PROVISION OF CORPORATE INCOME TAX REDUCTION FACILITIES
(MOF NO. 69 OF 2024 REGARDING AMENDMENTS TO PMK NO. 130/MOF.010/2020)
The Minister of Finance stipulates Amendments to the Provision of Corporate Income Tax Reduction Facilities. This facility is intended for Corporate Taxpayers who make new investments in Pioneer Industries. The facility obtained is a reduction in Corporate Income Tax on income received or obtained from the Main Business Activities carried out.
The Pioneer Industries in question are industries that have a wide connection, provide high added value and externalities, introduce new technologies, and have strategic value for the national economy. Main Business Activities must later be listed in the principle permit, investment permit, investment registration, or business license of the Taxpayer which explains the business field and type of production included in the Pioneer Industry criteria.
The points of change in PMK Number 69 of 2024 include:
1. There are additional criteria for making new investments that have never been issued a decision regarding the provision of corporate income tax reduction facilities based on Government Regulations regarding the provision of business licenses, ease of doing business, and investment facilities for business actors in the capital city of the archipelago. (previously none)
2. There is an adjustment to the criteria if the Pioneer Industry Taxpayer has its shares directly owned by other domestic taxpayers, then it is required to have an automated fiscal certificate. (previously Fiscal Certificate of All Shareholders in the Last Deed of Establishment/Amendment)
3. The removal of the requirement for a Fiscal Certificate must be owned by the shareholder recorded in the last deed of amendment in the event of a shareholder change.
4. Changes to the application are made by uploading a digital copy document detailing the details of fixed assets in the investment value plan. (previously digital copies of details of fixed assets and fiscal certificates of shareholders)
5. The elimination of one of the document requirements, namely the fiscal certificate of the shareholders
6. Adding provisions for fiscal certificates in OSS and how to obtain them in accordance with applicable regulations.
7. The imposition of the domestic minimum additional tax is in accordance with the applicable tax provisions for Taxpayers who have obtained the use of the Corporate Income Tax reduction facility before PMK Number 69 of 2024 takes effect, and is included in certain Taxpayers regarding the imposition of the global minimum tax on multinational groups of companies in Indonesia.
8. There is an obligation for taxpayers who obtain facilities to submit reports every 1 year related to the realization of investment and production, to the Director General of Taxes and the Head of the Fiscal Policy Agency through OSS.
9. The deadline for submitting applications submitted is December 31, 2025 at the latest.
This Regulation of the Minister of Finance takes effect from October 9, 2024.
A RESERVE FOR UNCOLLECTIBLE RECEIVABLES THAT MAY BE DEDUCTED FROM GROSS INCOME
(MOF NO. 74 OF 2024)
This provision updates the provisions regarding the Establishment or Fertilization of Reserve Funds that Can Be Deductible as Fees which were previously regulated in PMK Number 81/PMK.03/2009 and have been amended by PMK Number 219/PMK.011/2012.
Taxpayers can charge uncollectible receivables in two ways:
1. Direct write-off when receivables are declared uncollectible.
2. The formation of uncollectible receivables reserves from the beginning of the recognition of receivables in financial statements.
To determine the amount of taxable income, the reserve provision is only used for business taxpayers of banks and other business entities that distribute credit, lease-use business with option rights, consumer finance companies, and factoring companies.
The formation of reserves may be calculated based on the financial accounting standards applicable in Indonesia, as long as they do not exceed certain limits. The new rules also adjust the classification based on the stages of staging or collectibility of receivables, which is more in line with international accounting standards (PSAK 71). The staging stage group consists of receivables in the good, poor, and bad stages, while the quality group of receivables based on collectibility consists of receivables in current collectibility, in special attention, less current, doubtful, and stuck. If receivables are grouped based on their collectibility, then the receivables that are the basis for calculating the reserve of uncollectible receivables are the value of receivables after deducting the value of collateral. The amount of collateral value is set at 100% for liquid collateral, and 75% for other collateral.
The Taxpayer must submit a list of receivables documents that are clearly uncollectible; and A copy of proof of fulfillment of receivables that are manifestly uncollectible on his/her Annual Notification Letter, in the event that receivables that are manifestly uncollectible are taken into account as a deduction.
If there is a repayment of receivables that are clearly uncollectible in the current Tax Year, it is recognized as income in the current Tax Year.
There are 2 transitional provisions that need to be considered in this PMK, including:
1. Peoples Credit Banks and Sharia Peoples Financing Banks that have existed and have not undergone a change in nomenclature to become Peoples Economic Banks and Sharia Peoples Economic Banks, may use the provisions in accordance with this Ministerial Regulation for the establishment of reserves for uncollectible receivables.
