Page 2 - Newsletter (Technical Rules for Super Tax Deduction on Vocational Activities Released)

DDTC Newsletter Vol.02 | No.05 I September 2019 Page 2 of 5

Technical Rules for Super Tax Deduction on Vocational
Activities Released

Technical Rules for Super Tax A total of 268 competencies are spread across several
Deduction Facility on Vocational sectors, namely manufacturing (124 competencies),
agribusiness
health
(64
(31
competencies),
Activities competencies), tourism and creative industries (26
competencies), and digital economy (23 competencies).
Ministry of Finance has published technical regulation
regarding the provision of super tax deduction facility Third, vocational training center for individuals and
for taxpayer who performed vocational activity. That trainees, instructors, and/or coaching staff. There are
policy is stated in Minister of Finance Regulation (MoF 58 types of competencies in this group. A number of
Reg) No. 128/PMK.03/2019 concerning The Provision of competencies are spread across several sectors, namely
Gross Income Reduction for the Implementation of Work manufacturing (19 competencies), agribusiness (15
Practices, Apprenticeship, and/or Learning Activities in competencies), tourism and creative industries (13
the Framework of Coaching and Development of Human competencies), digital economy (7 competencies), and
Resources Based on Certain Competencies. migrant workers (4 competencies).

This rule is a technical guidance of Government Work practices or apprenticeship are activities
Regulation No. 45 of 2019 which was published early last performed by taxpayers in the place of business as part
July. According to the regulation, taxpayers can be given of the vocational or vocational education curriculum in
a maximum gross income reduction of 200% of the total order to master the skills or expertise of certain fields.
costs incurred for work practices, apprenticeship, and/or
learning activities. Meanwhile, learning activities are teaching activities
performed by parties assigned by taxpayers to teach in
However, to get most of these incentives, taxpayers must vocational schools, vocational madrasa aliyah, tertiary
meet several provisions. First, they must have performed diploma programs in vocational education, and/or
practical work activities, apprenticeship, and/or learning vocational training center.
in the context of coaching and developing human
Local Fiscal Capacity Has Stagnated in
resources based on certain competencies.
the Last 3 Years
Second, have a cooperation agreement, namely between
the taxpayer and vocational high school, vocational
‘madrasa aliyah’ (Islamic school), vocational education The government has recently released MoF Reg No. 126/
diploma program, vocational training center, or agencies PMK.01/2019 concerning Local Fiscal Capacity Map. local
that perform government affairs in the field of central, fiscal capacity map is an overviewof the local financial
provincial, and regency/city employment. capacity grouped based on the local fiscal capacity index
(Indeks Kapasitas Fiskal Daerah/IKFD).
Third, not in a state of fiscal loss in the fiscal year for
the use of additional gross income reduction. Fourth, MoF Reg No. 126/2019 defines the local fiscal capacity
has submitted a tax clearance certificate, which is a as the financial capacity of each region which is reflected
statement from the Directorate General of Taxes (DGT) through local government revenue minus the revenue for
regarding tax compliance for a certain period to meet the which the allocation has been determined (earmarked
requirements for obtaining services or in the context of
revenue) and certain expenditure.
performing certain activities.
The local fiscal capacity map can be used for consideration
The government divides competency levels into three
in determining the area of grant recipients, determining
groups. First, vocational high school and or vocational
the amount of matching funds by the local government
madrasa aliyah for students, educators, and/or education
if required, and/or other uutilization in accordance
personnel. In this group, there are a total of 127 types of
with statutory provisions. The local fiscal capacity map
competencies that can receive facilities. The number is
consists of maps of provincial and regency/city local
spread in the manufacturing sector (73 competencies),
fiscal capacity.
health (7 competencies), agribusiness (30 competencies),
and tourism and creative industries (7 competencies).
Referring to MoF Reg No. 126/2019, components of local
government revenue include local own-source revenue
Second, college diploma programs on vocational programs
for students, educators, and/or education personnel. In (Pendapatan Asli Daerah/PAD), balance funds, and other
this group, there are a total of 268 specific competencies lawful revenues.
that can utilize the super tax deduction incentive.