In­done­sian tex­tile in­dus­try seeks VAT ex­emp­tion

Apparel Online - - Beyond India -

The In­done­sian tex­tile in­dus­try has called the Fis­cal Pol­icy Of­fice of the coun­try to ex­empt the raw ma­te­ri­als pro­vided by lo­cal man­u­fac­tur­ers from Value Added Tax (VAT).

The Gov­ern­ment of In­done­sia gives tax ex­emp­tion on im­ported raw ma­te­ri­als to tex­tile com­pa­nies that have the ‘ease of im­port fa­cil­ity for ex­port pur­poses’ ap­proval.

The per­mis­sion is given to the com­pa­nies on the ba­sis that the (com­par­a­tively) cheaper raw ma­te­ri­als are used for prod­ucts trans­ported to the over­seas mar­kets.

The lo­cal man­u­fac­tur­ers who sup­ply raw ma­te­ri­als to units with such per­mis­sion have to pay 10 per cent VAT. This ul­ti­mately im­pacts their com­pet­i­tive­ness in the mar­ket, the in­dus­try claims.

The In­done­sian Syn­thetic Fi­bre Pro­duc­ers As­so­ci­a­tion (APSyFI) is also sup­port­ing the move.

“We have taken for­ward and dis­cussed the pro­posal with the Fis­cal Pol­icy Of­fice dur­ing our sev­eral meet­ings with them. We hope the same will be con­sid­ered,” said Redma

Gita Wi­rawasta, Sec­re­tary Gen­eral, APSyFI.

The as­so­ci­a­tion feels that the re­moval of 10 per cent VAT will in­crease the de­mand for lo­cal raw ma­te­ri­als. This will save around US $ 500 mil­lion in for­eign ex­change. APSyFI states that do­mes­tic con­sump­tion of raw ma­te­ri­als in the tex­tile in­dus­try of the coun­try can re­place 1,00,000 tonnes of im­ports.

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