Page 4 - 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 4 of 13

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

form of cooperation based on the production sharing An operator refers to a contractor or if the contractor
principle. Second, the gross split production sharing consists of several participating interest holders, then
contract is based on the principle of distributing one participating interest holder is appointed as a
gross production without the mechanism of returning representative by other participating interest holders
operating costs. as per the cooperation contract.
Referring to Article 3 of MoF Reg. 67/2020, the granted The request must be attached by two required
tax facilities include value added tax (VAT), sales tax on documents. First, a photocopy of the production
luxury goods (STLGs), and land and building tax. These sharing contract. Second, a certificate from the minister
facilities are granted by the Head of the Regional Office who carries out government affairs in the field of
on behalf of the Minister of Finance at the exploration energy and mineral resources. MoF Reg. 67/2020
and exploitation stage until the commencement of will take effect 30 days after its promulgation, which
commercial production. means this regulation will be valid starting on 15 July
2020.
In further detail, the VAT and SLTGs facilities are
provided in the form of the non-withholding of VAT
and/or SLTGs on the procurement of taxable goods Ministry of Finance’s 2020-2024
(barang kena pajak/BKP) or taxable services (jasa
kena pajak/JKP) used in the context of petroleum Strategic Plan
operations. The VAT and SLTGs facilities are also
provided for the utilization of intangible BKP or JKP The Ministry of Finance has issued a regulation
from outside the customs area in the framework of concerning the Ministry of Finance’s 2020–2024
petroleum operations. strategic plan. The strategic plan is regulated in
Minister of Finance Regulation No. 77/PMK.01/2020
Land and building tax (pajak bumi dan bangunan/PBB)
concerning the Ministry of Finance’s 2020–2024
facilities take the form of a 100% reduction of PBB due Strategic Plan (MoF Reg. 77/2020).
as stated in the notice of tax due (surat pemberitahuan
pajak terutang/SPPT). These facilities are provided This regulation stipulates a number of important
from the exploration and exploitation stage until the things. First, the government plans to accelerate
commencement of commercial production. national economic growth through increasing mining
output. To realize this, the government applies fiscal
The taxation facilities apply to one work area and are
and non-fiscal incentives to encourage investment,
given to certain contractors. Work area refers to the
relief of export duties, and tax allowance.
Indonesian legal mining territory for exploration and
exploitation. Second, the ministry of finance plans to change the
land and building tax (pajak bumi dan bangunan/PBB)
This regulation states that the VAT, STLGs, and PBB
collection system from an official assessment to self-
facilities apply to contractors of cooperation contracts
assessment. The state, thus, may obtain tax revenues
whose contracts were signed prior to the enactment
early. The tax collection system is transformed to
of Government Regulation No. 53 of 2017 (Gov. Reg.
obtain state revenues earlier without waiting for the
53/2017) and changed the form of the contracts into
provisions issued by the tax authorities. The DGT has
gross split production sharing contracts as per the
been appointed as the person in charge of the draft
provisions under Gov. Reg. 53/2017.
law on the land and building tax.
In addition, the facilities apply to contractors of
The draft PBB Law is of high urgency to increase the
cooperation contracts in the form of gross split
tax base and provide tariff flexibility. The system
production sharing contracts whose contracts are
change, the increased tax base, and the flexibility of
signed before or after the enactment of Gov. Reg.
tariffs are expected to increase state revenues from
53/2017. These three contractors must follow the
land and building tax .
provisions under Gov. Reg. 53/2017.
Third, revising the Stamp Duty Act to improve
However, upstream oil and gas business contractors
compliance and expand the database. Fourth, the
with gross split production sharing contracts wishing
establishment of a Draft Law (RUU) on Taxation
to obtain these tax facilities must submit an application.
Provisions and Facilities to Strengthen the Economy
The request is submitted directly by the operator to
(Omnibus Law) to improve business climate, legal
the Head of the Regional Office through the Tax Office
certainty, encourage foreign nationals’ interest in
(Kantor Pelayanan Pajak/KPP) where the Operator is
working in Indonesia, and encourage voluntary
registered.
compliance. Fifth, the application of the principle of