Indonesia exempts taxpayers from late submission penalties

The government has issued Director General of Tax Decision No. KEP-440/PJ/2019, concerning the exemption from administrative penalties for the late submission of tax returns (SPT) that were due on April 30 2019.

This decision is based on a disruption of the application that left taxpayers unable to file tax returns (SPT) through a certain channel (e-filing) by April 30.

This exemption from administrative penalties for late submissions of tax returns applies only to:

1. Corporate taxpayers whose fiscal year ended on December 31 2018 and that submitted their annual income tax returns for tax year 2018 through the e-filing platform on May 1 or May 2 2019; and

2. Taxable entrepreneurs that submitted periodic value-added tax returns for the period ending in March 2019 through e-Filing on May 1 and 2, 2019.

The government, through the Minister of Finance, issued Regulation No. 81/PMK.010/2019 on May 20 2019, concerning the VAT exemption on the following types of deliveries:

1. The simple housing and very simple housing that fulfils the following provisions:

   1. Building area not exceeding 36 square metres;

   2. Selling price not exceeding the limit on selling price, with the provision that the limit on selling price is based on an adjusted combination of zone and year;

   3. Is the first home owned by an individual in the category of low-income residents, is used by the individual as a residence, and is not transferred within a period of four years from when it is first owned;

   4. Land area not less than 60 square metres; and

   5. Acquired in cash or financed through a subsidised credit facility, or through financing based on Sharia principles.

2. The workers' temporary housing that is defined as a simple building, whether of one story or more, which is built or financed by individuals or employee cooperatives, intended for low-income permanent employees or workers in the informal sector with an agreed-on rental price, and not transferred within a period of four years from when they are first owned.

3. The student dormitories of one story or more, which are built or financed by a university or school, individuals, and/or regional government, which are specifically intended for housing of students, and not transferred within a period of four years from when they are first acquired.

4. Other housing that is exempted from VAT includes:

   1. Workers' houses, i.e. residences in buildings of one story or more, which are built and financed by a company and intended for its own employees and not of a commercial nature, with certain requirements; and

   2. Buildings intended for victims of natural disasters which are financed by the government and/or a non-governmental organisation.

This Ministerial Regulation came into force on June 5 2019.

Separately, following the signing of the agreement between Indonesia and the Commonwealth of the Bahamas in Nassau, Bahamas, on June 25 2015 for the exchange of information relating to tax matters, the Indonesian government has issued its ratification Presidential Regulation No. 29 of 2019, dated May 8 2019.

This regulation applies as the legal basis for the exchange of information relating to tax matters for the purpose of prevention of tax avoidance or evasion in the two countries, and came into force on May 9 2019.