Indonesian And Australian Tax Policy Implementation In Food And. Agriculture Industry

Transcription

1 Inernaonal Journal of Fnance & Bankng Sudes IJFBS Vol.3 No., 04 ISSN: avalable onlne a Indonesan And Ausralan Tax Polcy Implemenaon In Food And Agrculure Indusry Hanggoro Pamungkas a, Maya Safra Dew b, Yuna Anwar c, Marn Surya Mulyad d a,b,c,d Bna Nusanara Unversy, KH Syahdan 9, Jakara 480, Indonesa Absrac Tax polcy s one of he mos mporan polcy n consderaon of nvesmen developmen n ceran ndusry. Research by Newlon (987), Swenson (994) and Hnes (996) concluded ha ax rae s one of he mos mporan hng consdered by nvesors n a foregn drec nvesmen. One of ax polcy could be used o arac foregn drec nvesmen s ncome ax ncenves. The aracveness of ncome ax ncenves o a foregn drec nvesmen s as much as he aracveness o a domesc nvesmen (Anwar and Mulyad, 0). In hs paper, we have conduced a sudy of ncome ax ncenves n food and agrculure ndusry; where we conduc a horough sudy of ncome ax ncenves and corporae performance n Indonesan and Ausralan food and agrculure ndusry. Our research show ha here s a sgnfcan nfluence of ncome ax ncenves o corporae performance. Based on our sudy, we conclude ha he sgnfcan nfluence of ncome ax ncenves o Indonesan corporae performance somewha n a hgher degree han he Ausralan peers. We have also concluded ha Indonesan governmen provde a relavely more neresng ncome ax ncenves compare o Ausralan governmen. However, an average mehod of ne ncome a mehod appled n Ausrala could be consdered by Indonesan governmen o avod a marke prce flucuaon n hs ndusry. Keywords: ax polcy; ncome ax ncenves; food and agrculure ndusry; ax rae; foregn drec nvesmen; domesc nvesmen. 04Publshed by SSBFNET. Inroducon To suppor he developmen on ceran ndusry, governmen usually ssue a new polcy. There are several knd of governmen polcy whch could be used and ssued, e: nvesmen polcy and ax polcy. Tax polcy s one of he mos mporan hng o be consdered n ceran ndusry developmen. In consderng a foregn drec nvesmen, nvesors consder ax rae as one of he mos mporan componen (Newlon, 987; Swenson, 994; Hnes, 996). Locaon s also mporan deermnan of a foregn drec nvesmen (Ondrch and Wasylenko, 993). a Correspondng auhor.marn Surya Mulyad. 75

2 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Income ax ncenves are one knd of ax polcy ha could be used n effor o ncrease nvesmen. Income ax ncenves are a polcy o change ax srucure wh several mehods (Tung and Cho, 00; Mulyad, Anwar and Sagan, 0). One example of ncome ax ncenves whch ofenly used s a reducon n ax rae as documened by Mnz and Smar (004) n her research n Canada. Anoher hng has o be accouned for s hgh cos of ax oblgaon, especally for a bg busness (Slemrod and Blumenhal, 996). Therefore, here s no doub ha ax polcy (n hs case, ncome ax ncenves) need o be serously consdered o arac foregn drec nvesmen. Furhermore, hs ncome ax ncenves s also lke a doubleedge sword: s no only aracng foregn drec nvesmen bu also aracng domesc nvesmen as well (Anwar and Mulyad, 0). Food and agrculure ndusry s one of major ndusry boh n Indonesa and Ausrala. Recen ssues of food and agrculure ndusry was a deal by WTO Mnseral n Bal hs December, whch specfcally dealng wh food-sock holdng and he prce benchmark. Of course, hs WTO deal also show he mporance of governmen suppor for food and agrculure ndusry developmen. Consderng he mporance of food and agrculure ndusry n Indonesa and Ausrala, and he mporance of ncome ax ncenves as ax polcy o be mplemened n suppor of a ceran ndusry developmen, hs paper wll dscuss ax polcy mplemenaon n Indonesan and Ausralan food and agrculure ndusry. Second par of hs paper wll dscuss he leraure revew regardng ax polcy, ncome ax ncenves n boh counres and prevous research. Research mehodology wll be descrbed compleely n hrd secon and followed by dscusson and analyss and concluson. 76

