The Directorate General of Tax is currently discussing with the government to prepare the implementation framework for regulation No 42/2009 on luxury tax and proposing the maximum rate to be hiked to 100%, vs. 75% at present.
The automotive industry proposes that the government maintain sthe maximum luxury tax rate at the current rate to support the auto industry. At present, the 75% luxury tax rate applies to sedan, 4x2 and 4x4 with cylinder capacity above 3,000 cc (gasoline) and 2,500 cc (diesel).
Sales comment: Sedan and big engine cars account for less that 5% of the industry annual sales. We believe the market is more concerned on the potential increase in car registration tax, from 10% to 20% slated over the next 12 months. Then again, if you can afford a car, you can afford to pay the registration of your car.
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