Page 2 - Newsletter (Fiscal Facilities For Boosting Investment and Economic Growth)

DDTC Newsletter Vol.01 | No.02 I March 2019 Page 2 of 5

FISCAL FACILITIES FOR BOOSTING INVESTMENT AND ECONOMIC GROWTH

Latest Provisions Concerning Income the maturity period. Furthermore, the repayment of the
Tax Withholding on Deposits and tax underpayment due to this condition will be made
through income tax withholding upon the payment of
Savings Interest, and Central Bank deposit interest for the following month. The types of
Certificate Discount deposit of which the interest shall be subject to final
income tax withholding are time deposits, certificate of
deposit, and on-call deposits.
The Ministry of Finance has issued a regulation
concerning the relaxation of income tax withholding
In addition, for domestic taxpayers and permanent
for foreign exchange from export proceeds from natural
establishments who meet certain requirements of
resource (Devisa Hasil Ekspor Sumber Daya Alam/
interest income, the final income tax will not be withheld
DHE SDA). This relaxation is contained in the Minister
of Finance Regulation (Peraturan Menteri Keuangan/ for certain types of interest income on deposits, savings
(including demand deposits), and bank central certificate
PMK) No.212/ PMK.03/2018 concerning Income Tax
discounts. These requirements include:
Withholding on Deposits and Savings Interest, and
Central Bank Certificate Discount. The regulation which a) amount of total interest is less than IDR7,500,000;
revokes PMK No.26/PMK.010/2016 and KMK No.51/
b) interest and discount of SBI are received/obtained
KMK.04/2001 has come into effect as of December 31,
from banks established in Indonesia or foreign bank
2018. branches in Indonesia.
c) interest is received/obtained from the Pension
In general, this PMK states that final income tax will be
Fund of which the establishment has been legalized
imposed on income in the form of interest of deposits,
by the Financial Services Authority (Otoritas Jasa
savings, and discounts on Bank Indonesia Certificates
Keuangan/OJK); or
(Sertifikat Bank Indonesia/SBI) sourced from foreign
d) saving interest from banks appointed by the
exchange from export proceeds (Devisa Hasil Ekspor/
government in the context of building simple
DHE) and deposited in Indonesia, including branches
housing for their own needs in accordance with
of foreign bank located in Indonesia. The government
applicable regulations.
provides flexibilities regarding the bank selection and
the period of placement of the DHE, including DHE SDA,
The exception from this final income tax withholding
one of which is by encouraging the placement of funds
regulation will be further regulated in the Director
originating from DHE into the domestic banking system. General of Tax Regulations (Peraturan Direktur Jenderal
Pajak/Per-DJP).
In terms of rate, there is no change from the previous PMK.
However, based on the latest regulation, this final income
The final income tax withholding mechanism will be
tax rate facility will also be applied to Deposit of DHE
carried out directly, both by the bank that pays the interest
which is redeposited after the maturity. This is intended
on savings and/or deposits and Bank Indonesia as the SBI
to maintain the stability of the rupiah exchange rate and
issuer. The private bank as the final income withholder is
support the strengthening of the national economy. The
obligated to report the details of the placement of DHE
following table shows the rates of various types of income
deposits to the central bank in Indonesia. Furthermore,
of which the interest income shall be subject to the final
income tax facility based on PMK 212/2018. Pension Fund institutions that are exempt from final
income tax facilities are obliged to withhold income tax
on discount if they resell SBIs to non-bank institutions
The regulation also stipulates that the same rate will
and to Pension Fund institutions that have not been
also be applied if the deposit has been disbursed before
approved by the Minister of Finance and OJK.
Table 1 – The Rate of Final Income Tax on Interest
Tenor/ Deposit Interest Deposit Interest Saving Interest SBI Discount Deposit Interest
Type of Income DHE (US$) DHE (Rupiah) Interest
1 Month 10% 7.5%
3 Month 7.5% 5%
20%* 20%* 20%*
6 Month 2.5% 0%
> 6 Month 0% 0%
* The rates are imposed on the gross amount for domestic taxpayers (Wajib Pajak Dalam Negeri/WPDN) and permanent establishments (Bentuk Usaha
Tetap/BUT) and based on Tax Treaty (Perjanjian Penghindaran Pajak Berganda/P3B) for foreign taxpayers (Wajib Pajak Luar Negeri/WPLN).