3 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Leraure Revew.. Tax polcy: ncome ax ncenves Tax polcy have a bg mpac, alhough somemes only has a lle mpac or no mpac a all (Deskns, 005). Based on Wasylenko (997), he ook a general conclusons ha ax polcy s a sgnfcan deermnan of economc acves. Ths s due o ax sysem n a counry conss of many knd of ax ha nfluence overall economc acvy, eher corporae or personal economc acvy (Anasassou, 0). Several counres apply an ncome ax ncenves o suppor nvesmen n ceran ndusry (Van Parys and James, 00). Income ax ncenves wll arac nvesmen as corporaon whch has receved ncome ax ncenves have a compeve advanage o her compeor (Fernandez de Soo Blass, 0). Accordng o Huagaol, Darussalam and Seprad (006) here are hree knd of ncome ax ncenves: Income ax ncenves based on agreemen wh oher counry (governmen o governmen agreemen) e: ax reay. Agreemen wh conracor. Income ax ncenves based on governmen law and regulaon. Furhermore, Holland and Vann (998) dvde ncome ax ncenves o fve caegores: ax holday, nvesmen allowances and ax cred, mng dfference, ax rae reducon and free economc zones. Some echncal ssues are very mporan n ax holday, especally relaed o mpac of ax holday o nvesmen reurn. The mos mporan hng n ax holday s he sar dae of hs ncome ax ncenves. Tax holday and ax rae reducon are among he mos popular ncome ax ncenves. There s dfference beween hese wo ncome ax ncenves hough. In ax holday, corporae do no pay axes n a ceran perod of me. Whle n ax rae reducon, corporae sll need o pay axes wh lower ax rae compare o he oher corporaon... Income ax ncenves n Indonesa In Indonesa, ncome ax ncenves are gven wh varous background, naure and objecves. In general, background, naure and objecves of he ncome ax ncenves are an ncreased macroeconomc condon, whch cover: Boos domesc economc wh ncome ax ncenves. Developmen of ceran regon. Encourage a labour nensve ndusry. Arac long erm nvesmen n Indonesa. Increase ncome of lower-layer resden. Increase ncome equaly. 77

4 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Increase counry s ncome. Improvemen of food and healh ssues. Improvemen of welfare. Law bass of ncome ax ncenves n Indonesa has been revsed and mproved several mes. I was sared n 000 wh Governmen Regulaon 0/000, and he laes law bass of ncome ax ncenves ha s sll n effec s Governmen Regulaon 5/0 (appled snce December, 0). In hs laes regulaon, Indonesan governmen also nclude food and agrculure ndusry as ncome ax ncenves recpen. Income ax ncenves provded by Indonesan governmen are regulaed n Chaper of Governmen Regulaon 5/0. These ncome ax ncenves wll be gven n case axpayer realze a leas 80% of her nvesmen plan: Reducon of ne ncome. The amoun of reducon s 30% of nvesmen, whch could be expensed equally hroughou 6 years (5% each year). Acceleraed deprecaon and amorzaon. The useful lfe of Group I, II, III and IV s, 4, 8 and 0 years consecuvely. Whle permanen buldng has 0 years useful lfe and 5 years of non-permanen buldng. Specal rae of ncome ax on dvdend payable o foregn axpayer. The ax rae s 0% or lower rae avalable based on appled ax reaes. Exended loss carry forward, more han 5 years (normal perod) and maxmum 0 years. To receve he above ncome ax ncenves, besdes he regulaon of 80% nvesmen realzaon here are more specfc crera oulned n he appendx of governmen regulaon. The crera cover produc range, locaon and oher specal crera. For example n agrculure ndusry, a corporaon n mango culvaon busness could receve ncome ax ncenves f her locaon s n Eas Java and have land more han 500 hecare. Anoher example from food ndusry, a corporaon n mlk processng busness wh produc range of: mlk powder, condensed mlk and lqud mlk could receve ncome ax ncenves as long as her locaon s n: Wes Sumaera, Bengkulu, Wes Java, Cenral Java, Yogyakara, Eas Java, Bal, Wes Nusa Tenggara and Souh Sulawes wh he followng specal crera: mnmum nvesmen of 00 bllon rupah, mnmum of 00 employees and mnmum annual producon of 50 ons..3. Income ax ncenves n Ausrala In Ausrala, food and agrculure ndusry could receve ncome ax ncenves f hey are classfed as prmary producer. In Ausralan regulaon, a busness could be consdered as a prmary producer f s a busness (no merely a hobby) and also have o produce man producon n he followng caegory: land culvaon, manenance of anmals or poulry for he purpose of sellng hem or her bodly produce ncludng naural ncrease, fshng operaons, fores operaons and horculure. 78

