Jakarta proposes to end tax-free debt

Plan will affect companies whose debt exceeds four times equity


COMPANIES the world over have used interest payments to shrink their tax bills. Indonesia, faced with record private debt, is trying something different.

South-east Asia's largest economy plans to ban firms from writing off interest costs against taxable income should debt exceed four times equity. If the finance ministry proposal is enforced next year, heavyweights in the economy such as telecommunications firm PT Tower Bersama Infrastructure could take a hit.

Indonesian President Joko Widodo needs to balance reining in surging liabilities with encouraging investment to reverse the slowest economic growth in six years.

The central bank said this week it will loosen lending rules, even...

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