Page 3 - Newsletter (New Provisions on Article 25 Income Tax Installment and Compliance Risk Management)

DDTC Newsletter Vol.02 | No.06 I October 2019 Page 3 of 5

New Provisions on Article 25 Income Tax Installment and
Compliance Risk Management

gross income of each place of business, including the one form of Code Numbers of Excisable Goods Entrepreneurs
which is located at the place of residence of the taxpayer.
(Nomor Pokok Pengusaha Barang Kena Cukai/NPPBKC).
The fifth aspect of the regulation relates to other Elimination of Dualism in Batam
explanation that guarantee uniformity of operational
implementation in the field. Several other types of Investment Leadership
explanation include the procedure for the transfer due
to overpayment of Article 25 Income Tax installment, the The Indonesian government officially handed over the
time basis in which when the installments are calculated, exploitation of Batam’s free trade area and free port to
and the removal of administrative sanctions for the the local mayor. This policy is contained in Government
installment miscalculation during the transition period Regulation Number 62 Year 2019 (Gov Reg No. 62/2019)
from January 2019 tax period until the March 2019 tax concerning the Second Amendment to PP No. 46/2007
period. Thus, the amount of the installment is expected to (Gov Reg No. 46/2007) concerning the Free Trade Zone
be closer to the amount due at the end of the fiscal year. and Free Port of Batam.
The Relaxation of Excise Rules The main consideration of the issuance is in the context
Enactment for Sliced Tobacco Type of synchronization and coordination between the Free
Products Trade Zone Management Agency and the Batam Free
Port (Badan Pengusahaan Batam/BP Batam) and the
government of Batam City. This policy also ended the
The government changed the rules regarding the dualism of investment decision-making between the
notification of excisable goods (Barang Kena Cukai/BKC). Head of BP Batam and the local government.
This is regulated in a regulation issued on 19 September
2019, namely Minister of Finance Regulation Number BP Batam, formerly known as the Otorita Batam is a non-
134/PMK.04/2019 (MoF Reg No. 134/2019) concerning structural agency of the central government that was
the Amendment to the Minister of Finance Regulation formed based on Gov Reg No. 46/2007. The duties and
Number 94/PMK.04/2016 (MoF Reg No. 94/2016). authority of BP Batam is to carry out the management,
development and development of the area in accordance
The main change in this regulation is in the form of with the functions related to the establishment of Batam
granting concessions for tobacco product excise (Cukai as a Free Trade Zone and Free Port for a 70 year-period
Hasil Tembakau/CHT) of sliced tobacco type to the from 20 August 2007. However, the Head of BP Batam is
business players. Previously, the obligation to notify the not a local government official even though it is located at
BKC for the type of sliced tobacco was when the tobacco the Batam region.
leaf processing was completely made, regardless of the
substitute materials or auxiliary materials used in its Through the new regulation, the ex-officio mayor of
manufacture. Batam will then be the Head of BP Batam as long as
the individual meets the qualifications, namely not in
However, in this new regulation, there is an additional the process of detention and not temporarily absence.
time for notification where it can be made after the According to this new rule, the Head of BP Batam will
commodities have been packaged for retail sales. eventually become a budget user/consumer of goods.
Accordingly, the imposition of CHT for the sliced tobacco The tenure of this position will refer to the provisions
type will be enforced after the products are being of the law relating to the Free Trade Area and the Local
packaged for retail sales, and not as the material for Government.
further processing by other manufacturers.
Furthermore, economic activities in the area related
One of the considerations of MoF Reg No. 134/2019 to the development of public infrastructure and public
issuance is due to the Supreme Court Ruling (Putusan interests will be carried out based on joint planning
Mahkamah Agung/PMA) Number 46 P/HUM/2017 between the Head of BP Batam and the government of
dated 2 October 2017 related to the provisions of Article Batam City which will be coordinated by the Board of
2 Paragraph 3 Letter f and Article 3 Paragraph 2 letter D Batam Free Port and Free Trade Zone. This Board is also
in MoF Reg No. 94/2016 which is considered contrary to authorized to establish general policies, coach, supervise,
Law No. 39 of 2007 (2007 Excise Law). evaluate the achievement of performance agreements
(Pencapaian Perjanjian Kinerja/PPK), and coordinate the
The decision stipulates that both farmers and business activities of BP Batam in accordance with the provisions
entities that sell tobacco processing products for raw of the legislation that includes the assignation of the
material purpose prior to the final consumer cannot be
Head of BP Batam.
categorized as parties who must have a permit in the