Page 2 - Newsletter (Tax Facilities for Certain Investments and New Provisions Related to Taxation Data, Excise and e-Trade)

DDTC Newsletter Vol.02 | No.10 I December 2019 Page 2 of 5

Tax Facilities for Certain Investments and New Provisions
Related to Taxation Data, Excise and e-Trade

Income Tax Facilities for Capital Second, one year extra for additional employment of a
Investment in Certain Business Fields minimum of 300 Indonesian workers for four consecutive
years. Formerly, an additional period of compensation
or Regions for losses of one year was provided in the event that a
minimum of 500 Indonesian workers were employed for
five consecutive years.
The Indonesian government has updated the regulation
pertaining to the income tax facilities for capital
Third, two years extra for additional employment of a
investment in certain business fields or regions. The
minimum of 600 Indonesian workers for four consecutive
updates to the regulation are contained in Government
years. The previous regulation provided an additional
Regulation of the Republic of Indonesia No. 78 of 2019
period of compensation for losses of two years in the
(Gov. Reg. No. 78/2019) concerning Income Tax Facilities
event that a minimum of 1,000 Indonesian workers were
for Capital Investment in Certain Business Fields and/or
employed for five consecutive years.
Certain Regions.
The additional period of compensation for losses
The updates to this regulation are intended to further
of two years for capital investment by taxpayers or
encourage and improve direct capital investment
investors in industrial/bonded zones applies for losses
activities in terms of economic growth and business
in the first, second, and/or third taxable year as of the
sector development. Moreover, these updates are aimed
commencement commercial production. On the other
at providing legal certainty to engender a more conducive
hand, for other business fields, the additional period of
business climate for direct capital investment activities
compensation is provided for losses until the expiration
in certain fields or regions with high priority of national
of the provision of such tax facilities.
scale.
Furthermore, a net income deduction facility amounting
The regulation was promulgated on 13 November 2019
to 30% of the total capital investment may be utilized as
and will come into force 30 days since the promulgation
of the commencement of commercial production. On the
date. The enactment of this regulation simultaneously
contrary, other tax facilities are valid as of the issuance
revokes Government Regulation No. 18 of 2015 (Gov. Reg.
of the decision concerning the provision of tax facilities.
No. 18/2015) concerning Income Tax Facilities for Capital
Investment in Certain Business Fields and/or in Certain
Regions, as amended by Government Regulation No. 9 of In further detail, the net income deduction facility of
2016 (Gov. Reg. No. 9/2016) concerning Amendments to 30% for fixed assets in the form of land must include
Gov. Reg. No. 18/2015. the principal license, investment, and capital investment
registration. Additionally, the land must be owned and
utilized for business main activities. The land must
Through this regulation, the government adds the
also be acquired in new condition unless it is an overall
number of business fields or regions entitled to income
relocation as a capital investment package from another
tax facilities. The previous regulation stipulated 145
country.
business fields eligible for such facilities that were
categorized into 71 specific business fields and 74 certain
business fields located in certain regions. In contrast, In contrast, to obtain a net income deduction of 30% for
Gov. Reg. No. 78/2019 sets forth 183 business fields that fixed assets other than land, two requirements must be
are entitled to income tax facilities. Such business fields met. First, the assets must be acquired after obtaining
comprise 166 certain business fields and 17 certain a business license from the Online Single Submission
business fields located in certain regions. Management and Organizer Agency (OSS Agency).
Second, the assets have obtained a principal license,
investment, capital investment registration, or business
Furthermore, there are two new provisions for capital
license from the OSS Agency.
investment provided with an additional period of
compensation. First, one year extra for capital investment
carried out by taxpayers in certain business fields or Further, to obtain the facilities, a taxpayer must apply
regions. Second, one year extra for capital investment in prior to the commencement of commercial production.
new and renewable energy. The application may be submitted online through the
OSS system. Such an application can be conducted
simultaneously with the registration of Single Business
In addition, there are three provisions regarding the
Number (Nomor Induk Berusaha/NIB) for new taxpayers.
additional period of compensation different from the
In contrast, the application for capital investment or
previous regulation. First, one year extra if the taxpayer
expansion must be submitted no later than one year after
uses a minimum of 70% of domestically produced raw
the issuance of a business license by the OSS agency.
materials and/or components no later than the second
taxable year. The previous regulation stipulated the
fourth taxable year.