to the second year. This comparison will result in an increase in net worth, which should be equal to the taxable income for the second year. See examples of the following calculation:

First Year

Assets                                                 1. 000
Liabilities                                               200
Net worth                                               800

Second year

Assets                                                            3000
liabilities                                                         250
net worth                                                      2750
net worth first year                                     800
net worth increase in                                1950
plus nondeductible ekspenses           1000
minus nontaxable income                        400
Taxable income corrected                   2550
Taxable income reduced corrected   1250
Taxable unreported income in             1300

EXPENDITURE METHOD

as well as net worth method, expenditure method is also used to determine taxable income not reported. See examples of the following calculation:

Expenditure                                                       10.000
Total Nontaxable income                                    750
Adjusted Gross Income                                    9.250
Minus standard deduction                                  750
Minus exemptions                                                  500
Corrected taxable income                              8.000
Reported taxable income                                3.000
Unreported taxable income                            5.000

Expenditure method is usually used for tax cases:
1. Taxpayers did not make the accounting
2. Taxpayers making bookkeeping but not perfect
3. Hide taxpayer accounts.
4. Taxpayers have no visible assets

author :theodorus

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Use Tax Credits To Help Finance Your College Education

Tue, 11 Aug 2009 04:25:33 +0000

Students are always on the lookout for ways to help pay or offset the cost of their tuition. There are various government grants and scholarships available to you if you qualify. But what if you don’t qualify for these government programs? Don’t loose hope there are still options available to you that can help offset those tuition bills.

Did you know that tax credits are another way that Uncle Sam can help you finance your college education? Well it’s true and it has come to my attention that there are many students, old and new alike, who are not taking advantage of these educational tax credits that they are entitled to. Specifically the tax credits are the Hope Tax Credit and the Lifetime Learning Tax Credit. These two tax credits will reduce the amount of Federal Income Tax that you would pay dollar for dollar, unlike tax deductions that are used to lower your taxable income. It’s like someone saying to you “if you spend your money on college, I’ll give it back to you.” The tax credits are based on the amount of qualified educational expenses that students pay.

What are these qualified expenses? Qualified expenses are tuition and fees that are required to pay to an accredited college, university, or vocational school as a requirement for attendance. Fees that are not included are room & board, personal living and family expenses. Other expenses that may also qualify are expenses for books, supplies, student activity fees, and equipment if they are required to be paid to the school as a condition for enrollment.

Who is eligible for these tax credits? Anyone can claim these tax credits; you can claim these credits for yourself, your spouse and anyone you can legally claim as a dependant on your tax return.

The Hope Tax Credit is worth up to a maximum of $1,500, depending on how much the qualified educational expenses are, 100% of the first $1000 and 50% of the next $1000. To be eligible for The Hope Tax Credit the student need to be enrolled at least half time (6 credits) in at least one semester and meet certain income requirements. The Hope Tax Credit is available for each and every student, on the same tax return enrolled in a qualifying college program. This credit can be taken for the first two years of post secondary education (undergraduate degree or vocational school) for each student. A family with three students with qualified expenses of $2,000 each on the same return equals a $4,500 reduction in the taxes you owe.

The Lifetime Learning Tax Credit works a little bit differently, the credit is based on 20% of the of the first $10,000 of educational expense up to a maximum credit is $2,000 per return not per student. This credit can be taken for any and all years that a studennt takes even just one class that will improve or aquire job skills (undergraduate, graduate and professional degree courses included). If you have qualified expenses of $2,000 then you get a tax credit of $400 (.20 X $2,000).

Consider this, these tax credits can bring down the tax that you owe on April 15th, and money that you don’t have to pay in tax can be used to pay for the education you want and deserve. Other limitations are that both of these tax credits may not be used for the same student in the same year. Students that have been comvicted of a felony drug offense can not claim the Hope Tax Credit, but they can still take advantage of the Lifetime Learning Tax Credit.

This is just a breif overview of these tax credits that all students should know about and tahe advantage of. I reecomend that you do refer to IRS Publication 970 and I RS: Topics for Students for further information or discuss these tax credits with your Tax Professional.

About the author: P Nash is currently a student in his final year in a Business Administration program. He blogs on different topics related to higher education. Visit his blog College Matters for more higher education information.

