Indonesia tax update: depreciating tangible assets and electronic tax disputes
Dwipa Abimanyu Dewantara and Hartiadi Budi Santoso of GNV Consulting review recent Indonesian tax regulation, with new depreciation and amortisation rules for assets and provisions for electronic tax disputes.
Depreciation of tangible assets/amortisation of intangible assets
On July 13 2023, the Minister of Finance (MoF) issued a new regulation, number 72/2023 (PMK-72), regarding the depreciation of tangible assets and/or amortisation of intangible assets. Through this regulation, the MoF has now revoked regulations No. 248/PMK.03/2008, 249/PMK.03/2008, 126/PMK.011/2012, and 96/PMK.03/2009.
Here are some new salient points taken from PMK-72/2023:
Depreciation of tangible assets
Under the old regulation, permanent buildings should be depreciated over 20 years. However, under PMK 72/2023, the taxpayer now has the option to use the following depreciation methods for permanent buildings which have a useful life exceeding 20 years:
20 years; or
In accordance with the actual useful life based on the taxpayer's accounting records, if they are maintained in a compliant manner.
Taxpayers who have already depreciated permanent buildings, which were owned and utilised before the tax year 2022 (according to the 20 years useful life provision), may choose to depreciate based on the actual useful life by submitting a notification to the Directorate General of Taxation no later than April 30 2024.
Amortisation of intangible assets
Like the treatment for depreciation of buildings, for the amortisation of intangible assets with a useful life exceeding 20 years, the taxpayer can choose to use either a straight-line 5% amortisation for 20 years or follow the actual useful life based on the taxpayer’s bookkeeping. This can be done by submitting a notification to the tax authority no later than 30 April 2024.
Electronic administration of tax disputes in the Tax Court
On July 21 2023, the head of the Tax Court issued a new regulation, number PER-1/PP/2023 (PER-1), regarding the electronic administration of tax disputes and hearings in the Tax Court. Through this regulation, the head of the tax court has revoked regulation No. KEP-16/PP/2020.
Some salient points taken from PER-1/2023 are as follows:
Taxpayers, tax bearers, or attorneys shall apply to be registered applicants electronically by uploading the following documents:
Account registration application letter; and
Registration certificate/ tax ID number/ identity card/ family card/ passport and attorney license (for legal representatives).
Registered applicants will be given an account activation link to receive administrative and hearing services electronically from the e-tax court to the electronic domicile address.
Appeals and lawsuits
An appeal or lawsuit can be filed by a registered applicant by uploading an appeal or lawsuit letter in electronic pdf or doc/docx/rtf formats.
A registered applicant who has filed an appeal or lawsuit through the e-tax court will obtain an electronic proof of receipt (BPE). The date stated in the BPE is the date the letter is received at the Tax Court.
Appeals and lawsuits which are filed electronically will be heard electronically via video conferencing. However, for appeals or lawsuits that are not filed electronically, the hearings can still be conducted electronically with the consent of the appellant or plaintiff.
In the electronic hearing process, the parties submit electronic documents to the e-tax court in accordance with the period set by the judges. For effective tax dispute examination, the judges may change a hearing from electronic to face-to-face (offline).
Tax Court verdicts
The verdict will be pronounced electronically by the judges. The decision is provided via an electronic copy of the decision with the registrar's electronic signature. The electronic verdict can also be implemented for appeals or lawsuits that are not filed through the e-tax court.
This regulation is effective from July 31 2023.