Page 3 - Newsletter (Taxation Policies to Counter the Threat of Economic Recession and the Issuance of APA Implementing Regulation)

DDTC Newsletter Vol.03 | No.07 I April 2020 Page 3 of 9

Taxation Policies to Counter the Threat of Economic
Recession and the Issuance of APA Implementing Regulation

In addition to administrative sanctions, the Minister sectors in connection with the coronavirus outbreak.
of Finance will also impose sanctions in the form of This regulation was promulgated on 23 March 2020 and
revoking access after giving a warning. In this regard, the entered into force on 1 April 2020.
government authorizes the minister of communication
Four incentives are regulated in this rule. First, Article
and informatics to revoke access based on the minister
21 income tax incentives. These incentives are given to
of finance’s request.
employers in 440 business sectors listed in the appendix
Third, the time extension for the implementation of rights and/or those that constitute Import Facility for Export
and fulfillment of tax obligations. The time extension is (Kemudahan Impor Tujuan Ekspor/KITE) companies.
intended to provide convenience in the implementation Under this regulation, the government will cover Article
of rights and/or fulfillment of tax obligations that are 21 income tax of employees with fixed and regular gross
due within force majeure resulted from the COVID-19 income, which amounts to no more than Rp200 million
pandemic. In further detail, four requirements are set for in a year.
this extension, namely:
Second, Article 22 income tax incentives. These
1. The due date for the filing of taxpayers’ objection is incentives are withheld by foreign exchange banks or the
extended for a maximum of 6 months; Directorate General of Customs and Excise (DGCE) when
taxpayers import goods. Businesses that are included in
2. The due date for the refund of tax overpayment is
the classification code in the appendix of this regulation
extended for a maximum of 1 month;
and/or have been designated as KITE companies may be
3. The due date of the issuance of the notice of assessment exempted from this levy.
or decree on the request for tax overpayment
The taxpayer is to submit the request for Article 22
refunds, submission of letters of objection, requests
Income Tax Exemption Certificate in writing to the Head
for reduction or abolishment of administrative
of the Tax Office where the taxpayer is registered. The
sanctions, the reduction or cancellation of incorrect
period of the exemption from income tax withholding
tax assessments, cancellation of audit results is
shall be valid as of the issuance date of the Exemption
extended for a maximum of 6 months;
Certificate until 30 September 2020.
4. the determination of the force majeure period
Third, the deduction of Article 25 income tax installment
due to COVID-19 shall refer to the government’s
incentives. The deduction amounts to 30% of the
determination through the Head of the National
installment payable. The deduction of Article 25 income
Disaster Management Agency.
tax installments shall be given upon the submission of the
Fourth, the granting of authority to the minister of finance notice of installments deduction in writing to the Head
to provide customs facilities in the form of exemptions of the Tax Office where the taxpayer is registered. To the
or relief of import duties to address the emergency extent that the taxpayer meets the incentive criteria, the
conditions and the recovery and strengthening of the deduction in the amount of installments shall be valid
national economy. The regulation has come into force as until the September 2020 tax period.
of its promulgation date on 31 March 2020.
Fourth, value added tax (VAT) incentives. This facility
is given to taxpayers in business fields listed in the
classification in the appendix and/or have been
Tax Incentives for Taxpayers Affected designated as a KITE company. In addition, these taxable
by the Coronavirus Outbreak persons for VAT purposes are taxpayers whose refund of
VAT overpayment amounts to a maximum of Rp5 billion.
The government has officially released a regulation Under these conditions, taxpayers may be given a
on tax incentives for taxpayers affected by the corona preliminary refund of tax overpayment as low-risk
virus pandemic. These tax incentives are outlined in the taxable persons for VAT purposes. If the taxable persons
Minister of Finance Regulation No. 23/PMK.03/2020 for VAT purposes meet the requirements, the Periodic
concerning Tax Incentives for Taxpayers Affected by the VAT Return that is granted a preliminary refund shall be
Coronavirus Outbreak (MoF Reg No. 23/2020). valid for the tax period as of the enactment of this MoF
Reg. until September 2020 tax period. The filing must be
Under the regulation, the government states that the
performed by 31 October 2020 at the latest.
coronavirus outbreak is a national disaster that affects
economic stability and productivity. The regulation was
issued to maintain the stability of economic growth,
public purchasing power, and productivity of certain