Page 2 - Newsletter (The Expansion of Business Classification of Taxpayers Receiving Covid-19 Tax Incentives)

DDTC Newsletter Vol.04 | No.02 I July 2020 Page 2 of 5

The Expansion of Business Classification of Taxpayers
Receiving Covid-19 Tax Incentives

Expansion of Business Classification DTP incentives for employers with branches is to be
and Extended Granting of Incentives submitted at the central level only.
for Taxpayers Affected by Covid-19 On another note, MSME taxpayers that wish to take

advantage of the final PPh DTP incentives do not need
The government has again expanded the scope of to submit the Certificate of Gov. Reg. No. 23 of 2018, but
sectors entitled to tax incentives for taxpayers affected are only required to submit a realization report every
by the Covid-19 pandemic. The expansion of the scope month. Not all MSMEs, however, are exempt from the
of the incentive recipients is outlined in the Minister of obligation to submit the Certificate of Gov. Reg. No. 23
Finance Regulation No. 86/PMK.03/2020 concerning of 2018 to benefit from the final PPh DTP incentive.
Tax Incentives for Taxpayers Affected by the Corona
Virus Disease 2019 Pandemic (MoF Reg. 86/2020). The simplification of procedures –through the
elimination of the obligation to submit the Certificate
Enacted and effective from 16 July 2020, this regulation as outlined under MoF Reg. 86/2020– applies to
revokes the former regulation, the Minister of Finance MSME taxpayers that have settled PPh by depositing
Regulation Number 44/PMK.03/2020 concerning the payment themselves. Conversely, Certificate of Gov.
Tax Incentives for Taxpayers Affected by the Corona Reg. No. 23 of 2018 will still be required in the event that
Virus Disease 2019 Pandemic (MoF Reg. 44/2020). MSME taxpayers transact with PPh withholders. This
The government has revoked MoF Reg. 44/2020 as is because the PPh withholders need the document to
it is deemed necessary to facilitate the use of broader confirm the validity of the taxpayer status as an MSME
incentives during the national economic recovery. in various channels provided by the DGT.

The types of incentives granted under MoF Reg. Another change in MoF Reg. 86/2020 is that taxpayers
86/2020 remain the same as those provided under that enjoy Article 22 Import PPh incentives and Article
MoF Reg. 44/2020. First, Article 21 Income Tax 25 PPh installment incentives are required to submit
(Pajak Penghasilan/PPh) borne by the government monthly reports on incentive realization. The reports
th
(Ditanggung Pemerintah/DTP). Second, exemptions are submitted no later than the 20 of the following
from Article 22 Import PPh. Third, the reduction month after the tax period ends. Previously, the
of Article 25 PPh installments by 30%. Fourth, incentive realization was to be reported every three
accelerated VAT refunds. Fifth, Final PPh incentives for months.
Micro, Small, and Medium Enterprises (MSMEs).
Under this regulation, the government also stresses
Under this regulation, however, the government adds that compensation for overpayment of taxes from
the number of business classifications (Klasifikasi the previous tax period can be calculated in the VAT-
Lapangan Usaha/KLU) that may apply for incentives refund-related incentive mechanism. The threshold for
for taxpayers affected by the Covid-19 pandemic. For accelerated initial refunds under the latest regulation
Article 21 PPh DTP, 1,189 KLU are given tax incentives, remains the same as before, i.e. Rp. 5,000,000,000.00.
whereas formerly only 1,062 KLU were entitled to
such incentives. Next, the number of KLU receiving When MoF Reg. 86/2020 comes into force, employers
Article 22 Import PPh exemption incentives has been or taxpayers that have notified of the use of incentives
added from 431 KLU to 721 KLU. or requests for VAT exemption certificates under MoF
Reg. 23/2020 or MoF Reg. 44/2020 are no longer
The number of KLU that may apply for accelerated VAT required to resubmit the relevant notification or
has been added to 716 KLU from 431 KLU. In contrast, application.
the reduction of Article 25 Income Tax installments
incentive can now be utilized by 1,014 KLU from
previously only 846 KLU. In addition to expanding IMEI Registration Procedures for
the scope of KLU to receive these incentives, the
government has also extended the validity period of Imported Telecommunications
Equipment Carried by Passenger and
all types of incentives from until September 2020 to
December 2020.
Crew Members
MoF Reg. 86/2020 also provides some other relief for
taxpayers wishing to take advantage of tax incentives The Directorate General of Customs and Excise
during the Covid-19 Pandemic. This facility includes (DGCE) has established procedures for registering
that the notification of the utilization of Article 21 PPh international mobile equipment identity (IMEI) of