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JAKARTA - The finance minister will soon issue a regulation on an increase in sale tax on foreign-made luxury cars to curb their import, Industry Minister MS Hidayat said. "The ministerial regulation has been prepared," he said here on Thursday.
He said the finance minister will soon sign a list of luxury cars with an engine capacity of above 3,000 cc whose luxury sale tax will be raised. "The sale tax on luxury cars will increase to 125 percent," he said.
The policy to raise sale tax on luxury cars is part of the government`s efforts to contain the widening current account deficit which hit an all time high of US$9.8 billion or 4.4 percent of the nation`s gross domestic product (GDP) in the second quarter of 2013.
"We cannot ban the import of luxury cars and therefore, a disincentive policy is made to reduce their import," he said. "We also have taken steps to encourage the domestic production of the goods according to the market demand," he said.
Meanwhile, Director General of High Technology-Based Excellent Industry Budi Darmadi said the luxury sale tax hike was aimed not only at reducing the import of luxury consumer goods but also at encouraging the domestic production of the branded goods.
Budi said the sale tax on luxury cars would increase to a range of 100-125 percent from 75-125 percent, depending on the criteria of engine capacity. Indonesia imported about 7,000 luxury cars with an engine capacity of above 3,000 cc last year.
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