Indonesia sets regulations to support virtual tax environment
Ahdianto and Julius Wahyu of GNV Consulting highlight the key tax-related developments from August and September 2020 in Indonesia.
During the middle months of 2020, Indonesia’s Directorate General of Taxes (DGT) and Minister of Finance (MoF) have introduced a set of provisions as the economy reacts to the effects of the coronavirus pandemic.
The procedure for e-filing
On July 29 2020, the DGT issued Regulation No. PER-14/PJ/2020 (PER-14) regarding procedures for the electronic submission of objection letters (e-filing).
This regulation describes the procedure for filing an objection letter through an electronic channel (e-filing), which is regulated in Article 9 of MoF No. 9/PMK.03/2013 concerning the procedures for submitting and settling objections as amended by MoF Regulation No. 202/PMK.03/2015.
The main points of PER-14 are summarised as follows:
A taxpayer can file an objection letter through the electronic channel (e-filing);
The DGT will validate the objection letter submitted through e-filing. For the result of the validation, the taxpayer will be notified by a statement.
The objection letter must be signed by the taxpayer using an electronic signature. Please refer to PER-04/PJ/2020 for how to obtain an electronic certificate.
The e-filing shall be done by accessing the DGT’s online website and selecting the e-objection menu.
PER-14 became effective on August 1 2020.
Amendments to COVID-19 tax incentives
On August 14 2020, the MoF issued Regulation No. 110/PMK.03/2020 (PMK-110) as an amendment to MoF Regulation 86/PMK.03/2020 (PMK-86) regarding tax incentives for taxpayers affected by the coronavirus pandemic.
The essential points of PMK-110 are as follows:
Government-borne final income tax incentives for construction service businesses
PMK-110 inserts new articles related to the final income tax incentives for the taxpayers that generate income from the construction services business, which is borne by the government.
The above tax incentive applies to the income received or obtained by taxpayers that receive the programme for the acceleration of improvement of irrigation water use (P3-TGAI).
Changes in Article 25 income tax installment rates
PMK-110 changes the rate of the tax incentive of Article 25 income tax installments for taxpayers that are affected by COVID-19 and meet specific criteria. The rate is changed from 30% to 50%.
This is effective from the tax period of July 2020 for taxpayers that have submitted the notification of Article 25 income tax installment reduction to the tax office where the taxpayers are registered.
Taxpayers that have applied for reduction of their Article 25 income tax installments based on the previous regulations do not need to re-submit a new notification to the tax office. The tax incentive is also valid until the tax period of December 2020.
PMK-110 became effective on August 14 2020.
Aid, donations and granted assets
On July 20 2020, the MoF issued Regulation No. 90/PMK.03/2020 (PMK-90) regarding aid or donation, as well as granted assets exempted as objects of income tax.
The main points of PMK-90 are as follows:
1. For grantors, profits due to the transfer of assets in the form of grants, aids, or donations constitute an object of income tax, except if transferred to:
A blood relative in a direct line of one degree, i.e. a biological parent or biological child;
A religious institution which does not seek profit through its primary activities of managing places of worship and/or carrying out activities in the field of religion, including religious institutions established or legalised by the government, including zakat or compulsory religious donations;
An educational institution which does not seek profit through its primary activity of providing education;
Social agencies, including foundations which do not seek profit;
Co-operatives as regulated in the provisions of laws and regulations in the field of co-operatives in Indonesia;
An individual who runs a micro or small enterprise who owns net assets not more than Rp500,000,000 ($33,700) and generates annual turnover up to Rp 2,500,000,000; and
Other parties that do not have a relationship with the grantor through business, occupation, ownership, or control.
2. The profit as intended in the previous point shall be the difference between the market price and the remaining fiscal book value or the acquisition value.
3. For grantees, aid/donation and granted assets (in the form money or goods) are exempted as objects of income tax, as long as there is no relationship through business, occupation, ownership, or control with the grantors. In the event that there is a relationship of ownership or control, the aid/donation and granted assets received shall still be exempted as an object of income tax as long as the grantee is a religious institution, educational Institution, or social Institution, including foundations.
4. The aid/donation and granted assets in the form of goods shall be recorded by the grantee with an acquisition value of the remaining amount of fiscal book value or another value.
PMK-90 is effective since July 21 2020.
Ahdianto T: +62 21 2988 0681E: firstname.lastname@example.org
Julius Wahyu DaryonoT: +62 21 2988 0681E: email@example.com