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Indonesia: Treatment of taxation, customs and excise in special economic zones

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Charles Oetomo and Welly Armantha Napitupulu of GNV Consulting provide an update of the tax and customs incentives for companies in special economic zones.

The Minister of Finance (MoF) issued Regulation No. 33/PMK.010/2021 (PMK-33) regarding the amendment of Regulation No. 237/PMK.010/2020 (PMK-237) concerning the taxation, customs and excise facilities in special economic zones (SEZ).

PMK-33: The business entity has approval as the business entity to build and/or manage the SEZ from the government institution. To obtain tax facilities, the business entity in SEZ must apply through the SEZ application system, where the IT inventory must be used by business entities with businesses that have more than one category.

VAT exemption on clean water delivery

On April 6 2021, the government issued Regulation No. 58 Year 2021 (GR-58) regarding the amendment of GR-40 Year 2015 concerning the VAT exemption on the clean water delivery. GR-58 applies from April 7 2021.

The definition of clean water has been expanded to include the installation and fixed load cost, where the definition of installation cost and the cost of clean water is also explained in the regulation. Also, clean water that is ready for drinking (drinking water) does not include bottled drinking water.

Indonesia and Australia/United Arab Emirates tax treaties

On February 18 2021, the Director General of Taxes issued Circular Letters Nos SE-05/PJ/2021 and SE-18/PJ/2021 concerning the notification of entry into force of the multilateral convention to implement measures related to tax treaty related to prevent BEPS between Indonesia and Australia and Indonesia and the United Arab Emirates (UAE), respectively. 

The scope of the circular letters consists of the enforceability of the DTAs between Indonesia–Australia and Indonesia–UAE, the signatory and enactment process between the governments, the applicable time applicable to the points of arrangement in the convention that applies to the tax treaty (DTA) between Indonesia–Australia and Indonesia–UAE. These circular letters are also intended to inform all units within the Directorate General of Taxes.

Based on Article 35 of the convention, the provisions shall have effect in each contracting jurisdiction with respect to the covered tax agreement:

  • In respect to taxes withheld at source on amounts paid or credited to non-residents, where the event raising taxes occurs on or after January 1 2021; and

  • In respect to all other taxes levied with respect to taxable periods beginning on or after January 1 2022 in Indonesia and June 26 2021 in Australia and the UAE.

The main points of the provisions in the convention that apply to the DTA can be seen in the following articles:

  • Article 4 paragraph (1) and (3), Article 6 paragraph (1), Article 7 paragraph (1), Article 9 paragraph (1), Article 11 paragraph (1), Article 13 paragraph (1), Article 14 paragraph (1), Article 15 paragraph (1), Article 16 paragraph (3) for the Indonesia–Australia DTA; and

  • Article 6 paragraph (1), Article 7 paragraph (1), Article 16 paragraph (1) and (2), Article 17 paragraph (1) for the Indonesia–UAE DTA.

Recess period for the Tax Court

On March 29 2021, the head of the Tax Court issued Circular Letter No. SE-05/PP/ 2021 concerning the stipulation of recess period for the Tax Court hearing sessions in relation to Idulfitri 1442 H.

In summary, the Tax Court postponed any Tax Court hearings scheduled from May 5 2021 to May 25 2021. The hearing sessions resumed on May 27 2021. Exceptions apply to dispute cases which will be due soon. 

Temporary import and export of motor vehicles 

On March 1 2021, the Directorate General of Customs (DGC) issued DGC Regulation No. PER-05/BC/2021 (PER-05) concerning the ‘Guidelines for temporary import and export of motor vehicles through cross-border control posts’.

PER-05 is an implementing guideline of the MoF Regulation No. PMK-52/PMK.04/2019 (PMK-52) concerning the ‘Temporary import and export of motor vehicles through cross-border control posts’ which regulates motor vehicles traffic at cross-borders and simplifies the temporary import and temporary export process using a single document. 

 

Charles Oetomo

Partner, GNV Consulting

E: charles.oetomo@gnv.id


Welly Armantha Napitupulu

Senior manager, GNV Consulting

E: welly.napitupulu@gnv.id

 

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