Expansion of tax incentives related to COVID-19
On April 27 2020, the government of Indonesia, through the Minister of Finance (MoF), issued regulation No. 44/PMK.03/2020 (PMK-44) regarding tax incentives for taxpayers affected by the COVID-19 outbreak as a replacement of the previous regulation No. 23/PMK.03/2020 (PMK-23).
The main impact from PMK-44 is an expansion of the list of taxpayers that qualify to obtain tax incentives. This regulation also introduces additional incentives for micro, small and medium-sized enterprises (MSMEs) that are subject to a final income tax regime of 0.5%. The following table shows the summary of the tax incentives:
Concerning |
PMK-23 |
PMK-44 |
Article 21 employee income tax borne by the government |
- Business classification code (440 KLU codes); - The employer has been designated as a KITE (Import Facility for Export Purposes) company - Employees have tax ID numbers (NPWP); - Employees earn annualised gross income of less than IDR200 million ($13,450); - Notification on the realisation of income tax Article 21 borne by the government is conducted every three months.
|
- Addition of business classification code (1,062 KLU codes); - The employer has been designated as a KITE company; or - The employer has obtained a bonded zone operator permit, a bonded zone entrepreneur license, or PDKB (entrepreneur in bonded zone) permit; - Employees have NPWP; - Employees earn annualised gross income of less than IDR200 million; - Notification on the realisation of income tax Article 21 borne by the government every 20th of the following month. |
Final income tax |
No incentive |
Specifically, for small and medium enterprises (UMKM) regulated in GR 23/2018 |
Exemption from Article 22 income tax on import and refund of excess value added tax (VAT) |
- Business classification code (102 KLU codes); - The employer has been designated as a KITE company. |
- Addition of business field classification code (431 KLU codes); - The employer has been designated as a KITE company; or - The employer has obtained a bonded zone operator permit, a bonded zone entrepreneur license, or a PDKB permit. |
30% reduction of Article 25 income tax instalments |
- Business classification code (102 KLU codes); |
- Addition of business classification code (846 KLU codes); - The employer has been designated as a KITE company; or - The employer has obtained a bonded zone operator permit, a bonded zone entrepreneur license, or a PDKB permit. |
PMK-44 became effective on April 27 2020, and this incentive is valid from April to September 2020.
Guidelines of tax incentives for taxpayers affected by the COVID-19 outbreak
Along with the issuance of PMK-44, on April 30 2020, the Director General of Tax (DGT) issued Circular No. SE-29/PJ/2020 (SE-29) concerning the PMK-44 guidelines for tax incentives for taxpayers affected by the COVID-19 outbreak.
The guidelines referred to in this circular are as follows:
1. Article 21 income tax borne by the government
Effective tax period from when the notification letter is submitted until September 2020;
Taxpayers should submit the notification letter of Article 21 tax borne by the government for the tax period of April no later than May 20 2020;
Entrepreneurs who meet the requirements and/or taxpayers who have submitted the Article 21 income tax return (SPT PPh 21) prior to the issuance of PMK-44 can amend the SPT PPh 21 to get tax incentives.
2. Final income tax incentives
Taxpayers should have most recent notification letter of PP 23 after PMK-44 was issued;
Taxpayers should issue the tax payment slip stamped with “refund of final income tax deferred by government per PMK NUMBER 44/PMK.03/2020”;
Should submit the notification letter of realisation of final income tax borne by the government together with the tax payment slip, at the latest on the 20th of the next month after the following tax period.
3. Tax incentive of Article 25 income tax instalments
Effective tax period since notification letter was submitted to September 2020;
Taxpayers should submit the notification letter of incentive of Article 25 instalment for the tax period of April no later than May 15 2020;
Taxpayers that already paid the Article 25 instalment before the issuance of PMK-44 can perform overbooking of the payment.
4. Article 22 import tax exemption
Effective tax period from the issuance date of exemption certificate until September 30 2020;
Should submit a realisation notification every three months, together with the tax payment slip.
5. Preliminary refund for value added tax
Taxpayers that filed monthly VAT return with the tax overpayment at a maximum of IDR5 billion;
Taxpayers that are categorised as low-risk VAT-able entrepreneurs
PMK-44 is effective since April 27 2020.
Adjustment of corporate taxpayer income tax rates
In connection with the promulgation of government regulation in lieu of Law (PERPPU)-1/2020, the Director General of Taxes has issued regulation No. PER-08/PJ/2020 (PER-08) concerning the calculation of income tax instalments for the current tax year in connection with the adjustment of corporate taxpayer income tax rates.
The main points discussed in the regulation are:
The CIT rates of 22% and 19% apply for the calculation of Article 25 income tax instalments for the year 2020 valid since the normal deadline for submission of the annual corporate income tax return for the year 2019. This deadline will depend on the bookkeeping period used by the taxpayer.
This rate reduction applies to (i) general taxpayers and (ii) taxpayers who have periodic financial reporting obligations (such as banks, state-owned enterprises, regional government owned enterprises, publicly listed taxpayers, and other taxpayers that must prepare periodic financial statements).
This PER-08 became effective as of April 21 2020.
Endy Arya Yoga
T: +62 21 2988 0681
Siti Ni'mah Fitriah
T: +62 21 2988 0681
