• Indonesian

Government Has Implemented New Tax Regulations Following COVID-19 Situation in Indonesia

COVID-19 PANDEMIC: INDONESIAN GOVT. HAS OFFERED TAX INCENTIVES

To provide support for businesses and individuals during the COVID-19 crisis in Indonesia, the Minister of Finance has issued PMK 44/2020 regarding business sectors that are eligible for tax incentives.

 

There are 4 types of tax incentive applications that are valid from April to September 2020:

1. Zero payroll tax (tax art. 21)

2. 30% discount of Company Income Tax Installment (tax art. 25) or 0% Final Income Tax for SME (Tax PP 23)

3. Zero import tax (Art. 22) – Company is required to have a KITE License (Import for Tax Purpose)

4. Expedite VAT refund – In addition to having a KITE, this is applicable as well for companies stating overpayment on their VAT Return

 

For clients who are eligible, our tax consultants can provide consultation and tax incentive application services:

1. Tax Incentive Notification Letter (one time submission)

2. Payroll modification for zero payroll tax from April to September 2020

3. Realisation report from April to September 2020

 
There is no denying that the coronavirus, also known by its popular name COVID-19, has put the world’s economy in a slow mode, and Indonesia is no exception. The government has been forced to cut the country’s revenue through cutting corporate income tax, among others.

What is more, the government has accelerated its tax reforms along with collecting taxes from IT companies in Indonesia in order to provide tax relief to bring back the country’s economy in the long run.

Read on to learn about the current tax regulations, stipulated under Perppu No. 1/2020, in Indonesia.

Extending the Deadlines for Tax Filing and Reporting in Indonesia

Due to the current public health situation, the newest tax calendar in Indonesia that you should be referring to in order to ensure compliance is as follows:

  • For individual annual tax return and payment, the deadline has been extended for one month from 31 March 2020 to 30 April 2020.
  • For 20 February monthly tax return, the deadline has been extended for more than one month from 20 March 2020 to end of April 2020.

New Tax Incentives or Exemption in Indonesia

In light of the coronavirus pandemic, the government has made official new tax incentives or exemption, as follows:

  • Manufacturing (April – September): exemption of withholding tax (WHT) art. 21 – employees and art. 22 – import of raw materials, 30% exemption of tax installment art. 25, exemption of tax audit on VAT restitution.
  • Hospitality (April – unidentified): exemption of local tax.

 

Employers or companies that are eligible for the newest tax incentives are as follows:

  • Employers with shortlisted Business Segment Classification (KLU)
  • Employers having Certificate of Import For Export Purposes (KITE)
  • Employers categorised as Low Risk of VAT-able Company (applicable only for VAT incentives)

Supporting Companies to Survive the Coronavirus Outbreak in Indonesia through Corporate Income Tax Reduction

In order to prevent layoffs, or worse bankruptcies, because of inactivities amid the pandemic, the government has implemented a new stipulation that reduces the corporate income tax (CIT) from 25 percent to 22 percent. The reduction applies for the years of 2020 and 2021. According to plan, there will be another two percent reduction in 2022.

As for public companies having a minimum of 40 percent shares in the stock market, the CIT will be deducted to 19 percent in 2020 and 2021. When 2022 starts, the CIT will be reduced to 17 percent only.

Individual Income Tax Reduction

To ease the burden of many low-income individuals during this difficult time, the government has also exempted employees or workers who earn not more than IDR 200 million annually from paying their income taxes for the next six months.

Taxing E-Commerce Activities or Digital Transactions

The government aims at easing the burdens of individuals and businesses suffering from the pandemic. However, the government also aims at increasing state revenue by leveraging the e-commerce activities or digital transactions.

Tremendously established digital companies along with foreign individuals carrying out the above-mentioned activities or transactions are required to comply with domestic tax stipulations.

Furthermore, value added tax (VAT) will also be imposed on intangible taxable goods and services that are sold electronically and from overseas.

Ensure Compliance amid Coronavirus Outbreak in Indonesia

As a leading consulting company in Indonesia, Cekindo’s team of tax consultants and experts always keeps up with the newest tax regulations. You are welcome to consult any matter related to taxation and compliance in Indonesia with our people.

Moreover, we also provide tax outsourcing services to ensure compliance for your business in Indonesia, especially amid the coronavirus outbreak in Indonesia.

Whatever your taxation need is, do not hesitate to discuss with us. Fill in the form below now. We are happy to help.