The Indonesian government released Regulation 78/2019 or GR 78 on November 13, 2019, abolishing Regulation 18/2015. This regulation is regarding Income Tax Incentives Granting for Investments in Certain Business Sectors and Industries in Indonesia, which has become effective on December 13, 2019.
The purpose of the enactment of GR78 is to simplify the procedure of income tax incentives application with the use of Online Single Submission system (OSS). The Indonesian Capital Investment Coordinating Board (BKPM) is the authority managing the OSS system.
In GR 78, certain income tax incentives are available for business expansions and new investments and a list of eligible business sectors are stated, increasing from the previous 145 to the current 183.
Newly added industries are textiles, food, coal refinery, coal-based products, new and renewable energy power plants, basic metal, drug and traditional medicine, pharmaceutical, livestock, forestry and agriculture.
The mentioned business sectors must meet certain requirements in order to be qualified for the tax incentives. The requirements stated in GR 78 are as follows:
There are several types of tax incentives with different utilisation period under the GR 78. Here’s a list of the tax incentives:
According to GR 78, to be eligible for tax incentives over fixed assets, applicants must fulfill the following requirements based on the type of fixed asset, i.e. land assets or non-land assets:
As a taxpayer, you are required to apply the tax incentives through the OSS system before the commercial production starts.
In addition, you must realise one of the following conditions along with your application:
Cekindo is one of the registered and authorised tax agents in Indonesia.
With various tax incentives and exemptions, many international companies have established new entities or branches in Indonesia in order to take advantage of these benefits.
However, taxes in Indonesia are complex matters and change on a regular basis.
As a result, appointing a tax representative or a tax expert is recommended for companies, especially foreign entities, who are not familiar with the local tax scene.
Cekindo provides tax advisory services, tax and accounting audits, tax filing and reporting, and other tax compliance assistance.
Over the years, we have gained immense popularity and respect by industries and organisations with our dedicated services.
We can also assist you in applying for relevant business licenses and certificates.
For more information on Cekindo’s services and assistance, please contact our consultants through the form below.