Page 7 - Newsletter (Tax Return Procedures During COVID-19 Pandemic and Provisions on Article 25 Income Tax Installments at a New Rate)
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DDTC Newsletter Vol.03 | No.09 I May 2020 Page 7 of 9
Tax Return Procedures During COVID-19 Pandemic and Provisions
on Article 25 Income Tax Installments at a New Rate
Implementing Regulation on the
reports on the realization of import Article 22 income
tax exemptions. In addition, the exemptions of Article Revisions to the State Budget
22 income tax are also given to third parties conducting
sales of goods to address COVID-19.
The Ministry of Finance (MoF) has again issued a
Fourth, the procedures for utilizing the exemption regulation related to the handling of the COVID-19
facility from Article 23 Income Tax withholding, Resident pandemic. The policies are outlined in the Minister of
corporate taxpayers and permanent establishments that Finance Regulation No. 38/PMK.02/2020 concerning
receive or obtain compensation from certain parties the Implementation of State Financial Policies to Address
are exempted from Article 23 income withholding. Corona Virus Disease 2019 (COVID-19) and/or to
Exemptions from Article 23 income tax withholding are Counter Threats that Endanger the National Economy
given through the Article 23 income tax withholding SKB. and/or Financial System Stability (MoF Reg. 38/2020).
This regulation is the implementing regulation of Article
All the facilities stipulated under the regulation are
2 paragraph (2) of Perppu No. 1/2020. This ministerial
temporarily valid, as of April 2020 to September 2020 tax
regulation took effect as of its promulgation on 20 April
period. Promulgated on 6 April 2020, this regulation has
2020.
come into force thereafter.
To implement state financial policies to address COVID-19,
the limit of budget deficit during the COVID-19 handling
Suspension of Trial Proceedings at period has been set to exceed 3% of Gross Domestic
the Tax Court Extended Product (Produk Domestik Bruto/PDB). In the 2023 fiscal
year, the deficit is expected to be a maximum of 3% of
The Tax Court has extended the provisions on the GDP. Deficit adjustments shall be conducted in stages.
prevention period of COVID-19 spread in its environment.
The amount of the deficit shall be adjusted under
This is outlined in the Head of the Tax Court Circular No.
five circumstances. First, revenue declines while the
SE-04/PP/2020 concerning the Amendment to the Head
expenditure ceiling remains stable. Second, revenue is
of Tax Court Circular No. SE-03/PP/2020 concerning
stable while the expenditure ceiling increases. Third,
Guidelines for the Adjustments of Trial Proceedings and
revenue decreases while the expenditure ceiling rises.
Administrative Services During the Prevention Period of
Fourth, revenue declines and expenditure declines. Fifth,
Corona Virus Disease 2019 (COVID-19) Spread within
the Tax Court (SE-04/2020). This regulation was enacted revenue levels while the expenditure ceiling decreases.
on 16 April 2020.
Taking into account the condition of the national economy,
The regulation stipulates that the prevention period of mandatory spending shall be adjusted. The adjustments
COVID-19 spread formerly set from 17 March 2020 to 21 should not reduce the education budget allocation by
April 2020 has now been extended from 17 March 2020 20% of the total state budget in the current year.
to 23 April 2020.
Budget shifts among organizational units, inter-functions,
Further, the Tax Court has again extended the prevention and/or programs also include budget shifts among
period of COVID-19 spread in its environment. The sub-sections of the Budget Section of the State General
provisions on the forthcoming extension are regulated Treasurer (Bagian Anggaran Bendahara Umum Negara/
in Circular Number SE-05/PP/2020 concerning the BA BUN) and/or among posts within a sub-section
Second Amendment to the Head of Tax Court Circular in the BA BUN for which the Budget Implementation
Number SE-03/PP/2020 concerning the Guidelines for Checklist (Daftar Isian Pelaksanaan Anggaran) has not
the Adjustments of Trial Proceedings and Administrative
yet been issued. This shift in budget may originate from
Services During the Prevention Period of Corona Virus
the national priority output insofar as the national non-
Disease 2019 (COVID-19) Spread (SE-05/2020).
priority output budget is lacking/insufficient, and/or
The regulation was enacted on 21 April 2020. The the national priority output is undermined due to the
suspension of trial proceedings at the Tax Court is now COVID-19 pandemic.
extended to 13 May 2020. The two circulars also state
In the case of actions that result in expenditures borne
that other provisions in SE-03/2020 concerning the by the State Budget (Anggaran Pendapatan dan Belanja
guidelines of the adjustments of trial proceedings and
Negara/APBN), in which the budget to finance the
administrative services are declared to remain in force.
expenditures is not yet available or not sufficiently
available, additional allocations may be used for additional
expenditure and financing the handling of the COVID-19
pandemic. Additional budget allocations are utilized for
the interventions of COVID-19 pandemic handling, social