Indonesian Vice President Jusuf Kalla promised on Tuesday that the government would reduce double taxes on transactions at Syari'a bank from about 20 percent to zero no later than February to create a fair competition with conventional banks, Director of Syari'a bank Achmad Ridwan Amin said in Jakarta.
The director said after meeting with the vice president that the move could smooth development of the bank and attract more investors.
"(The vice president) said (the taxes) would be aborted in two months," Ridwan said at a press conference.
Director for Directorate of Syari'a Bank of the Indonesian Central Bank, the Bank of Indonesia Ramzi A. Zuhdi said that the move was aimed at creating a fair competition among all kinds of banks in the country.
The Syari'a bank finances its consumers by purchasing a product and then selling it to the consumer. Each transaction of purchase and sale is charged 10 percent taxes, according to Zuhdi.
He said such taxes were not imposed in conventional banks, which have different type of financing. "(The two banks) do not play at the same flying field. This is not fair," he said.
Suhdi said that the double tax was one of obstacles for investors from Middle East to invest in the sector.
Bank Syari'a was expected to grow by 5 percent this year, said Suhdi. The bank has loan to deposit ratio more than 100 percent.
Source:Xinhua
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