Government Insists on Eradicating Global Sharia Tax
Monday, 29 January, 2007 | 14:10 WIB

TEMPO Interactive, Jakarta: The government will ask the House of Representatives (DPR) to attach a provision on value-added tax (PPN) eradication and luxurious goods sales tax (PpnBM) on the issuance of state sharia commercial paper or state sukuk.

“We will lobby every faction to attach (the request) to the amendments of the Law on General Provisions of Tax Guidelines that is being discussed,” said Rahmat Waluyanto, Director General of State Debts Management, last week in Jakarta.

The reason for this is that tax assessment will cause state sukuk issuance to be unappealing for investors.

In addition, transactions involving sukuk assets do not offer additional values, do not help in transferring asset ownership and only have benefit rights.

State sukuk are different with conventional obligations because no interest is paid.

They offer profit share that require endorsed transactions on issued assets.

“The transactions on assets do not offer additional values because there are not any ownership transfers of the assets. So, no taxes should be imposed,” said Rahmat.

According to him, only income tax should be imposed on yields that sukuk holders receive.

ANTON APRIANTO