5 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Prmary producer could he followng ncome ax ncenves sarng July, 009. The followng ncome ax ncenves are no avalable n he oher ndusry:. Immedae deducons for landcare operaons.. Three year wre off for waer facles. 3. Ten year wre off for elecrcy connecons and elephone lnes. 4. Acceleraed deducons for horculural plans. 5. Deferral of prof on he forced dsposal or deah of lvesock. 6. Deferral of prof on nsurance recoveres. 7. Deferral of prof on double wool clps. 8. Income averagng. Besde he above ncome ax ncenves, here s also research and developmen ax ncenves for Ausralan corporaon. For ax year end or before June 30, 0 hs ax ncenves n form of reducon and resuon wh some erms and condons. Whle for ax year sar or afer July, 0, here are wo ers of research and developmen ax cred sysem. The wo research and developmen ax cred sysem are:. Tax cred (could be resued) amouned 45% of elgble research and developmen expenses.. Tax cred (could no be resued) amouned 40% of research and developmen expenses..4. Prevous research As has been dscussed prevously, ncome ax ncenves are governmen polcy o suppor nvesmen n ceran ndusry by alerng he curren ax srucure. Prevous research n ax srucure n general have dfferen analyss and dfferen framework (Lamber, 985; Aknson, 995; Creedy, 995). The mpac of ncome ax ncenves o foregn drec nvesmen has also been research subjec of prevous researcher. Roo and Ahmed (978) concluded ha ax have mpac on foregn drec nvesmen and also nvesmen decson n a mulnaonal corporaon. Mos of oher researchers also conclude smlarly based on her research, ha ax polcy s sgnfcan n nvesmen/economc flow deermnaon (Harman, 984; Young, 988; Gruber and Mu, 99). Tung and Cho (00) also concluded from her research n Chna, regon wh lower ax rae are more aracve o foregn drec nvesmen compared o regon wh hgher ax rae. Anwar and Mulyad (0) also concluded ha ncome ax ncenves gven specfcally n ransporaon ndusry have a sgnfcan mpac o corporae performance. Prevous research n erms of comparson of Indonesan ncome ax ncenves and oher counres have been conduced n renewable energy ndusry (Anwar and Mulyad, 0), geohermal ndusry (Anwar and Mulyad, 0), ransporaon ndusry (Anwar and Mulyad, 0) and creave ndusry (Mulyad, Anwar and Sagan, 0). From her research, could be concluded ha some of ncome ax ncenves provded by oher counry are comparavely more appealng compared o ncome ax ncenves provded by Indonesa. However, s worh o noe hough, ha ax polcy (ncome ax ncenves) s only one varable ou of many ha s consdered n an nvesmen decson. 79

6 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Based on he prevous research and leraure revew, we have developed he hypohess o be esed n hs research: he mplemenaon of ncome ax ncenves have a posve mpac o corporae performance n Indonesan and Ausralan food and agrculure ndusry whle he perod of pre-mplemenaon of ncome ax ncenves have a negave mpac o corporae performance n Indonesan and Ausralan food and agrculure ndusry. 3. Research Mehodology We are applyng wo research mehodology n hs paper. Frs, we apply a qualave mehod by comparng ncome ax ncenves n food and agrculure ndusry n Indonesa and Ausrala. And second, o measure he mpac of ncome ax ncenves applcaon o corporae performance, we used he followng EGARCH economerc model. n k R e d R where ln ln r q p j n d = dummy varable of ncome ax ncenves perod mplemenaon k e R = lag reurn = error ln p j = mpac of prevous varance r = mpac of prevos error q = mpac of asymmeres

