COVID-19 Pandemic: Provision on Taxation Stimulus Introduced by Indonesian Government

In response to the current spreading of the coronavirus across the countries, which has undeniably caused serious impact to the economic situation, the Indonesian government, through the Minister of Finance (“MoF”), has introduced some new taxation measures to maintain the economic stability and productivity in order to mitigate the impact of coronavirus pandemic.

Legal Frameworks: Our below executive summary refers to the following regulations:

  1. Government Regulation No. 23 of 2018 on Income Tax on Operating Income Received or Acquired by Taxpayers with Certain Gross Revenue (“GR 23/2018”)
  2. Minister of Finance Regulation No. 44/PMK.03/2020 on Taxation Incentives for Taxpayers Affected by the Corona Virus Disease 2019 Pandemic (“MoF Regulation 44/2020); and
  3. Taxation Directorate General (“TDG”) Circular Letter No. SE29/PJ/2020 on 30 April 2020 on Implementation Guidelines of MoF Regulation No. 44/PMK.03/2020 on Taxation Incentives for Taxpayers Affected by the Corona Virus Disease 2019 Pandemic (“Circular Letter 29/2020”).

Note: Please be advised that the enactment of MoF Regulation 44/2020 on 27 April 2020 has repealed and replaced the previously enacted regulation namely MoF Regulation No. 23/PMK.03/2020 of 2020.

Main Keys on the Taxation Stimulus: We have managed to provide you the following main keys on the taxation stimulus amidst COVID-19 pandemic.

Tax Stimulus Classification: We note that the tax stimulus is imposed to: (a) certain types of Income Tax/Pajak Penghasilan (PPh) and (b) Value Added Tax (VAT) with details as follows:

Tax Stimulus

Remark

PPh Art. 21 (“Employee Tax Stimulus”)

  • We note that the Indonesia government will abide the cost of PPh 21 for 3 (three) months from April until September 2020. (Art. 2 (9) of MoF 44/2020).
  • Employees should fulfill the following criteria:
  1. Receive income from an employer whose business classification is listed in Appendix A of MoF Regulation 44/2020, or is declared as a company granted with Import Facility for Export Purposes;
  2. Have obtained Tax Identification Number/Nomor Pokok Wajib Pajak (NPWP); and
  3. Receive an annualized regular income not exceeding to IDR200million.
  • We further note that to obtain Employee Tax Stimulus employers should provide written notification to the chairman of the relevant tax office. (Art. 3 (1) of MoF 44/2020).

Final PPh as governed under GR 23/2018 (“Final PPh Stimulus”)
  • We note that the government will concede 0.5% of the relevant gross circulation amount. (Art. 5 (6) of MoF 44/2020)
  • Final PPh stimulus will be granted for April-September 2020 fiscal period. (Art. 5 (9) of MoF 44/2020)
  • We further note that to obtain Final PPh Stimulus, taxpayers should apply for Statement Letter as stipulated under the regulation (Art. 6 (1) of MoF 44/2020)

PPh Art. 22 (“Import Tax Stimulus”)
  • We note that Import Tax Stimulus will be imposed on the companies who have fulfilled the following criteria:
  1. Business classification is included in Appendix I of MoF Regulation 44/2020;
  2. Have been declared as a company granted with Import Facility for Export Purposes; or
  3. Have obtained a bonded zone permit. (Art. 9 (3) of MoF Regulation 44/2020)
  • To obtain Import Tax Stimulus, companies should apply for Art.22 Tax Exemption Letter through TDG official website (Art. 9 (5) and (6)  of MoF 44/2020)
  • We further note that the imposition of Import Tax Stimulus will remain valid from the issuance date of Art.22 Tax Exemption Letter until 30 September 2020. (Art. 9 (9) of MoF 44/2020)

PPh Art. 25 (“Corporate Income Tax Stimulus”)
  • We note that companies who have fulfilled the following criteria are entitled for Corporate Income Tax Stimulus:
  1. Business classification is included in Appendix I of MoF Regulation 44/2020;
  2. Have been declared as a company granted with Import Facility for Export Purposes; or
  3. Have obtained bonded zone permit. (Art. 11 (1) of MoF Regulation 44/2020)
  • We note that the government gives 30% deduction on the installment of corporate income tax that should be payable for the fiscal period up to September 2020. (Art. 11 (1) of MoF Regulation 44/2020)
  • We further note that to obtain Corporate Income Tax Stimulus, companies should provide written notification to the chairman of the relevant tax office. (Art. 11 (3) of MoF Regulation 44/2020)

VAT Stimulus
  • We note that the government will provide preliminary returns of VAT overpayment stimulus to the following taxpayers:
  1. Have a business classification as listed in Appendix I of MoF Regulation 44/2020, have been declared as a company granted with Import Facility for Export Purposes, or have obtained bonded zone permit.
  2. The amount of preliminary VAT refunds is amounting to maximum IDR5Billion. (Art. 14 (1) MoF Regulation 44/2020)
  • We further note that the VAT Stimulus is valid for VAT returns/Surat Pemberitahuan Masa PPN (including its amendments) for the period of April 2020 – September 2020 and the application should be submitted no later than 31 October 2020. (Art. 14 (6) of MoF Regulation 44/2020)

Note: For further technical reference on the implementation of the above tax stimulus, please kindly refer to the Appendix of MoF 44/2020 and Circular Letter 29/2020.

Certain sectors entitled for Taxation Stimulus: We note from the Appendix of MoF Regulation 44/ 2020, numerous sectors are entitled to the above taxation stimulus with details as follows:

Agriculture, forestry, and fisheries;

Information and communications;

Mining;

Financial and insurance activities;

Processing industries;

Real estate;

Procurement of electric gas, hot-water steam gas, and cold water;

Professional scientific and technical  services;

Waste-water recycling waste management;

Warehouses, labor, travel agencies, and rental business activities;

Construction;

Education;

Wholesale retail trade in related to cars and motorcycle equipment repair;

Human health and social activities, including hospital;

Transportation and warehousing;

Tourism, arts, entertainment and recreation industries; and

Provision of food, beverages, and accommodation;

Other service activities and companies operating in bonded zones.

Reporting of Tax Stimulus Realization: We further note that taxpayers who obtained the above PPh tax stimulus should submit a realization report through TDG official website.

The article above was prepared by Marshall S. Situmorang (Partner) and Aniendita Rahmawati (Associate). 

Disclaimer: The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances. For more information, please contact us at mail@nusantaralegal.com.