Page 2 - Newsletter (New Tax Facilities on Goods and Services Required to Address COVID-19 and Revision on State Budget)

DDTC Newsletter Vol.03 | No.08 I April 2020 Page 2 of 9

New Tax Facilities on Goods and Services Required to Address
COVID-19 and Revision on State Budget

Tax Facilities on Goods and Services All the facilities provided under the regulation are
Required to Address COVID-19 temporary, i.e. shall be valid from April 2020 to September
2020 tax period. The regulation shall come into force as
Pandemic of 6 April 2020, upon its promulgation.

The government provides tax incentives for goods
and services required to counter the Corona Virus The DGT’s Face-to-Face Services
Disease 2019 (COVID-19) pandemic. These facilities are
granted to support the availability of medicines, medical Suspension Extended
equipment, and other required supporting equipment to
The Director General of Taxes has extended the
address the pandemic.
prevention period of COVID-19 spread formerly set from
These incentives are outlined in the Minister of 16 March 2020 to 5 April 2020. The suspension of face-
Finance of the Republic of Indonesia Regulation No.28/ to-face services is now extended until 21 April 2020. This
PMK.03/2020 concerning the Provision of Tax Facilities measure is undertaken due to the latest developments of
on Goods and Services Required to Address Corona Virus COVID-19 and in line with state apparatus employment
Disease 2019 Pandemic (MoF Reg. No.28/2020). Under policies at the national level.
this regulation, the government provides four types of
tax incentives. The extension of the prevention period is outlined in the
Director General of Taxes Circular No. SE-21/PJ/2020
First, the non-withholding of Value Added Tax (VAT) concerning the Extension of Prevention Period of the
and the government-borne VAT incentives. These VAT Corona Virus Disease 2019 (COVID-19) Spread within
incentives are granted to certain parties on the import the Directorate General of Taxes (SE-21/PJ/2020). The
or supply of taxable goods (barang kena pajak/BKP), regulation shall come into force as of its enactment on 2
supply of taxable services (jasa kena pajak/JKP), and/or April 2020.
utilization of taxable services from outside the customs
area. Certain parties that may utilize these facilities Other than as a preventive measure in the health sector,
the regulation is aimed at ensuring effective and efficient
include government bodies/agencies, hospitals, and
other parties appointed by government bodies/agencies implementation of the DGT’s duties, functions, and
services. Under this regulation, the work from home
or hospitals to assist in handling COVID-19.
(WFH) period for the Directorate General of Taxes (DGT)’
Further, taxable goods on which VAT is not withheld or employees shall also be extended until the specified date.
borne by the government include medicine, vaccines,
Moreover, this regulation is closely related to other
laboratory equipment, detection kit, personal protection,
circulars regulating the DGT’s internal business
patient care, and other supporting equipment declared
processes, including guidelines for information and
as equipment for handling COVID-19.
communication technology (ICT) support to implement
In contrast, taxable services eligible for these facilities WFH as well as further guidance for supervision in the
include construction services, consulting services, taxation field.
engineering and management, rental services, and other
required supporting services for handling COVID-19.
Second, exemptions from Article 22 income tax on the Changes to the Supervision and
import or purchase of goods for handling COVID-19 by
certain parties. In addition, exemptions from Article 22 Service System in the Excise Sector
income tax are also granted to third parties conducting
Along with the DGT, the Directorate General of Customs
sale transactions of goods for handling COVID-19 with
and Excise (DGCE) has also amended a number of
government bodies/agencies, referral hospitals, and
provisions pertaining to the supervision and services
other parties appointed to assist.
in excise to prevent and reduce the spread of COVID-19.
Third, exemptions from the withholding of Article 21 These amendments are outlined in the Director General of
income tax for resident taxpayers. This incentive is Customs and Excise Circular No. 5/BC/2020 concerning
provided for individuals who receive compensation from the Supervision and Services in Excise in the Emergency
certain parties for providing services required to counter Response Period Due to Corona Virus Disease 2019
COVID-19 pandemic. (COVID-19) Pandemic (SE-05/BC/2020).
Fourth, exemptions from Article 23 income tax for resident Under this regulation, the DGCE reorganizes 6 types of
corporate taxpayers and permanent establishments business processes related to the provision of services
(bentuk usaha tetap/BUT). The fourth incentive is granted and supervision in the excise sector.
to resident taxpayers and/or permanent establishments
First, extending the deadline for the submission of transfer
that receive compensation from certain parties for
notification of goods subject to excise (pemberitahuan
services required to address COVID-19 pandemic.