Doing Business in Indonesia VS USA – 3E Accounting
Indonesia is gearing up to be the destination of choice for foreign investors. However, some investors may be eyeing the USA instead. Each country has its advantages, particularly for foreign investors, so it pays to do your research regarding this. The commonality between Indonesia and the USA is that both are trying to bring in foreign investors.
Avoiding Scams By Checking Taxation Scheme for Indonesia VS USA
One way the two countries are competing for the attention of foreign investors is through tax incentives. Foreign nationals need to determine whom they consult regarding taxation, especially considering Indonesia VS USA benefits. Get-rich-quick schemes have already scammed some foreign investors.
If you want to invest in Indonesia, specific tax incentives are open to foreign investors who wish to enter labour-intensive industries. Of particular interest are the research and development areas of such industries and the development of labour training programs.
If you intend to pursue the USA as your investment destination, analyze if you should reside in that country while doing business. This is because some foreign investors decide to live in the USA to oversee their American investments. Opting to reside in the USA will mean you are obliged to pay taxes for your investments as a US citizen would be. And this applies to your investments on a global level too. (This scrutiny by the IRS is prompted by the Foreign Account Tax Compliance Act or FATCA law).
Seek Out Tax Incentives for Labor Training for Indonesia VS USA
One positive tax incentive of Indonesia is geared towards foreign investors who need skilled labour. Indonesia grants a tax break if you intend to set up an apprenticeship or training program for your workforce. The tax incentive point is to motivate foreign investors to rely on Indonesian labour for their operations. This covers both foreign investors who are just venturing into Indonesia and those who have already set up shop. This rule also applies to foreign investors who venture into research and development as well.
On the other hand, it is rather confusing to invest in the USA for any purpose, including labour training. One reason it can get confusing to find the right tax incentive is that the US taxes foreign investors as citizens. As long as you reside within the USA, you must declare all your assets to the IRS. The other factor that can confuse state law on taxation may be different from federal law. This may explain why seeking professional assistance on taxation in the USA has much sought after.
Challenge China Supremacy Through Choosing Indonesia VS USA
Analyzing your taxation situation may be central to the Indonesia VS USA argument. One way companies are dealing with it is by considering their own situation while based in China. True, China is arguably the number one competitor of the USA when manufacturing consumer goods. But that can change in a matter of months if manufacturers opt to leave China.
Manufacturers are eyeing Indonesia for their relocation because China seems to be altering its business terms. China is now increasing the cost of its operations, partly because of its direct competition with the USA. The USA is still a strong contender for the long term despite their higher labour costs, and China recognizes that. On the other hand, currently, China-based companies are considering relocating to Southeast Asia instead. This is because Indonesia has cheaper overhead and labour than China.
For anyone studying their Indonesia VS USA options, it can be intimidating to compare these two countries. After all, Indonesia faces some challenges that may hamper its ability to compete against the USA. Some of these challenges are the less-skilled workforce and the need to adapt to newer, more efficient technologies. Analysts believe Indonesia must upgrade its infrastructure so that foreign investors will be impressed enough to bring in investments. (These are all strengths of the USA, actually).
However, Indonesia has its strong points that influence the Indonesia VS USA argument in its favour. For one, Indonesia’s taxation system is less confusing than that of the USA. Second, Indonesia is willing to offer tax incentives to sit up and take notice of any competitive foreign investor. Third, Indonesia is keen to bring in foreign investors who find the China system less attractive than the Indonesian system. Indonesia can be the little mouse that roared in Asia and brought in foreign investors in droves because of this. That is why the USA may have to rethink its business strategy, considering Indonesia might be the next business in Nirvana.
If you require assistance in some business services such as Taxation, we at 3E Accounting are willing to help. Contact us today, and we will walk you through your Taxation options at your convenience.