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Indonesian ship owners call for freight tax cut

The Indonesian National Shipowners Association (INSA) is seeking the abolition of the government’s 10 percent value-added tax (VAT) on freight delivered by local carriers.

INSA said domestic shipping lines also pay a 10 percent tax on locally purchased fuel on top of the freight tax, while foreign-flagged ships are exempted from the 10 percent VAT when transporting export-import cargo from Indonesia.

Association chair Carmelita Hartoto pointed out that lifting the 10 percent VAT would provide equal treatment between local and foreign ships and increase national lines’ freight market share.

Indonesian import-export freight reached 577.3 million tons as of September 2011 and is expected to expand by 7 percent each year to more than 1 billion tons in 2015, according to INSA estimates.

A tax cut on freight shipments would bolster finances and increase shipping companies’ capital for operational expansion, Hartoto said.

At present only around 10 percent of the total export-import cargo in Indonesia are handled by local shipping lines, which aim to increase their share to 30 percent by 2015, said Hartoto.

Leon Muhammad, the Transport Ministry’s director general for sea transportation, said his ministry had talked to the Finance Ministry about the tax cut proposal and was awaiting the latter’s decision.


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