Bond Interest Tax Down to 5%, Make Deposits Unattractive?

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Bond Interest Tax Down to 5%, Make Deposits Unattractive?
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The government through the Directorate General of Tax (DGT) of the Ministry of Finance (Ministry of Finance) has cut the Income Tax (PPh) for Bond Interest to 5 percent. Previously, the bond interest tax was 15 percent.
The Director of Counseling, Services, and Public Relations of the Directorate General of Taxes, Hestu Yoga Saksama, in a press release circulated recently explained that the reduction in bond interest income rates were those received by the Collective Investment Contract (KIK).
Then, what type of bond investment does the income tax rate obtained from interest fall? And whether the bond interest tax cuts will make deposits no longer attractive.
Type of Bond Investment with Decreased Tax Rates
Still as explained by the Directorate General of Taxes in his written statement, the type of bonds whose income tax rates from interest rates fall are government bonds and private bonds.
This reduction in income tax rate to 5% is for interest on infrastructure bonds, real estate investment funds, and asset-backed securities recorded at the Financial Services Authority (OJK).
“Provisions on income tax on bond interest apply to debt securities, including state bonds and regional bonds, with a maturity of more than 12 months,” DGT wrote.
The reduction in income tax for bond interest is regulated in Government Regulation (PP) No.55 of 2019 concerning Income Tax on Income in the Form of Bond Interest.
This Rule constitutes the Second Amendment to PP 16 of 2009 concerning Income Tax on Income in the Form of Bond Interest.
The First Amendment to income tax on bond interest is stated in PP No.100 of 2013, which in this regulation the 5% tariff applies only to mutual funds, while collective investment contracts are subject to a higher tariff of 15%.

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