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Directorate General of Taxes:An Excellent Government InstitutionWith Excellent Research Capabilities

Mon, 10 Aug 2009 03:17:58 +0000

“If we can measure it, we can manage it.
If we can manage it, we can achieve it.”
A. The Glooming Facts
According some academic literatures, there are a number of indicators that illustrate the
fact about national taxes in Indonesia, including : (a) tax ratio in indonesia is still relatively low
compared to other countries, (b) the filling ratio is allegedly low, (c) the elasticity of tax
collection is still greater than one, (d) the distribution of tax revenue is still concentrated on too
few tax payers. In addition, another academic literature concluded that the main problem of the
tax administration is its weakness on tax law enforcement. The weakness is shown by (a) a low
number of income tax return that claims profit, (b) a low number of registered taxpayers, and (c)
a high number of uncollected tax arrears. On top of that, the other academic literature had
revealed that a large tax gap is found.
B. Where Do We Go?
According to those findings, judging from a self-assessment system point of view, there
two things that might not already attained in Indonesia. Firstly, taxpayers not have a high level of
voluntary compliance of the tax responsibilities prescribed by the constitution and law yet,
and/or secondly the DGT fail to provide a proper guidance to taxpayers on how to file their tax
returns correctly and to perform sort of tax examinations to check the compliance level of
taxpayers.
Consequently, as Indonesia adopts a self-assesment system for its national taxes, DGT
must strive to resolve the condition mentioned above. In line with that, specifically, in 2004
DGT has been summarized four strategic goals to achieve its mission and vision, they are: (a)
improving the quality of tax service, (b) improving the level of tax payers compliance through
law enforcement, (c) improving the organizational effectivity and efficiency through reformation
and modernization, and (d) improving the human resources professionalism and integrity.
If DGT persist in achieving those strategic goals, we simply believe that there is a time
where the tax payers completely satisfied with the service quality of DGT’s operational activities
and the level of taxpayer’s voluntary compliance definitely high. It is therefore available an
optimal main source of government funding with vigorous fiscal sustainability and the high
level of trust in Indonesia’s tax system. Concisely, this is our ideal of DGT.
C. Why Research Capabilities?
One of big emerging question is what we need initially to achieve DGT’s strategic goals.
As we all know, tax can be seen from many aspects including, economics, law, sociology, and
psychology. Respectively, we simply put “tax knowledge” in the top list among others. In this
context, we can define “tax knowledge” as all facts, information, certain understanding,
awareness or familiarity gained by experience of a fact or situation related to taxation. Through
this tax knowledge, we can formulated the type of the problem occurred, predictions and
prescriptions, recommendations, controls, and evaluations toward implementation of DGT’s
strategic goals. Related to one of the main duties of DGT , tax knowledge will also help DGT to
formulate its policy accurately.
It is therefore essential that DGT should have quantitative and qualitative data as basis
for its operational plans and overall strategic goals, by performing vigorous tax research
capabilities. In this essay, we simply define tax research as any systematic effort to increase the
stock of “tax knowledge”. This includes therefore any systematic process of critical investigation
and evaluation, theory building, data collection, analysis and codification related to taxation. The
results of these tax research can provide useful information for DGT as revenue collecting
authorities and have implications for tax policy development.
Due to our best knowledge, research is still a rare activities in DGT nowadays.