7 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Dscusson and analyss 4.. Analyss of sasc es resul We have chosen each 0 corporaons boh lsed n Indonesa and Ausrala sock exchange. The sasc es resul s avalable n Table. Table. Sasc es resul of corporae performance n Indonesa and Ausrala food and agrculure ndusry Indonesa# Pre## Pos### Ausrala# Pre## Pos### AALI -4.89E-9* 3.37E-9* AAC E-0 BISI 3.46E-9* 3.73E-9* AVG -.E-9*.46E-9* BTEK.74E-8* -.E-8* AYB.6E-9* 0.00 INDF -6.00E-9* 4.83E-9*** BUG -5.66E-0*** 0.00 LSIP.55E-9* 0.00 CCL.9E-9* -.43E-9*** ROTI.36E E-9 CSS 6.6E-9* -6.E-9** SGRO.8E E-9 FNP 9.4E E-9 TBLA -.50E-9* 3.38E-9* GFF -7.79E-0*.45E-0* ULTJ -.09E-8*.34E-8** PFL 5.E-0* 0.00 UNSP -.47E E-9*** SHV E-0 Source: Processed daa Table nformaon: # Code of lsed corporaon n Indonesa and Ausrala sock exchange ## Corporae performance afer ncome ax ncenves mplemenaon n each counry ### Corporae performance before ncome ax ncenves mplemenaon n each counry * Sgnfcan n % ** Sgnfcan n 5% *** Sgnfcan n 0% From able, we could analyze he mpac of ncome ax ncenves mplemenaon n Indonesa and Ausrala o corporae performance. Corporae performance are measured wh daly reurn proxy of each corporaons, wh he bass of ncome ax ncenves wll ncrease corporae ne ncome whch n general wll ncrease daly reurn. For he cu-off of ncome ax ncenves mplemenaon perod, we use December, 0 for Indonesa (he sar dae of Governmen Regulaon 5/0) and July, 009 for Ausrala (he sar dae of ncome ax ncenves for prmary producer). From he sasc es resul, for Indonesa case s known ha 70% of he samples show an nfluence of ncome ax ncenves mplemenaon n perod before ncome ax ncenves mplemenaon. All evdence s sgnfcan n %. From samples whch show an nfluence, 57% show a negave correlaon whch could be analyzed as whou ncome ax ncenves wll resul n low ne ncome and low reurn. Income ax ncenves mplemenaon s also sgnfcanly nfluence Indonesan food and agrculure ndusry. 70% of Indonesan corporaon samples show he evdence of hs nfluence, n whch mos of s sgnfcan n %. From ha 70%, we documened a 7% evdence of posve correlaon. Ths means mplemenaon of ncome ax ncenves resuled n a hgher ne ncome, and ulmaely a hgher reurn. 8

8 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: We have found smlar resul from our Ausralan daa. From our research, we have found 70% of he samples show an nfluence of ncome ax ncenves o corporae performance. Bu s only 4% of he samples show a negave correlaon, whch s slghly lower compared o he Indonesa research where we found a 57% evdence of negave correlaon. In pos-mplemenaon perod, we only found 40% from Ausralan samples ha show he nfluence of ncome ax ncenves o corporae performance. Ineresngly, from hs 40%, we have found equal posve and negave correlaon evdence. From hs resul, we could conclude ha here s only medum o low magnude mpac of ncome ax ncenves n Ausrala o corporae performance compared o Indonesan evdence. From hs sasc es resul, we also conclude ha ncome ax ncenves have a sgnfcan mpac o corporae performance n food and agrculure ndusry. Our fndngs are smlar wh fndngs of Anwar and Mulyad from her research n Analyss of ncome ax ncenves We have summarzed he ncome ax ncenves provded by Indonesan and Ausralan governmen for food and agrculural ndusry n able. Table. Summary of ncome ax ncenves for Indonesan and Ausralan food and agrculural ndusry Naure Indonesa Ausrala Ne ncome reducon 30% from nvesmen, equally dsrbued n 6 years Invesmen n landcare operaons, waer facles (equally dsrbued n 3 years) and elecrcy connecons and elephone lnes (equally dsrbued n 0 years) Acceleraed expenses All angble and nangble asses Horculural plans Lower ax rae For dvdend pad o foregn ax subjec N/A Exended loss carry Exended loss carry forward up o en Prof deferral for ceran crcumsances forward/prof deferral Ne ncome calculaon mehod Source: Processed daa years N/A Income averagng o avod marke prce flucuaon From he comparson n able, we could conclude ha ncome ax ncenves provded for Indonesan food and agrculural ndusry are comparably more appealng han Ausralan. For example, n ne ncome reducon: s a 30% reducon from any knd of nvesmen. Whle n Ausrala, alhough s a full reducon, bu here are some resrcon of he nvesmen whch s lmed o nvesmen n landcare operaons, waer facles, elecrcy connecons and elephone lnes. For acceleraed expenses, s appled o all angble and nangble asses n Indonesa. As for Ausralan cases, s lmed o horculural plans. Whle for he lower ax rae, s no avalable n Ausrala. In Indonesa, s avalable for dvdend ax rae ha s pad o foregn ax subjec. 8

