FORESTRY MINISTER CALLS FOR CANCELLATION OF VAT ON LOGS

Jakarta, April 15 (ANTARA) - Forestry Minister Zulkifli Hasan on Thursday asked Finance Minister Sri Mulyani to exempt logs and forestry products from value added tax (VAT).

The imposition of VAT on logs had merely made forestry products particularly those originating from smallholder forests uncompetitive, he said.

"I have just finished writing a letter to be sent to the finance minister soon. The letter contains a call for the cancellation of VAT on logs because they serve as raw materials which are mostly supplied by smallholder forests," he said.

The appeal was in line with the forestry ministry's campaigns calling for the people to develop plantation forests which would later supply raw materials to industries, he said.

He said the imposition of VAT on logs would also reduce the competitive edge of the country's processed wood because the end-products of the processed wood had been subject to similar tax.

"Wood furniture is already subject to VAT, so is paper. If logs serving as raw materials to make furniture and paper are taxed this sector will bear double taxation," he said.

Earlier, some forestry businessmen lodged an objection to the imposition of VAT on logs and other forestry commodities following the coming into force of Law No. 42 of 2009 on Value Added Tax and Luxury Sales Tax.

Chief of the Indonesian Forestry Society (MPI) Sudradjad DP said VAT on logs and other forestry products could reduce their competitive edge.

"The imposition of 10 percent VAT on forestry commodities is not fair and will put pressure on the competitiveness of forestry products," he said.