By :
Arifin Rosid-Malang-Indonesia

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Tax Exemption

Mon, 10 Aug 2009 02:22:33 +0000

A tax exemption is a reduction or elimination of the taxes normally imposed on individuals and organizations by state and federal governments. In order to be tax-exempt, an organization must meet certain criteria that are specifically defined by the United States Internal Revenue Code (IRC). Many organizations which receive tax exemption under the IRC are charities, churches, and any other organizations which are operated for tax-exempt purposes.
A tax exemption is usually provided to an organization which is part of a sector of the economy which the government wants to promote economically. This is certainly the case, for example, with charitable organizations. The government wishes to reduce the tax burden on these types of organizations, based on the premise that doing so will encourage the economic activity of the tax-exempt organization. Tax exemptions can also serve the purpose of reducing the taxes borne by a particular segment of society, in the interest of fairness.
Non-profit organizations are generally tax-exempt on a federal level in the U.S. These may include schools, churches, charities, labor unions, and even amateur sports leagues. For these organizations, their tax exemption will depend on a number of factors, such as their sources of income, their purpose, and their activities. The tax laws at the state level also provide tax exemption for many of these same organizations, although the laws vary from place to place. Generally, however, they would be exempt from property taxes and state income taxes, as well as sales tax.
Additionally, individuals can receive a tax exemption for some types of benefits and income. Life insurance benefits, for example, fall under the tax-exempt category, as well as combat pay for military personnel and interest earned from investing in municipal bonds. These types of income, as well as several others, are tax-exempt because of how they are received. For-profit businesses also have a tax exemption available to them in some cases, especially when they are generally seen as providing a valuable service to society or an essential product for the economy. These tax exemptions are often controversial, however, and are criticized by those who feel that this gives the tax-exempt businesses and unfair advantage.
Various other types of tax exemption exist to serve the needs of government and different jurisdictions. For example, some organizations which resell goods, such as telecommunications companies, are often exempt from state sales taxes. At the discretion of local governments, sales which take place on certain days may be exempt from sales tax. This is a common occurrence during holiday periods and in the wake of natural disasters, and is used as a positive incentive for consumers to purchase goods.
author :Adam Hill
source:http://www.wisegeek.com

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income tax

Mon, 10 Aug 2009 02:07:26 +0000

Almost all governments are funded, at least in part, by some form of taxation on their citizens. Most of these taxes are collected at the time of a sale or service, but others are collected at the end of a 12-month period called a fiscal year. One such yearly levy is the oft-dreaded income tax. Income tax is essentially a bill from the federal and state governments for individual earnings through salaries and investment profits. Income tax is considered a progressive tax because the individual’s financial obligation rises with the level of reportable income.
The United States has not always had an official income tax, however. After years of oppression under the thumbs of robber barons and corrupt corporate executives, early 20th century Congressional leaders created a national income tax law in 1914 primarily to force the wealthiest and greediest to pay their fair share. Eventually this income tax reform would trickle down to the middle and lower working classes. Although income tax still remains progressive, many of the wealthiest companies and individuals benefit from a number of legal exemptions.
Thankfully, income tax can only be levied on positive income, not a net loss. The basic income tax structure allows individuals to earn a certain amount of non-taxable income. This is generally calculated by the standard deduction amount listed on the federal and state tax forms. If an individual has not earned more than the standard deduction amount (generally a few thousand dollars), then he or she would not owe an income tax.
The problem faced by wage earners, however, is that the payroll department is obligated to deduct a set percentage of money from each paycheck for tax purposes. Federal and state income tax is deducted according to a specific calculation based on a wage earner’s marital and dependency status. Other payroll deductions are also made to cover Social Security (FICA) contributions, insurance, union dues and any voluntary contributions. The amount collected for federal and state income tax is later reported on an official tax form called a W-2. Income without such tax deductions may be reported on another form called a 1099.
During income tax season from January to April 14th, individuals must report all of their total income from both wages and profits from investments. The standard deduction is then subtracted from the total and the remainder is considered taxable income. A chart provided with the official 1040 tax forms reveals the actual amount of income tax owed to the government. If the amount withheld by the payroll department is higher than this number, the government will issue a refund for the difference. If the W-2 number is lower, then the individual owes more income tax and must pay the Internal Revenue Service.
For most middle class taxpayers, income tax liability runs around 15% of their gross income. Individuals and businesses can legally deduct many expenses related to their occupations, which can significantly reduce this amount. Charitable donations can also be used to offset income tax obligations. A qualified tax preparation company or trained accountant can be a lifesaver when it comes to income tax matters.

author : Michael Pollick

source :http://www.wisegeek.com

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9 wise tax moves for 2009

Mon, 10 Aug 2009 01:47:20 +0000

The theme of the most recent presidential election was change. That’s a constant when it comes to taxes. Every year, taxpayers must deal with different tax laws. As the new year rolls in, here are nine new, renewed or slightly altered tax situations that could help you lower your tax bill.The theme of the most recent presidential election was change. That’s a constant when it comes to taxes. Every year, taxpayers must deal with different tax laws. As the new year rolls in, here are nine new, renewed or slightly altered tax situations that could help you lower your tax bill.

