Page 4 - Newsletter (Technical Rules for Super Tax Deduction on Vocational Activities Released)

DDTC Newsletter Vol.02 | No.05 I September 2019 Page 4 of 5

Technical Rules for Super Tax Deduction on Vocational
Activities Released

MoF Reg No. 126/2019 Appendix. The IKFD covers 34 the maximum limit of APBD deficits for regions with very
provinces and 508 regencies/cities in Indonesia. high and high KFD categories and widens the maximum
limit for local deficits with low and very low local fiscal
Regarding to this IKFD, the MoF cut the cumulative capacity categories.
maximum limit for the local government budget
(Anggaran Pendapatan dan Belanja Daerah/APBD) Certificate of Origin for the Imposition
deficit for next year. This was regulated through MoF of Import Duty Tariffs on Imported
Reg No. 125/2019 concerning the Maximum Cumulative
Limit of the APBD Deficit, the Maximum Limit of the Goods from China
APBD Deficit, and the Maximum Limit of the local loan
for the 2020 Budget Year. The government provides legal certainty on the
provisions regarding the procedure for the imposition of
The cumulative maximum limit for the deficit was cut import duty tariffs on imported goods from the People’s
from 0.3% of the GDP projection to 0.28% of the GDP Republic of China using a Certificate of Origin (Surat
projection for 2020. The maximum budget deficit limit Keterangan Asal/SKA).
for 2020 was set differently than in previous years.
Legal certainty is done through the issuance of MoF Reg
In previous years, the maximum limit of the APDB No. 124/PMK.04/2019. This regulation was enacted
and entered into force on 30 August 2019. The issuance
deficit was set at 5% to 3% depending on the local fiscal
of this regulation changed the provisions of Article 25A
capacity category of the relevant regions. For 2020, the
of MoF Reg No. 229/PMK.04/2017 as amended several
maximum APBD deficit is set between 4.5% to 3.5% of
times with MoF Reg No. 11/PMK.04/2019 and MoF Reg
GDP depending on the local fiscal capacity category of the
No. 109/PMK.04/2019.
relevant region.
MoF Reg No. 124/2019 explains that SKA issued up to
For regions with very high categories, the maximum
31 August 2019 using the format as listed in Appendix I
APBD deficit limit is set at 4.5% of local government
letter B roman VII and Attachment I letter B roman VIII
revenue, lower than the previous year which could reach
PMK 11/2019 are still declared valid.
5% of GDP. Sequentially, the regions with high, medium,
low and very low categories each set a maximum limit
The SKA in question was issued based on the Agreement
of deficits at 4.25%, 4%, 3.75%, and 3.5% of local
on Trade in Goods of the Framework Agreement on
government revenue for 2020. Comprehensive Economic Cooperation Between the
Association of the South East Asian Nations and The
In previous years, regions with high, medium, low and People’s Republic of China. SKA or Certificate of Origin
very low local fiscal capacity categories were each set to is a supplementary customs document issued by SKA
a maximum limit of deficit of 4.5%, 4%, 3.5%, and 3% Issuing Agency which states that goods which will enter
of local government revenue. In a short, government cut customs area can be given a preferential rate.

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