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Indonesia updates rules on tax facilities, withholding tax and tax incentives

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Tax rules updated in Indonesia

Ahdianto and Julius Wahyu of GNV Consulting discuss the latest developments on tax facilities and COVID-19, unification withholding tax returns and tax incentives affected by COVID-19.

Tax facilities and COVID-19

The Minister of Finance (MoF) has issued regulation No. 226/PMK.03/2021 (PMK-226) dated December 31 2021 regarding the tax facilities for goods and services required in the handling of the COVID-19 pandemic and the extension of income tax facilities. This is based on government regulation No. 29 of 2020 regarding income tax facilities for handling COVID-19.

The tax facilities stipulated in PMK-226 remain the same as in the previous regulation. The main points of this regulation are:

  • Taxable services concerning the handling of the COVID-19 pandemic are now no longer eligible for VAT incentives;

  • VAT borne by the government cannot be credited; and

  • The period for the tax facilities is extended until June 30 2022.

PMK-226 became effective on January 1 2022.

Unification withholding tax

On December 28 2021, the Director General of Taxes issued regulation No. PER-24/PJ/2021 concerning the form and procedure for making the unification withholding tax slip and the form, content and procedure for filling and submitting the unification withholding tax return.

This regulation becomes effective from the January 2022 tax period.

The unification withholding tax slip itself is a document made by the taxpayer for withholding/collection of income tax. It states the amount of income tax that has been withheld/collected.

The unification withholding tax slip can be in standard or other equivalent document formats. The unification withholding tax return covers several types of income tax, i.e. Articles 4 (2), 15, 22, 23 and 26 income tax. 

Both the unification withholding tax slip and the unification withholding tax return are electronic documents made and submitted through the e-Bupot Unifikasi application.

They should also be electronically signed by the taxpayer or their representative with an electronic signature or by the taxpayer’s proxy using the electronic certificate or Directorate General of Taxes (DGT) authorisation code.

In making the unification withholding tax slip, the parties from whom tax is withheld/collected must provide to the tax withholder/collector: 

  • Tax ID number (NPWP); or

  • Single identity number, for those who do not have an NPWP (NIK). 

For a foreign taxpayer from whom tax is withheld or collected:

  • Tax identification number; or

  • Other tax identity.

The withholder/collector of income tax should:

  • Pay the income tax that has been withheld/collected no later than 10 days after the tax period ends;

  • Pay the self-paid income tax no later than 15 days after the tax period ends; and

  • Submit the unification withholding tax return no later than 20 days after the tax period has ended. 

Late payment or tax underpayment is subject to an administrative penalty, i.e. interest as regulated in Article 8 paragraph (2a) of the Indonesian Tax Law (KUP). Late submission of a tax return is subject to an administrative fine of Rp100,000 ($7) as regulated in Article 7 of the KUP Law.

For the unification withholding tax return submission, the taxpayer will receive an electronic receipt slip (BPE) which is a receipt for the submission in accordance with the applicable tax regulations.

A unification withholding tax receipt can be amended or cancelled before the DGT conducts a tax audit or an investigation for preliminary evidence. A unification withholding tax receipt can also be added to tax objects yet to be reported in the unification withholding tax return. These are then reported in the amended unification withholding tax return.

The DGT has determined that the unification format will be implemented nationwide starting from the January 2022 tax period and required for all taxpayers no later than April 2022. 

Tax incentives for taxpayers affected by COVID-19 

On January 21 2022, the MoF issued regulation No. 3/PMK.03/2022 (PMK-3) concerning tax incentives for taxpayers affected by the COVID-19 pandemic. PMK-3 is provided mainly to replace the previous regulations and to extend the period of granting some incentives until June 2022.

The main points of PMK-3 are:

  • An extension of the tax incentive period for Article 25 tax instalment, Article 22 import tax, and final income tax for construction services until the June 2022 tax period.

  • The taxpayer can utilise the tax incentive by submitting a notification letter through the DGT website.

  • The list of the business group codes (KLU) of tax incentive recipients has been reduced to the following:

  • Article 22 import tax exemption: 72 KLU (previously 397 KLU); and

  • Article 25 income tax instalments: 156 KLU (previously 481 KLU)

  • A taxpayer that has reported the realisation report on the utilisation of tax incentives for the January to December 2021 periods may still be able to make amendments no later than March 31 2022.

PMK-3 became effective on January 25 2022.



Partner, GNV Consulting


Julius Wahyu

Director, GNV Consulting



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