Page 4 - Newsletter (Tax Return Procedures During COVID-19 Pandemic and Provisions on Article 25 Income Tax Installments at a New Rate)

DDTC Newsletter Vol.03 | No.09 I May 2020 Page 4 of 9

Tax Return Procedures During COVID-19 Pandemic and Provisions
on Article 25 Income Tax Installments at a New Rate

Places of Registration for Taxpayers (iii) electronic transaction taxes, in the event that the
and/or Place of Reporting for Trade stipulation on income tax imposition referred to
in point b cannot be applied.
Through Electronic Systems Business The exercise of the rights and fulfillment of the tax
Players obligations commence on the date of registration
with KPP Badora. Promulgated on 17 April 2020, this
The Director General of Taxes has released a regulation
regulation came into force on the same date.
stipulating Permanent Establishment & Expatriate Tax
Offices (KPP Badan dan Orang Asing/KPP Badora) as The enactment of this regulation simultaneously revokes
the place of registration and reporting for trade through the former regulation, the Director General of Taxes
electronic system business players. Trade through Regulation No. 10/PJ/2018 concerning the Places of
electronic system business players refer to business Registration for Taxpayers and/or the Places of Reporting
players carrying out activities in trade through electronic for Taxable Persons for VAT Purposes in Large Regional
systems (Perdagangan Melalui Sistem Elektronik/PMSE) Offices of the Directorate General of Taxes, Jakarta
consisting of foreign traders, foreign service providers, Special Regional Tax Offices, and Medium Tax Offices
domestic and foreign PMSE provider (PPMSE). (PER-10/2018).

These provisions are outlined in the Director General
of Taxes Regulation No. PER-07/PJ/2020 concerning Affirmation on the Calculation of
Places of Registration for Taxpayers and Business
Article 25 Income Tax Installments
Players Through Electronic Systems and/or Places of
Reporting of Business Activities for Taxable Persons for with New Rates
VAT Purposes in Large Regional Offices of the Directorate
General of Taxes, Jakarta Special Regional Tax Offices, and The Director General of Taxes has released a regulation
Medium Tax Offices (PER-07/2020). stipulating new income tax rates for corporate taxpayers
as the basis for calculating Article 25 income tax
The regulation was released to provide legal certainty,
installments that takes effect as of the tax period of the
ease of administration, and enhance the supervision of
filing deadline for annual corporate income tax returns.
the implementation of rights and/or fulfillment of tax
obligations for PMSE business players. This affirmation is outlined in the Director General of
Taxes Regulation No. PER-08/PJ/2020 concerning the
Under this regulation, trade through electronic systems
Calculation of Income Tax Installments for the Current
business players comprise permanent establishments
Tax Year in connection with the Adjustment of Corporate
that are PPMSE and domiciled outside Jakarta, resident
Income Tax Rates (PER-08/2020).
and non-resident corporate PPMSE taxpayers, foreign
traders, and foreign service providers registered in This regulation was released to provide legal certainty to
Permanent Establishment & Expatriate Tax Offices. taxpayers related to the adjustment of corporate income
tax rates as regulated in Government Regulation in Lieu
The places of registration shall be stipulated by Director
of Law No. 1 of 2020 concerning State Financial Policy
General of Taxes Decrees. The stipulations apply to
and Financial System Stability to Address Corona Virus
trade through electronic system business players that
Disease 2019 (COVID-19) Pandemic and/or to Counter
have been appointed by the Minister of Finance to fulfill
Threats that Endanger the National Economy and/or
obligations as withholders of Value Added Tax (VAT) on
Financial System Stability (Perppu 1/2020).
PMSE.
Under Perppu 1/2020, the corporate income tax
In addition, the provisions shall apply to trade through
rate for resident corporate taxpayers and permanent
electronic systems business players that meet the
establishment (Bentuk Usaha Tetap/BUT) was formerly
requirement of significant economic presence to be
reduced from 25% to 22% for tax years 2020 and 2021.
subject to income taxes or electronic transaction taxes.
The rate is subject to a further decrease to 20%, which is
Further, the exercise of rights and/or fulfillment of to take effect in the tax year 2022.
taxation obligations for PMSE Business Players in KPP
Taxpayers eligible for the facilities in Article 17 paragraph
Badora include:
(2b) of the Income Tax Law, however, are subject to a 3%
(i) VAT; lower rate. This implies that the tax rate applicable to this
category of taxpayers are 19% for the 2020 and 2021 tax
(ii) Income Taxes, in the event that the Foreign
years and 17% for the 2022 tax year respectively.
Business Player is deemed to have a permanent
establishment, i.e. meeting the significant Further, this regulation stipulates that for taxpayers that
economic presence requirement; or maintain bookkeeping based on the calendar year, the