Indonesia to review new film tax

Under fire for a potential new tax on foreign films that has led distributors to halt their importation, the government on Sunday promised to review the move.

The minister of culture and tourism, Jero Wacik, said the government wanted to support the development of the domestic film industry with the proposed new tax.

“We will review the Directorate General of Taxation’s circular issued in January on the new levy on imported films,” he said. “This is because we are not going to pursue regulations that have a bad effect on the public and threatened to kill the cinema industry here with their implementation.”

The minister said the government, if necessary, would also invite distributors to discuss how much they were prepared to pay. Imported films already pay a 23.75 percent excise duty and another 10 percent income tax. Local governments also levy up to a 15 percent tax on ticket sales.

Jero said a new tax arrangement for domestic and imported films would be finalized within two weeks. “We just want to clarify everything as soon as possible and don’t want to create any misunderstandings,” he said. “We just want to do what’s best for our national film industry.”

The minister said he would announce the final proposal for the tax scheme by National Film Day, which is on March 29. He said the government was not looking to pass any regulations that would kill off the film industry, but only wanted to improve quality.

Jero said President Susilo Bambang Yudhoyono in December had directed him to help advance the domestic film industry and, in the process, help create new jobs. “The president requested that we improve and increase the number of Indonesian films,” the minister said.

There has been a barrage of criticism, both here and abroad, over the proposed tax. The Motion Picture Association, which represents some of the biggest studios in Hollywood, on Thursday told journalists in Jakarta that it would stop movie exports to the country because of the possible new levy, which was rumored to cost as much as 43 cents per meter of film imported.

The controversy surrounding the new tax and the film boycott has been a hot topic around water coolers across the country and on online social networking sites such as Twitter. The official line that the tax was aimed at helping develop the domestic film industry has even been dismissed by those in the film industry.