Taxation Rates
Indonesia has a series of progressive sliding rate taxes for all categories. Furthermore, as a developing nation, much economic activity is done at the 'cottage' level where sales and services taxation are tax exempt.
Indonesia's taxations system recognises the economic reality of the majority poorer citizens and the poor are exempt from almost any taxation. The underlying ethic of "gotong-royong"- "neighbourly help" is applied where the more fortunate wealthier are enforced to meet their moral obligation of a heavier burden of tax- regardless of arbitrary arguments to its fairness.
The tax-free poverty threshold for Indonesian income earners is also dependent on regions as there exists some disparity between purchasing power of the Rupiah between regions and intra-regionally between larger urban cities and smaller ones. The Capital, Jakarta is considered the most expensive city in term of all goods, services and wages.
Read more about this topic: Taxation In Indonesia
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