1. Claim your stimulus rebate
If you didn’t qualify for an economic stimulus payment in 2008 or received less than the maximum, you get a second chance in 2009. The rebate is actually a credit against your 2008 taxes, which must be filed by April 15, 2009. In 2009, you’ll find the official Recovery Rebate Credit on whichever 1040 form you file. However, this time you won’t get a separate cash payment. Rather, your credit will be used to offset any tax you owe. If your IRS bill happens to be less than your rebate credit and other tax payment amounts you’ve made, then any excess will be issued as a refund check.

2. Become energy-efficient at home
In 2005, a new federal energy bill created tax savings for various ways to improve a home’s energy efficiency. Unfortunately, the tax breaks for the improvements that are easiest to implement and least costly expired at the end of 2007.

The good news is that the credits, along with some new ones, were reinstated effective Jan. 1, 2009. On that date, installation of added insulation, storm windows and doors or an energy-efficient furnace or air conditioner could get you a tax credit of up to $500. However, as with many — OK, most — tax laws, the credit is not that cut-and-dried. Some improvements have specific credit limits. The federal Energy Star program has compiled a comprehensive chart of available home improvement tax credits.

And the $500 limit applies to the total credit you can claim for all the years the credit is available. So if you put in $200 worth of windows in 2007, then you have only $300 left on your possible credit claim for 2009.

3. Expand energy efficiency to the road
Gasoline prices dropped at the end of 2008, but you don’t really expect them to stay under $2 a gallon, do you? You can get a head start on potentially rising pump prices by buying a hybrid or other alternative-fuel vehicle. Even better, such an auto could provide a tax credit to boot. Although the tax breaks in 2009 for popular Toyota and Honda hybrid vehicles no longer exist, other auto manufacturers still offer a wide variety of fuel-efficient cars, trucks and SUVs that could increase your gas mileage and save you tax dollars.

4. Keep an eye on extenders
For the last few years, the tax code has offered filers an array of tax deductions. The only problem with these tax breaks is that they are temporary, requiring Congress to reauthorize them annually. Several of these so-called extenders were approved for the 2009 tax year as part of the economic bailout bill. They include an additional standard deduction amount for real estate taxes, as well as deductions for college tuition and fees, state and local sales taxes and teachers’ classroom expenses. If you can claim any of these extended tax breaks, be sure to do so in 2009. There’s no guarantee Congress will keep them around for another year.

5. Monitor retirement distributions
Once owners of traditional IRAs and other tax-deferred retirement accounts turn age 70Â½, they must start taking required minimum distributions, or RMDs, or face steep tax penalties. IRA owners who reached the mandatory withdrawal age in 2008 have the option to delay their first RMD until April 1, 2009. The amount of the distribution, however, still must be based on the account’s value as of Dec. 31, 2007. That could be very costly for account holders who are forced to sell assets that lost much of their value in 2008’s market turmoil.

If, however, you must make your first RMD in 2009, you get a break. A new law places a one-year moratorium on 2009 RMDs, meaning your next required withdrawal will be in 2010. As for folks who got caught in 2008, there is a possibility that additional legislative or regulatory action could be taken to help you, so if you can delay the payout, don’t take your RMD until as close as possible to April 1 to see if Congress provides some relief in this area.

6. Take the first-time homebuyer’s credit
Unless Congress extends the time frame for this tax break, you only have the first six months of 2009 to qualify for the first-time homebuyer’s credit. This is actually a $7,500 loan that must be paid back over 15 years via your future tax filings and applies only to first homes bought between April 9, 2008, and July 1, 2009. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. And although it technically applies to first-time buyers, the IRS says you qualify if you haven’t owned a primary residence during the three years prior to your home purchase.

7. Cash in on no capital gains
In 2008, a great tax break took effect for investors in the 10 percent and 15 percent income tax brackets. Those folks could sell their assets and owe no capital gains tax. This tax break also applies to qualified dividends. This good investment-sale news continues in 2009 and, for planning purposes, 2010. For 2009, the 15 percent tax bracket for singles tops out at $33,950; it’s up to $67,900 for married couples filing jointly. If you can realistically keep your income under the limit, then you can cash in assets without worrying about how much of your profits will end up at the IRS.

8. Watch your tax bracket
A huge deficit plus a Democratic House, Senate and president mean higher taxes, right? Not necessarily, at least not in 2009. A stumbling economy has put the brakes on President-elect Barack Obama’s campaign pledge to raise tax rates for higher-income earners. The more likely scenario now is that existing tax cuts will continue through their scheduled sunset date of Dec. 31, 2010.

