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,
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