Page 4 - Newsletter (New Regulation on Stamp Duty and Tax Cluster in Job Creation Law)

DDTC Newsletter Vol.04 | No.09 I November 2020 Page 4 of 12

New Regulation on Stamp Duty and Tax Cluster in

Job Creation Law

a permanent home, a center of vital interests, habitual On the other hand, if the taxpayer does not invest
abode, tax residency status, and/or other certain income from dividends or income from a PE and
requirements which will be further regulated in without going through the PE within a certain
minister of finance regulations. stipulated period, the income shall constitute income
in the tax year it is earned. Tax on income that has been
Further, the important points of changes found in
paid or payable abroad on said income constitutes a
Article 4 of Income Tax Law cover the principle of tax credit as referred to in Article 24 of Income Tax
income taxation of foreign citizens (Warga Negara
Law.
Asing/WNA) who have been designated as residents
taxpayers (Subjek Pajak Dalam Negeri/SPDN), the Next, Article 4 paragraph (3) subparagraph i of Income
elimination of Income Tax on domestic and foreign- Tax Law as amended by Article 111 of Job Creation Law
source dividends received by resident taxpayers now also exempts part of the profit or residual income
(Wajib Pajak Dalam Negeri/WPDN), as well as the received or earned by members of cooperatives from
deletion of several income tax objects. income tax objects. Job Creation Law also adds a new
provision in Article 4 paragraph (3) subparagraphs o
In light of the principle of taxation on the income of and p which exempts the funds for Hajj Fees (Biaya
foreign citizens who have been designated as SPDN,
Penyelenggaraan Ibadah Haji/BPIH), income from the
Job Creation Law adds four new paragraphs, i.e. Hajj Financial Management Agency (Badan Pengelola
paragraphs (1a), (1b), (1c), and (1d) in Article 4 of
Keuangan Haji/BPKH) in certain fields and the surplus
Income Tax Law. In essence, Article 4 paragraph (1a)
received/earned by social and religious bodies or
of Income Tax Law as added in Article 111 of Job institutions registered with the agency in charge of
Creation Law stipulates that foreign citizens who have them insofar as they meet the stipulated conditions,
become an SPDN are subject to income tax only on from income tax objects.
income received or earned from Indonesia. This policy,
however, only applies insofar as the foreign citizen Further, important points of changes in Article 26
meets two conditions, i.e. having certain expertise and of Income Tax Law pertain to the adjustment of
this treatment is only valid for four tax years from the Article 26 Income Tax rate on interest. Job Creation
time the foreigner becomes an SPDN. Law adds Article 26 paragraph (1b) of Income Tax
Law which stipulates that the 20% rate on the gross
Article 111 of Job Creation Law also revises Article amount of interest, including premiums, discounts,
4 paragraph (3) subparagraph f of Income Tax Law and compensation in connection with debt repayment
concerning dividends that are exempted from tax
guarantees received by non-resident taxpayers
objects. As for Article 4 paragraph (3) subparagraph
other than PEs in Indonesia may be decreased by a
f of Income Tax Law as amended by Article 111 of Job
Government Regulation.
Creation Law exempts domestic-source dividends
that are received or earned by resident corporate or Details of the changes to the additional articles of
individual taxpayers, from income tax objects insofar Income Tax Law in Job Creation Law can be seen in the
as the dividends are invested in Indonesian territory Comparison Matrix between Income Tax Law and Tax
within a certain period of time. Cluster in Creation Law. Download here.

In addition, foreign-source dividends and after-tax (ii) VAT Law
income of a Permanent Establishment (PE) abroad
that is received/earned by resident corporate or Article 112 contains changes to several provisions
individual taxpayers are exempted from income tax under Law No. 8 of 1983 concerning Value Added Tax
objects, insofar as they are invested or used to support on Goods and Services and Sales Tax on Luxury Goods
other businesses in the territory of the Republic of as amended by Law No. 42 of 2009 concerning the
Third Amendment to Law No. 8 of 1983 concerning
Indonesia within a certain period and meet certain
Value Added Tax on Goods and Services and Sales Tax
requirements.
on Luxury Goods (VAT Law).
Foreign-source income that does not go through a
Permanent Establishment and is received or earned Articles of VAT Law amended in Job Creation Law
by resident corporate and individual taxpayers is include Article 1A, Article 4A, Article 9, and Article 13.
also exempted from income tax objects if invested in Broadly speaking, the points of changes to VAT Law
Indonesia, provided that said income originates from in Job Creation Law pertain to the regulation of the
rights of input VAT crediting by Taxable Persons for
active overseas businesses and does not constitute
VAT Purposes (Pengusaha Kena Pajak/PKP) that have
income from companies owned abroad.