JAKARTA, Sept. 3 (Xinhua) -- The Indonesian House of Representatives on Tuesday endorsed an amendment to the income tax law aimed at boosting economic activities by providing lower rates and more incentives to businesses, a paper said here Wednesday.

    The new law stipulates that the income tax for corporations will be set at 28 percent flat next year, replacing the current progressive system, and will be further reduced to 25 percent at the start of 2010.

    The law, which will take effect next year, will benefit firms with high earnings.

    "We pledge the tax amendment will be very supportive and friendly to all levels of business, but at the same time very stiff on any violations," said Dradjad Wibowo, a member of the House was quoted by the Jakarta Post as saying.

    The law provides incentives to encourage firms to go public.

    Companies that list at least 40 percent of their shares on the Indonesia Stock Exchange will see their tax rate cut by five percent compared to those of ordinary corporations.

    Indonesia has been struggled to improve investment climate, which has frequently been complained by investors due to uncertainty in business regulation. Moreover it is worsened by red tape and rampant corruption.