2. The calculation of the recorded value of the reserve for uncollectible receivables losses for the 2024 Tax Year at the beginning and end of the year must be calculated based on the provisions of this PMK. If there is a discrepancy, the following provisions apply:
1. The difference is more, then it is recognized as a fee charged for the longest period of 2 Tax Years, namely 2024 and 2025; and
2. The difference is less, recognized as income in the 2024 Tax Year.
This Regulation of the Minister of Finance takes effect from October 18, 2024.
CONDITIONS FOR THE IMPLEMENTATION OF STAMP DUTY
(MOF NO. 78 OF 2024)
The Regulation of the Minister of Finance related to the Provisions for the Implementation of Stamp Duty was issued as a replacement for the 3 MoFs that were previously applicable, including:
a. Regulation of the Minister of Finance Number 133/PMK.03/2021 concerning Regulations for the Implementation of Government Regulation Number 86 of 2021 concerning the Procurement, Management, and Sales of Stamps;
b. Regulation of the Minister of Finance Number 134/PMK.03/2021 concerning Payment of Stamp Duty, General Characteristics and Special Characteristics on Sticky Stamps, Unique Codes and Certain Descriptions on Electronic Seals, Seals in Other Forms, and Determination of Validity of Seals, as well as Later Seals; and
c. Regulation of the Minister of Finance Number 151/PMK.03/2021 concerning the Determination of Stamp Duty Collectors and Procedures for Collection, Deposit, and Reporting of Stamp Duty.
In this Regulation of the Minister of Finance, there are 8 Chapters with 82 Articles. The scope of regulation in this Ministerial Regulation includes:
1. Objects, when payable, and Parties owed Stamp Duty;
2. Procedures for paying Stamp Duty, the implementation of procurement, management, and sale of Stamps, as well as determining the validity of Stamps;
3. Sealing Later;
4. Collection of Stamp Duty; and
5. Refund of overpayment of taxes that should not be owable.
In the section on the procedures for paying Stamp Duty, the implementation of procurement, management, and sale of Stamps, as well as the determination of the validity of Stamps, it is explained that the payment of Stamp Duty is carried out using Stamps or Tax Payment Letters. Stamps can be Sticky Seals, Electronic Seals, or Seals in Other Forms. There are also Stamps in Other Forms including Stamp Stamps, Computerized Stamps, Printing Stamps, and Digital Stamp Stamps.
Sealing Then is carried out for documents whose Stamp Duty is not or is underpaid as it should be; and/or documents used as evidence in court whose procedures are regulated in this PMK.
In the Stamp Duty Collection section, it is explained about the Determination of Stamp Duty Collectors, Procedures for Collecting, Depositing, and Reporting Stamp Duty, and Revocation of Determination of Stamp Duty Collectors.
Regarding the Refund of Overpayment of Taxes That Should Not Be Payable is carried out by submitting an application in the following cases:
a. Unused or outstanding deposits; and
b. The collection of Stamp Duty is larger than the Stamp Duty that should be collected due to the correction of the Stamp Duty Period Tax Return.
This Regulation of the Minister of Finance was promulgated on October 18, 2024 and will take effect on November 1, 2024.
TAX TREATMENT IN JOINT OPERATIONS
(MOF NO. 79 OF 2024)
The Minister of Finance stipulates technical provisions related to Tax Treatment of Joint Operatins (KSO) which will take effect from October 18, 2024. This regulation outlines two main categories of KSO based on their tax obligations:
1. KSO Required to Register for a Taxpayer Identification Number (NPWP) and is required to report their business to be confirmed as a Taxable Entrepreneur
KSO is required to register to obtain a Taxpayer Identification Number as a Corporate Taxpayer in case it meets these criteria:
a. deliver goods and/or services;
b. receive or obtain income; and/or
c. expenses or payment of income to other parties, on behalf of KSO.
KSO is required to register at the place of residence no later than 1 month after the establishment or activity is carried out. KSO is also required to be confirmed as a Taxable Entrepreneur if the KSO’s revenue exceeds the threshold for small businesses and/or 1 (one) or more Members have been confirmed as a Taxable Entrepreneur.
The treatment of VAT and/or PPnBM in KSO is the same as Corporate Taxpayers in general, only the tax base for VAT on the delivery of Taxable Goods (BKP) or Taxable Services (JKP) by Members to KSO is the agreed contribution value agreed upon by each member., not the selling price.
The treatment of income tax in KSO is also the same as Corporate Taxpayers in general, only there are additional fees that can be charged by KSO, including fees incurred in accordance with the Members contribution to the KSO.
KSO losses can only be compensated by such KSOs, and cannot be compensated by its Members. In addition, the Treatment of Income Tax Withholding and/or Collection in KSO is no different from that of Corporate Taxpayers.
