Indonesia: January 2020 tax round-up

Minister of Finance (MoF) Regulation no. 186/PMK.03/2019 regarding classification of tax objects and procedures for determining tax base of land and building tax

On December 10 2019, the Minister of Finance (MoF) issued a new Regulation no. 186PMK.03/2019 (PMK-186) to revoke PMK-131/PMK.03/2017 (PMK-131) and PMK-139/PMK.03/2014 (PMK-139) concerning the classification of tax objects and procedures for determining tax base of land and building tax.

The key points of PMK-186 are as follows:

Classification of land and building tax

The new PMK changes the classification of land and building tax objects, which previously consisted of four classifications, into six classifications: land and building tax of plantation sector, land and building tax of forestry sector, land and building tax of oil and gas sector, land and building tax of geothermal sector, land and building tax of mineral and coal sector, and land and building tax of other sectors.

The areas for land and building tax of the plantation sector are:

• areas as stated in the license for cultivation, license of plantation business, permanent license for cultivation, and/or cultivation rights title for plantation; and

• areas outside the area as mentioned above which is a single entity used for plantation business activities and is physically inseparable.

Not intended as area as mentioned above is area that has been granted a plantation-processing business license.

The areas for land and building tax of the forestry sector are:

• areas as stated in IUPHHK-HA [business permit for utilisation of forest timber product in natural forest] and/or IUPHHBK-HA [business permit for utilisation of forest non-timber product in natural forest], IUPHHK-RE [business permit for utilisation of forest timber product through ecosystem restoration], IUPHHK-HTI [business permit for utilisation of timber forest product in industrial planted forest] and/or IUPHHBK-HT [business permit for utilisation of forest non-timber product in planted forest], or assignments from the government to the State Forest Public Enterprise (Perum Perhutani) based on laws and regulations; and

• areas outside the area as mentioned above which is a single entity used for forestry business activities and is physically inseparable.

The areas for land and building tax of the oil and gas sector are:

• oil and gas work areas as stated in the agreements;

• areas outside the area as mentioned above which is a single entity used for oil and gas business activities and is physically inseparable.

The areas for land and building tax of the geothermal sector are:

• geothermal work areas as stated in the geothermal license, geothermal resources business concession, joint operation contract for geothermal resources businesses, geothermal resources business license, or geothermal business assignment;

• areas outside the area as mentioned above which is a single entity used for geothermal business activities and is physically inseparable.

The areas for land and building tax of the mineral and coal sector are:

• areas as stated in the mining business license, special mining business license, smallholder mining license, contract of work, or coal mining enterprise contract of work;

• areas outside the area as mentioned above which is a single entity used for mineral and coal mining business activities and is physically inseparable.

The land and building tax of other sectors that cover waters are:

a. capture fisheries;

b. fish cultivation;

c. pipeline network;

d. cable network;

e. toll roads; or

f. storage and processing facilities, include floating storage and offloading (FSO), floating production system (FPS), floating processing unit (FPU), floating storage unit (FSU), floating production storage and offloading (FPSO), and floating storage regasification unit (FSRU).

Procedure for determining tax object sales value

The tax object sales value (NJOP) constitutes the basis for the assessment of land and building tax. This value is the sum of the NJOP of land and the NJOP of building. Evaluation of the tax objects to determine the NJOP of land and NJOP of building is carried out by the tax appraiser.

The calculation of land and building tax in a contract of work, coal mining enterprise contract of work, or special mining business licence for production operations, shall follow the provisions in the contract of work, coal mining enterprise contract of work, or special mining business licence for production operation.

This MoF regulation became effective starting January 1 2020. 

Minister of Finance (MoF) Regulation no. 171/PMK.04/2019 regarding exemption from import duty on import of goods

On November 22 2019, the MoF issued Regulation no.171/PMK.04/2019 (PMK-171) to revoke PMK-28/PMK.011/2011 (PMK-28) concerning exemption from import duty on import of goods by the central government or local government for the public interest. 

The key points of PMK-171 are as follows:

The importation of goods by the central government or a local government may be exempted from import duty if:

• The goods are purchased using funds from the state budget (Anggaran Pendapatan dan Belanja Negara or APBN) or local budget (Anggaran Pendapatan dan Belanja Daerah or APBD); and/or

• Received from grant.

The exemption of import duty can also be granted for several conditions as follows:

• Importation through bonded storage, special economic zone, or free zone;

• handover of imported goods which are exempted from import duty from the recipient of import duty exemption; or

• settlement of temporarily imported goods through grant to the central government.

Furthermore, the importation of such goods may also be granted tax facilities such as:

• Non-collection of VAT and sales tax on luxury goods; and/or 

• Exempted from collection of Article 22 withholding income tax. 

In order to enjoy the facility of import duty exemption, the central government, local government or third party shall submit an application to the Minister of Finance (MoF) through the Head of Customs and Excise Regional Office or Head of Customs and Excise Primary Service Office.

This MoF regulation became effective 30 (thirty) days after its enactment date, which was November 25 2019. 

Dewa Nugraha

T: +62 21 2988 0681

E: dewa.nugraha@gnv.id

Dwipa Abimanyu Dewantara

T: +62 21 2988 0681

E: dwipa.dewantara@gnv.id