Page 1 - Newsletter (Update on New Tax Holiday Regime in Indonesia)
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DDTC Tax Newsletter 03 I Apr 2018
UPDATE ON NEW TAX HOLIDAY
REGIME IN INDONESIA
In the effort to strengthen one of the main functions Industry. Previous requirements such as tax sparing
of fiscal policy as covered in Indonesian Macroecomic and placement of fund in national banking regulated in
Framework (Kerangka Ekonomi Makro), namely the the previous regulations are now non-existent in PMK
function of stabilization, the Government of Indonesia 35/2018. Comparison of regulation schemes of Tax
pursues the policy through the provisions of fiscal Holiday facilities listed in Table 1.
incentives for strategic economic activities. One of them
is through the provisions of Tax Holiday. Who Are Eligible to Apply?
Minister of Finance (MoF) of Republic of Indonesia In PMK 35/2018, the criteria and requirements for
has issued the most updated policy on Tax Holiday applicants are regulated in Article 3. Paragraph (1) of
dated 29 March 2018 namely MoF Regulation No.35/ this Article states that the applicant should be a Pioneer
PMK.010/2018 (“PMK 35/2018”). Prior to today’s Industry and has the status as an Indonesian legal entity
regime, Tax Holiday policy was initially implemented as with new capital investment at a minimum of IDR500
of August 2011 in the era of President Susilo Bambang Billion before the starting time of commercial operation.
Yudhoyono (SBY) through MoF Regulation No. 130/ The commencement of commercial operation refers to
PMK.011/2011 (“PMK 130/2011”) as amended by MoF the timing when products of the main business activity
Regulation No. 192/PMK.011/2014 (“PMK 192/2014”). (Kegiatan Usaha Utama) are sold to the market and/or
However, this initial regulation was then revoked by utilized by its own entity for further production process
the issuance of MoF Regulation No.159/PMK.010/2015 for the first time.
(“PMK 159/2015”) as amended by MoF Regulation
In terms of financial matters, applicant should
No.103/PMK.010/2016 (“PMK 103/2016”).
fulfill the requirement of Debt to Equity Ratio (DER) as
Important Changes stipulated in MoF Regulation No.169/PMK.010/2015
(“PMK 169/2015”). Moreover, applicants must have not
PMK 35/2018, which has come into effect as of 4 previously obtained the decision or notification regarding
April 2018, provides beneficial tax treatment for Pioneer the rejection of CIT reduction by the MoF. In addition,