COVID-19 Pandemic: Updates on the Tax Reliefs Provided by Indonesian Government

On 16 July 2020, the Minister of Finance (“MoF”) has issued an update on the tax stimulus provides by the Indonesian government in response to the spreading of the coronavirus since early March 2020. The regulation aims to boost national economic recovery through an extension of the granting of incentives to taxpayers impacted by COVID-19.

Legal Frameworks: Our below executive summary refers to MoF Regulation No. 86/PMK.03/2020 on Tax Incentives for Taxpayers Affected by the Corona Virus Disease 2019 Pandemic (“MoF Regulation 86/2020”).

Note: Please be noted that the enactment of MoF Regulation 86/2020 has simultaneously revoked the MoF Regulation No. 44/PMK.03/2020 (“MoF Regulation 44/2020”), that we have summarized in our previous article).

Main Keys on the Updates on Taxation Reliefs in Indonesia: We provide the following main keys on the updates on taxation reliefs in Indonesia.

Extension of Tax Relief Period: We note that the MoF Regulation 86/2020 has extended the granting of tax relied period until December 2020 (previously was stipulated to September 2020).

Income Tax Stimulus: The following are the updates on the income tax stimulus introduces on MoF Regulation 86/2020:

Tax Stimulus

Remark
Article-21 Income Tax The MoF Regulation 86/2020 stipulates that Article-21 Income Tax stimulus is applicable to head office and its branch offices, provided that the tax collection is done by the head office (Art. 3 (3) of MoF Regulation 86/2020).
Final PPh as governed under the Government Regulation No. 23/2018 We note that MoF Regulation 86/2020 has eliminated the provision regarding the submission of taxpayer statement letter/Surat Keterangan that previously regulated on Art. 5 (3) of MoF Regulation 44/20.   
Article-22 Income Tax MoF Regulation 86/2020 establishes a universal applicability period for the submission of mandatory tax stimulus reports on the 20th day of the month following the end of the relevant tax period (Art. 8 (11) and 12 (2) of MoF Regulation 86/2020).
Article-25 Corporate Income Tax

Value Added Tax (“VAT”) Stimulus: We note that the MoF Regulation 86/2020 has broadened the requirements for taxpayers that are eligible for the VAT stimulus. However, certain criteria shall be fulfilled by the taxpayers i.e. must be classified as low-risk business, must be operating within specific lines of business, and so forth.

Nevertheless, please be advised that MoF Regulation 86/2020 requires taxpayers to select the option for the return of tax overpayments when submitting their tax returns to enjoy such stimulus. (Art. 13 (3) of MoF Regulation 86/2020).

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.