But don’t expect lawmakers to sit still. Since most tax rates will return to higher levels Jan. 1, 2011, look for Congress to start exploring ways to deal with the coming mass tax increases. Keep a closer-than-usual eye on Capitol Hill so that if changes are made, you’ll be prepared to take the appropriate steps to minimize any potential tax costs.

9. Avoid the alternative minimum tax
Admittedly, avoiding the alternative minimum tax is easier said than done, especially when Washington insists on annual patches to this parallel tax system rather than a long-term fix. Each year, the alternative minimum tax, or AMT, threatens to ensnare millions of middle-class taxpayers, primarily because when it was created it didn’t include an annual inflation adjustment. For 2008, the exemption amounts to correct this oversight and protect filers from the AMT were increased to $46,200 for single taxpayers and $69,950 for joint filers.

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deferred tax

Fri, 07 Aug 2009 00:38:32 +0000

The term tax deferred refers to the postponement of paying taxes on earnings until a later date. In an investment situation, money allowed to grow in a tax deferred account is not taxed until it is withdrawn. Some examples of tax deferred investments are individual retirement accounts (IRAs), annuities, and certain types of bonds.

Tax-deferred investments can provide investors with valuable savings. Essentially, tax-deferred investments allow investors to save money in the present, dealing with taxes in the future. To take advantage of tax deferred savings, an investor can choose to place pre-tax dollars, up to a certain amount, in various investment products. By doing so, the investor lowers his or her current taxable income and may be able to benefit from taxation at a lower tax bracket.

Sometimes, individuals confuse tax exempt and tax deferred. The two are drastically different. Tax exempt means the investment or purchase is completely free of governmental taxation. By contrast, taxes must be paid on tax deferred purchases and investments; the taxes are simply paid at a later date.

An example of a financial product that allows for the postponement of taxes is the tax deferred annuity (TDA). TDAs are often used to help employees save for retirement. With a TDA, an employee may place pre-tax money into a special account. Often, this is done using automatic payroll deduction. Earnings in the account accumulate until the employee is ready to retire. Upon retirement, funds are distributed and taxes are paid.

TDAs not only allow employees to save while making contributions, but they also allow for savings at retirement. In many cases, employees are in a lower tax bracket after retirement. Therefore, the amount of taxes paid after retirement are expected to be lower than those that would have been paid while the employees were still working for a living.

IRAs are popular among tax deferred investments. By investing in an IRA, an individual is able to allow for the accumulation of dividends and interest, as well as appreciation, without paying taxes on the funds. Once the owner of an IRA begins withdrawing funds from the account, he or she is responsible for paying taxes. Generally, IRA owners begin making withdrawals at about 59 and a half years of age.

There are many types of tax deferred investments. Such investments include Employer-Sponsored Qualified Retirement Plans; Roth, traditional, and educational IRAs; annuities; certain types of life insurance; and EE and HH savings bonds. Stocks can be placed in tax deferred accounts as well.

author :N. Madison
source : wisegeek.com

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TAX GAP

Fri, 07 Aug 2009 00:36:10 +0000

The tax gap is a term used by the Internal Revenue Service (IRS) and by many state and local tax agencies. It represents the difference between what is actually owed to tax-collecting agencies and what is really paid to them. It’s difficult to know exactly the exact tax gap is for institutions like the IRS. Audits in 1998 led to projected tax gap figures of about 250-300 billion US dollars (USD) per year.

Only 50,000 people or businesses were audited, so the figure is a projection from a relatively small sample. In large states like California, 2005 projections suggest a loss of about 6 billion dollars a year in state taxes. 2005 federal studies concluded that the tax gap cannot be estimated with complete accuracy, but suggest the tax gap has widened since 1998 while ability to collect owed taxes remained about the same.

Some portion of the tax gap is recovered each year by enforcing payment of taxes owed, and through auditing. About 55 billion USD a year is eventually paid. This means estimates of the gross tax gap are really about 350 billion USD a year. The net tax gap is somewhere between 250-300 billion USD.

There are three main causes for the tax gap: failure to file returns, underreporting income, and failing to pay for taxes owed. Of these, the largest share of the tax gap is due to underreporting. From IRS estimates, about 250 billion dollars is lost each year due to underreporting.

