Govt to give 5-10 year tax holiday to biofuel investors
Saturday, August 19 2006 - 02:48 AM WIB
Al Hilal Hamdi, the head of the National Team for Development of Biofuel, was quoted by the newspaper as saying on Friday that the government was preparing a regulation on the incentives.
?It (the regulation) will be probably a Governmental Regulation signed by the President,? he said.
The government is aggressively promoting the development and use of biofuel in order to cut down the use of oil whose price has been tripled over the past several years. Analysts believe oil price will remain at high level and the nation?s economy will be hurt if it continues to rely on the commodity as fuel.
President Susilo Bambang Yudhoyono reiterated his support for the development and wider use of biofuel in his speech delivered on the eve of the nation?s Independence Day, saying aside from reducing the nation?s reliance on oil, the program would also create 5 million new jobs for the public.
The President said the government will provide Rp 1 trillion to help farmers to pay interest on loans taken to plant such crops as palm oil, sugarcane and jatropha that can be used to produce biofuel.
Al Hilal said aside from the Rp 1 trillion subsidy for farmers, the government is considering giving a tax holiday to investors for between 5 and 10 years, allowing investors to cut down the value of their taxable asset and profit by 20 percent, shorten the depreciation period of their taxable assets.
The tax holiday and tax allowances will be probably provided to investors during the provision of raw materials as well as the production of biofuel.
?The incentives will also be provided to export-oriented investors,? he said.
Biofuel producers will also enjoy tax incentive that is now provided to the producers of oil-based fuel, that is they are only obliged to pay value-added tax on the retail sales of their products. (*)