9 Pamungkas e al. /Inernaonal Journal of Fnance & Bankng Sudes Vol 3, No, 04 ISSN: Indonesa and Ausrala have a smlar naure n he nex ncome ax ncenves. Indonesa provde an exended loss carry forward up o en years (from orgnally fve years). In Ausrala, here s a polcy of prof deferral on forced dsposal, deah of lvesock, nsurance recoveres and double wool clps. The las ncome ax ncenves provded by Ausralan governmen, he usage of ncome averagng, could be consdered by Indonesan governmen o be appled. Ths due o he hgh flucuaon of marke prce n food and agrculure ndusry whch can cause a sgnfcan ncrease/decrease n corporae ne ncome. The usage of ncome averagng wll resul n a more sable ne ncome and also ax lably. Therefore, s beer for he corporae cash flow n relaon o amoun of ax lably. Ou of fve knd of ncome ax ncenves provded by Indonesan and Ausralan governmen for food and agrculural ndusry, we have a concluson of Indonesan ncenves are comparably more appealng han Ausralan. Our fndngs are n conrary wh he fndngs of Anwar and Mulyad (0a, 0b, 0) and Mulyad, Anwar and Sagan (0) whch concluded ncome ax ncenves provded by Indonesan governmen are less appealng compared o oher counres n he comparson. 5. Concluson Our research showed a mxed fndngs o our hypohess. For some corporaons, we have found ncome ax ncenves have a sgnfcan nfluence o corporae performance. In food and agrculure ndusry, Indonesan and Ausralan governmen provde several ncome ax ncenves where hose ncome ax ncenves have a sgnfcan nfluence o corporae performance n he ndusry. However, we have found he Ausralan nfluence of ncome ax ncenves o corporae performance s n a less magnude compared o he Indonesan. Whle for some oher corporaons, here are no sgnfcan nfluence of ncome ax ncenves o corporae performance. Furhermore, we also come o a concluson ha ncome ax ncenves provded by Indonesan governmen are relavely more appealng compared o Ausralan ncome ax ncenves. Addonal samples from oher counres food and agrculure ndusry such as: USA and New Zealand would be benefcal o be fuure research n hs opc, as we have only dscussed wo counres n food and agrculure ndusry ax polcy mplemenaon n hs research. References Anasassou, T.A. (0). Margnal effecve ax raes and ax ncenve srucure evaluaon: The case of Greece. Journal of Appled Busness Research, 7(4): -7. Anwar, Y., and Mulyad, M.S. (0). Income ax ncenves on renewable energy ndusry: Case of geohermal ndusry n USA and Indonesa. Afrcan Journal of Busness Managemen, 5(3): Anwar Y. and Mulyad, M. S. (0). Income ax ncenves on renewable energy ndusry: Case of USA, Chna, and Indonesa. The Busness Revew Cambrdge, 7(): Anwar, Y. and Mulyad, M. S. (0). Analyss of ncome ax ncenves for ransporaon ndusry n Indonesa. The Busness Revew Cambrdge, 9():

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