Fiscal Incentives May Spur ETF Performance

By Editorial Team 04/09/2019
Summary

Exchange-Traded Fund (ETF) or mutual fund that trade on an exchange is officially listed in investment instruments to receive tax incentives in September 2019. The incentives provided are an exemption from transaction fees and Final Income Tax (PPh) for two years. Previously, the Indonesia Stock Exchange (IDX) had held a talk with the Directorate General of  Taxation (DJP) to discuss tax exemption for securities instruments in the form of Collective Investment Contracts (KIK), such as Real Estate Investment Funds (DIRE), Infrastructure Investment Funds (DINFRA), and ETFs.

The discussion included ETF due to low ETF trading activities on the secondary market. ETF purchase transactions are mostly done in the primary market or during its launch, whereas ETFs are designed as mutual funds tradable on the secondary market. Therefore, IDX feels the need for an incentive to spur ETF transactions. The incentive is also expected to trigger the increasing number of ETFs in the future.

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