Income tax discount for listed companies: A proposal
Government plans to give discounts on income tax for listed companies. Under the plan, companies with free float shares at 30%-40% will get the discount. The higher the amount of listed shares, the bigger will be the discount. But why the cut-off listed shares is 30%-40%? Why not above 50%? Who will get the benefit?
Director General for Tax Darmin Nasution said government has yet to decide minimum amount of listed shares that eligible for the discount. But the tax incentive will be one of policies to be announced with other policies to boost the economy.
Income tax rate is 30%, no difference between listed and non-listed companies. Association of Issuers proposed income tax rate of 20% for listed companies, and 30% for non-listed. The association argued if government would cut income tax for non-listed companies to 25%, public-listed companies should be charged with 15% income tax only. I'm not sure government would willing to sacrifice that much.
Most companies listed at JSX have listed shares below 20%. The tax discount, if implemented, would encourage more companies to float their shares at JSX while the already listed companies would float more shares. The rationale of the policy is good. But without significant changes in the current practices at stock market, I'm sure the tax discount mechanism would create more manipulators.
There are lots of listed companies with floating shares at 30%-40%, but actually these stocks are in the hands of controlling shareholders through their affiliated stock brokers.
So besides the amount of listed shares, the amount of shareholders should become the basic element of the tax discount scheme. The larger the amount of ultimate shareholders, the bigger would be the discount. I'm sure it can't guarantee the scheme would be manipulation-free, because it's just common to have listed companies manipulating the amount of 'independent'.
So, strong supervision from capital market authority on the above issues is paramount.
READ MORE!!!
Director General for Tax Darmin Nasution said government has yet to decide minimum amount of listed shares that eligible for the discount. But the tax incentive will be one of policies to be announced with other policies to boost the economy.
Income tax rate is 30%, no difference between listed and non-listed companies. Association of Issuers proposed income tax rate of 20% for listed companies, and 30% for non-listed. The association argued if government would cut income tax for non-listed companies to 25%, public-listed companies should be charged with 15% income tax only. I'm not sure government would willing to sacrifice that much.
Most companies listed at JSX have listed shares below 20%. The tax discount, if implemented, would encourage more companies to float their shares at JSX while the already listed companies would float more shares. The rationale of the policy is good. But without significant changes in the current practices at stock market, I'm sure the tax discount mechanism would create more manipulators.
There are lots of listed companies with floating shares at 30%-40%, but actually these stocks are in the hands of controlling shareholders through their affiliated stock brokers.
So besides the amount of listed shares, the amount of shareholders should become the basic element of the tax discount scheme. The larger the amount of ultimate shareholders, the bigger would be the discount. I'm sure it can't guarantee the scheme would be manipulation-free, because it's just common to have listed companies manipulating the amount of 'independent'.
So, strong supervision from capital market authority on the above issues is paramount.
READ MORE!!!
posted by yosef at 7:58 AM
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