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Income tax on derivative transaction affects futures trade

August 7, 2009 - 07:58 AM

The imposition of income tax on derivative transaction has expanded the spread of transaction at futures exchange and caused investors to stay away from futures exchange in Indonesia, Bisnis Indonesia Daily reported on Friday.

President Director of PT Kliring Berjangka Indonesia (KBI) Surdiyanto Suryodarmodjo said that the imposition of derivative tax as high as 2.5% on transactions at futures exchange would increase the transaction spread to around 10.

“If the spread of the executed transaction is three and tax is supplemented, the spread may expand to 13. It would make futures exchange’s products unsold whereas income of the exchange results from spread,” he said, adding that the high spread would encourage local customers to favor transactions at overseas futures exchange.

The government recently issued Government Regulation Number 17 Year 2009 regarding Income Tax on income resulting from derivative transactions but market communities have asked the government to review the tax rate.

Chairman of the Indonesian Futures Exchange Broker Association (IP2BI) Gregorius Teddy Gunawan said that the government should find a fair solution to polemic over the imposition of income tax on income resulting from derivative transaction because the 2.5% rate imposed at the initial margin would burden customs upon transacting thus affecting the trade. (*)

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