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New Tax Rule Won’t Hurt Bond Market, Official Says
November 19, 2009

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An tax rule signed early this month will not change the treatment on gains made by foreign investors in the local debt market, a finance ministry official said.

The ruling “aims to prevent domestic taxpayers from using foreign parties as a vehicle to avoid taxes,” Rahmat Waluyanto, director general of debt management at the ministry, said on Thursday. The ruling requires taxpayers to file additional documents to prove their eligibility under double-taxation prevention agreements, Rahmat said. It will take effect on Jan. 1.

The more stringent regulation may dampen foreign interest in Indonesian bonds and prompt selling in the rupiah, analysts said on Thursday.  

Bloomberg