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INDONESIA

Deductible revenue for tobacco firms limited

01 Jul 2009. According to the Jakarta Post, Indonesiaís finance ministry will limit the amount of promotion and distribution costs that can be deducted from the annual revenues of cigarette and pharmaceutical companies.

Additionally, the companies are obliged to submit a report on their promotional and distribution spending plans or they will be unable to subtract the costs from total revenues at the end of the year. According to tax office chief Darmin Nasution, the regulation was aimed at limiting the amount of the costs for promotion and distribution that would be subtracted from the companiesí gross revenues, which eventually affect tax revenues.

In 2008, the tobacco industry paid IDR 60 trillion (EUR 4.2 billion) in taxes or about 10 per cent of total government earnings from taxes.

Tobacco companies spent IDR 375 billion on advertising in the first quarter of this year, according to AGB Nielsen Media Research. (pi)