Indonesian Listed Companies Association (AEI) Urges Tax Incentives to List Shares
Ivan Dasa Saputra
The Indonesian Listed Companies Association has called for more government tax incentives to encourage companies to float their shares on the stock exchange.
Ishakayoga, executive director of the association known as AEI, urged the government on Monday to cut the floating-share cap for tax reductions to 35 percent. Currently, companies with 40 percent of their shares floating in the local market are entitled to a tax reduction.
Ishakayoga, formerly the president director of the defunct Surabaya Stock Exchange, also asked the government to shelve its plan to tax company founders’ shares, saying the tax would deter them from floating their shares in the market. “We need to encourage more companies to become public or our stock market will get stuck,” he said.
Currently, 448 companies are listed on the Indonesia Stock Exchange, with total market capitalization at Rp 3,631 trillion ($385 billion), or about half the country’s gross domestic product.
Companies that list 40 percent or more of their shares on the local market pay a reduced income tax of 20 percent, as opposed to the 25 percent rate for non-listed companies or for those whose float is less than 40 percent.
Ishakayoga said the floating cap should be lowered to 35 percent, a comfortable amount for most company owners.
Fuad Rahmany, the director general of taxes at the Finance Ministry, said in April the government was mulling plans to impose a tax on founders’ shares. The tax scheme would not apply to investors who bought their stocks on the capital market.
Ishakayoga, however, claimed the scheme would stop owners from floating their shares. Shareholders that conduct initial public offerings are currently taxed at 0.5 percent of the transaction.