Underreporting includes not fully reporting all income. People or businesses may also take too many deductions or may claim tax credits to which they are not entitled. Individuals are most likely to underreport income, not pay their taxes in full, or fail to file completely. They account for the largest share of the tax gap on the federal level. In contrast, studies conducted by the California Franchise Tax Board suggested small businesses were most responsible for the state tax gap.

People who don’t pay taxes accurately may not do so intentionally. Though some people elude taxes through underreporting, many people simply make mistakes when filing their tax reports each year. These mistakes may or may not be caught by state tax boards or the IRS. For many, underreporting or purposefully not filing is no mere mistake but a deliberate attempt to evade taxes.

Given the loss to federal and state governments, President George W. Bush has called for greater spending to conduct more audits and to collect more taxes owed. The president has also noted that complexity in tax law is in part to blame for the tax gap, and advocates for greater spending to reduce this complexity in order to gain more tax compliance. It is unclear whether greater spending or more audits would change the behavior of those who knowingly underreport on their taxes or who do not file. However, it is abundantly clear that the tax gap represents a significant loss to both state and federal government each year.

author :Tricia Ellis-Christensen
source : wisegeek.com

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‘Tax holiday ineffective in attracting FDI’

Wed, 05 Aug 2009 02:46:42 +0000

Plans to introduce a “”tax holiday”" would not be effective in alluring foreign investors into the country due to continuing security problems, labor disputes and legal uncertainties, Centre for Strategic and International Studies (CSIS) economist Pande Radja Silalahi asserted.

Pande said on Tuesday that foreign investors preferred a secure investment climate over tax incentives.

“”According to several surveys, tax holidays are not their top priority in entering this country, they need more certainty in doing business here,”" he told The Jakarta Post.

He added that the government’s fiscal condition was not in good enough shape to introduce a tax holiday.

He was responding to an earlier report that the Investment Coordinating Board (BKPM) was proposing the introduction of tax holiday to help boost badly needed foreign direct investment (FDI) into the country.

BKPM Chairman Theo Toemion claimed that he had already won the support of President Megawati Soekarnoputri, although the plan had yet to be discussed by the Cabinet.

Theo also said that other countries in southeast Asia had provided a tax holiday to attract foreign investors.

Calls for the introduction of a tax holiday have also come from various quarters, including from Japanese business organizations.

But Minister of Finance Boediono, who is under pressure to generate more tax revenue to finance the state budget, is likely to oppose the tax holiday plan.

Meanwhile, economist Bustanul Arifin economist of the Institute for Development of Economic and Finance (Indef) said that the government should only offer the tax holiday facility to foreign investors with a long-term investment plan which would create a considerable number of job opportunities in the country.

He, however, warned that the tax holiday facility could also be ineffective if the country’s newly autonomous provincial governments unilaterally slapped taxes on foreign investors.

“”Foreign investors are very worried about the implementation of the provincial autonomy,”" Bustanul said.

He also urged the government to take immediate steps to improve the investment climate here.

The government abolished tax holidays in 1983 following the enactment of a new tax law, although investors in certain sectors and areas of the country were eligible for a tax allowance facility.

BKPM is currently drafting a new investment bill which will include the tax holiday plan. The bill will be submitted to the House of Representatives for approval in the near future.

Meanwhile, Irmadi Lubis, a legislator from House commission V, overseeing industry and trade affairs welcomed the plan to provide tax holidays.

“”It shows that there is a political will from the government to attract foreign investors by introducing tax holidays,”" Irmadi said.

He, however, said that such a policy would require a change in the existing tax law.

Meanwhile, First Secretary for trade at the Japanese Embassy in Jakarta Tetsu Fukuoka said that the tax holiday policy was very important for Indonesia to attract foreign investors.

“”Tax holidays are a very important step to attract foreign investors but it is not a guarantee (that investors will come),”" he told The Post, pointing out that other factors such as the rule of law, labor environment and existing supporting industries were also at play.

Foreign investors have largely shunned Indonesia since the country plunged into an economic and political crisis in 1998.

Foreign direct investment (FDI) approvals dropped last year to US$9 billion, from $15.42 billion. In the first two months of this year, FDI fell by 79 percent to $489 million, from $2.33 billion in the same period in 2001.

source : The Jakarta Post

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9 wise tax moves for 2009

Wed, 05 Aug 2009 01:39:15 +0000

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