Indonesia delays submission of sweeping tax bill to parliament to January

JAKARTA (Reuters) - The Indonesian government has delayed the handover of a sweeping tax bill to parliament until January, a month behind its earlier target, an official said on Wednesday.

The tax bill is one of two omnibus laws that President Joko Widodo is launching in a bid to revise swathes of existing legislation that hampers investment in Southeast Asia’s largest economy.

Corporate tax cuts and moves to make internet companies pay value-added taxes are among the main changes the bill aims to introduce.

Widodo had said earlier the tax bill would be submitted this month, while another important bill, which would relax the nation’s rigid labor rules, was to be handed over in January.

Vice Finance Minister Suahasil Nazara told reporters the tax bill is now scheduled to be given to lawmakers for review in early January.

“We will submit as quickly as possible ... after parliament returns from recess,” he said. Parliament reopens on Jan. 13.

Nazara declined to say why there was a delay.

Last week, Coordinating Minister for Economic Affairs Airlangga Hartarto told a news conference the bill was ready for the president to vet and would be submitted to parliament before it entered recess on Wednesday.

Lawmakers also had to postpone a hearing to approve 2020 priorities because of the late submission of a presidential letter requesting deliberation of the tax bill, Willy Aditya, deputy chairman of a key parliamentary body that sets the legislative agenda, told Reuters by phone.

Aditya, a politician from a party in Widodo’s ruling coalition, said the delay would not hurt parliament’s support for the bill.

“We’ve been pretty open about the omnibus law so far. We support the president’s good intention,” he said.

The ruling coalition controls 74% of the seats in parliament, boosting the bill’s chance of approval.

Hikmahanto Juwana, a University of Indonesia legal expert, said the delay would not be a problem if Widodo can maintain good communications with the nation’s political parties.

“If (the bill is) seen as urgent, it can be put forward” as soon as parliament returns from recess, he said.

Widodo, who began a second term as president in October, has made improving Indonesia’s investment climate and creating jobs a priority for the next five years.

On top of the omnibus laws, he has promised to cut red tape, relax foreign ownership rules in business and improve education, which he said would lay the foundation to make Indonesia among the world’s top five economies in 2045.

Reporting by Tabita Diela; Writing by Gayatri Suroyo; Editing by Tom Hogue