Shipping industries are the very important pillars to develop Indonesia into a global maritime axis. However, the current tax policies formulated by the government for the shipping industry show lack of support to the national shipping companies. The formulated policies tend to present more benefits to and support more foreign shipping companies than national companies.  Some of these policies are among others: a) no VAT levies for use of bunkers by international shipping companies, b) non-equal VAT treatment on port services, and c) presumptive scheduler taxation rates based on old Income Tax regime which has relatively high income tax rates.

The main objective of this research is to evaluate tax policy on the shipping industries in Indonesia. In addition, this research also does a comparative analysis aiming to increase the productivity of domestic shipping companies – using the South Korea tax policy as a comparison.  The final goal of this research is to provide a policy brief for the government in constructing or reconstructing tax policies aimed at developing national shipping industry.

The state of the art of this research is to make the tax politic as a new paradigm in analyzing problems. The benefit of this paradigm is in its ability to dissect the root causes on taxation substantial aspects, because actually a policy is a political product.

The analysis results show absence of political platform (which should be clear and unequivocal) in the current taxation policies on shipping industry – which tend to be reactively constructed, not supportive to the development of, or even in some instances discriminatory against national shipping industries.

It is recommended that the government immediately formulate the politic of taxation which is pro national shipping industry.  And, distorting taxation policies need to be revised in order not to impede competitiveness in the shipping industry.

Keywords : Shipping, maritime, tax policy, value added tax, national competitiveness