Page 3 - Newsletter (Reduction of Income Tax Rates for Publicly Listed Companies and Establishment of VAT Withholder Criteria for E-Commerce Businesses)

DDTC Newsletter Vol.04 | No.01 I July 2020 Page 3 of 13

Reduction of Income Tax Rates for Publicly Listed Companies and
Establishment of VAT Withholder Criteria for E-Commerce Businesses

The scholarship components of formal and non- which is supplemented with supporting evidence. The
formal education comprise tuition fees paid to schools, surplus that is not used for the construction and/or
educational or training institutions, examination fees, procurement of facilities and infrastructure within a
research costs related to the specific field of study, period of four years is recognized as an income tax
book fees, transportation costs, and/or reasonable object at the end of the tax year after the period ends.
living costs according to the study location.
Third, the procurement costs of goods and/or services
Second, the surplus is received by non-profit used to support the operational implementation of
education and/or research and development. Fourth,
organizations. The surplus received or earned by
non-profit bodies or institutions are exempted as a costs to increase the quality of capacity and services of
tax object. This facility may be granted if the surplus education and/or research and development, as well
is used for the construction and/or procurement of as community service as per the legislation on higher
facilities and infrastructure for educational and/or education.
research and development activities. In addition, the
surplus must be utilized within a maximum period of
Tax Facilities for Upstream Oil and
four years since it is received or earned.
Gas Business Activities with Gross
Surplus refers to the difference between the
Split Production Sharing Contracts
calculation of all income received or earned other than
income that is subject to the final income tax and/or is
not an income tax object, less the cost to earn, collect, The Ministry of Finance has issued a regulation on
and maintain the income. There are four costs to earn, tax facilities for upstream oil and gas businesses with
collect, and maintain income. gross split production sharing contracts. The granting
of these facilities is outlined in the Minister of Finance
First, aid, donations, or grants. Aid, donations, or grants
Regulation No. 67 of 2020 concerning the Granting
may be deducted from gross income insofar as there
of Value Added Tax or Value Added Tax and Sales
is no special relationship with the recipient under
Tax on Luxury Goods as well as Land and Building
Income Tax Laws. The special relationship, however,
does not include ownership or control relationship if Tax to Upstream Oil and Gas Business Activities with
the donor and recipient of aid, donations, or grants are Gross Split Production Sharing Contracts (MoF Reg.
bodies or institutions. 67/2020).
An upstream business refers to a business whose core
Second, the operational costs of organizing education
activities are in or are dependent on exploration and
and/or research and development. Facilities and
infrastructure in the educational and/or research exploitation. Exploration refers to activities that aim
and development activities include the provision of to obtain information on geological conditions to find
facilities for activities, construction, and procurement and produce estimates of oil and gas reserves in a
specified work area.
of infrastructure located within Indonesia’s territory.
Included in the construction and procurement of Exploitation, on the other hand, is a series of activities
infrastructure is the use of surplus allocated in the aimed at producing oil and gas from a specified work
form of endowments. The surplus can be allocated in area. Exploitation consists of drilling and exhausting
the form of endowments with certain conditions. wells, constructing means of transport, storing
and processing on-field facilities for the separation
The surplus in the form of construction and/or
and refinery of oil and natural gas, as well as other
procurement of facilities and infrastructure other than
supporting activities.
surplus allocated in the form of endowments may be
granted to other bodies or institutions insofar as they Upstream business activities are carried out by a
are within the territory of Indonesia. The use of the contractor that is a business entity or permanent
surplus cannot be deducted from gross income for the establishment stipulated to perform exploration and
donor bodies or institutions. exploitation in a work area based on a cooperation
contract with the Special Task Force for Upstream
The body or institution must report the surplus used for Oil and Gas Business Activities (Satuan Kerja Khusus
the construction and/or procurement of facilities and
Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi/
infrastructure. The surplus report is submitted to the
SKK Migas).
head of the tax office where the taxpayer is registered.
In addition to the report, said body or institution Such a cooperation contract can be established in
must make a note on the detailed use of the surplus two forms. First, the production sharing contract is a