Tax relief measures introduced in Indonesia in response to the coronavirus (COVID-19) pandemic are included in Regulation No.23/PMK.03/2020 issued by the Ministry of Finance.
Relief related to Article 25 income tax provides that the corporate income tax rate will be reduced from 25% to 22% for financial years 2020 and 2021, and 20% for financial year 2022 onwards, with an additional 3% reduction applicable for “listed company” with more than 40% public shares.
Relief related to Article 22 income tax on imports includes an exemption for companies that: (1) have a business classification stated in the 2018 corporate income tax return that is among those listed in the Attachment F of PMK-23; and (2) have been declared as a company granted with import facility for export purposes. The exemption is valid from the issuance date of the Tax Exemption Letter until 30 September 2020.
The government will bear the cost of Article 21 employee income tax for the months of April - September 2020 for employees who receive income from an employer that has a business classification reported on its 2018 corporate income tax return as among those classifications listed in the Attachment A of PMK-23, or is declared as a company granted with import facility for export purposes. There are other criteria such as a requirement for a tax identification number and annualized regular income not exceeding IDR 200 million.
Concerning value added tax (VAT), the relief provides that the government will automatically consider certain taxpayers as “low risk” and will accordingly provide a preliminary VAT refund for the following entities: (1) those that have a business classification stated in the 2018 corporate income tax return that is among those listed in the Attachment F of PMK-23; (2) those that have been declared as a company granted with import facility for export purposes; or (3) those for which the amount of preliminary VAT refunds available has been increased from IDR 1 billion to IDR 5 billion. The VAT refund treatment is available when VAT returns (including amendments) for the fiscal periods April to September 2020 are filed on or before 31 October 2020.
Regarding the taxation of electronic-based trading activity (e-commerce), the measures provide that VAT can be imposed (charged) on taxable intangible goods and/or services sold through e-commerce platforms and that income tax or electronic transaction tax can be imposed on e-commerce transactions of foreign individuals or digital companies that have a “significant economic presence.”
Concerning customs and excise tax, the relief provisions allow the Minister of Finance to grant certain exemptions or relief from custom duty.
The relief measures include reporting and payment relief with regard to the individual income tax return that is filed annually. The tax administration will waive the administrative penalty that would be imposed if the annual income tax return for fiscal year 2019 and payment of tax is made by individual taxpayers on or before 30 April 2020. The forbearance will be that a tax collection letter will not be issued.
In additional, tax amnesty annual reporting by individuals (that had been set to be submitted by 31 March 2020) can be submitted by 30 April 2020.
In general, the relief allows more time for taxpayers and the tax administration to comply with certain deadlines, such as:
For more information, contact a tax professional with the KPMG member firm in Indonesia:
Abraham Pierre | +62 215 704 888 | firstname.lastname@example.org
Jacob Zwaan | +62 215 704 888 | email@example.com
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