In the event that the income tax on the transfer of land and/or building rights is paid by the KSO itself, the KSO needs to submit a request for research on evidence of fulfillment of the obligation to pay Income Tax. In the context of the name change process, KSO must attach:
a. certificate of results from the application for research proof of fulfillment of income tax payment obligations; and
b. a copy of the KSO cooperation agreement or KSO establishment deed, in accordance with the original.
2. Tax treatment for KSO who are not required to register to obtain a Taxpayer Identification Number and are not required to report their business to be confirmed as a Taxable Entrepreneur.
KSO that is not required to register, the implementation of its tax rights and obligations lies with each Member. VAT and/or PPnBM treatment, as well as income tax will be carried out by KSO Members in accordance with the proportions agreed in the KSO agreement.
The obligation to withhold and/or collect Income Tax is also carried out by each Member in accordance with the applicable tax provisions.
For KSO that has been operating, it is also urged to carry out obligations in accordance with this Regulation of the Minister of Finance, both for KSO that meets the criteria for mandatory registration and for KSO that is not required to register.
PROCEDURES FOR GRANTING VALUE-ADDED TAX OR VALUE-ADDED TAX AND SALES TAX FACILITIES ON LUXURY GOODS AND INCOME TAX IN THE CONTEXT OF THE IMPLEMENTATION OF GOVERNMENT PROJECTS FINANCED BY GRANTS OR FOREIGN LOAN FUNDS
(MOF NO. 80 OF 2024)
In the context of the implementation of Government Projects financed by Grants and/or Loans, the Ministry of Finance provides facilities in the field of taxation through Minister of Finance Regulation Number 80 of 2024.
The facilities provided are listed in Article 2, namely:
a. Value Added Tax and/or Sales Tax on Luxury Goods is not levied for:
1. Grant Recipients, Loan Recipients, and/or Grant and/or Loan Recipients;
2. Grantors of goods and/or services; and/or
3. Main Contractor; and/or
b. Income Tax is borne by the Government for the Main Contractor.
Government projects that receive this facility include projects/activities of Ministries/Institutions and/or Regional Governments financed by Grants and/or Loans.
If only part of the funds are financed by Grants and/or Loans for the implementation of project activities, then tax facilities are provided to VAT and/or PPnBM for the part of the activities financed by Grants and/or Loans.
Likewise, if income in a tax year is received or obtained from the implementation of Government Projects financed by Grants and/or Loans, and other than those financed by Grants and/or Loans, tax facilities are provided to Income Tax on the portion of income received/earned from the implementation of Government Projects financed by Grants and/or Loans.
Grantees and/or Loans, need to submit a Notice of the Main Contractor so that the tax facilities can be used by the Main Contractor. Furthermore, the DGT conducts research and issues a Certificate as the Main Contractor if approved or the Notification Letter does not meet the provisions if rejected, with a maximum processing time of 5 working days after the notification is received.
After the Certificate as the Main Contractor is obtained, the Main Contractor needs to register BKP/JKP which will be used in the implementation of the Government Project to the DGT, which will then be processed within 5 working days and issued a Proof of BKP/JKP Registration if approved or the Notification Letter does not meet the provisions if rejected.
The provision of VAT and/or PPnBM Facilities is given with a Certificate of Non-Collection which must be applied for by the Recipient or Grantor and/or Loan or Main Contractor. Likewise, the Government-Borne Income Tax Facility is given with a Certificate of Income Tax Facility which is applied for by the Main Contractor.
The Main Contractor needs to submit a Report on the Realization of Income Tax Facilities no later than the deadline for submitting the Annual Tax Return or Tax Period. The DGT has the right to replace, cancel, and/or revoke the facilities provided based on the application or by position after the research has been conducted.
This Regulation of the Minister of Finance will come into effect on October 18, 2024.
DETERMINATION OF SPECIAL ECONOMIC ZONES FOR EDUCATION, TECHNOLOGY, AND INTERNATIONAL HEALTH
(GOVERNMENT REGULATION NO. 38-39 OF 2024)
On October 7, 2024, the Government has designated the Special Economic Zone for Education, Technology, and International Health in two regions, Banten and Batam with details in the following areas:
1. Eastern Region covering an area of 28.83 Ha (Cisauk District, Tangerang Regency, Banten Province); and
2. The Western Region covers an area of 30.85 Ha (Pagedangan District, Tangerang Regency, Banten Province).
3. Sekupang with an area of 23.10 Ha (Tanjung Pinggir Village, Sekupang District, Batam City, Riau Islands Province); and
4. Nongsa covers an area of 24.07 hectares (Sambau Village, Nongsa District, Batam City, Riau Islands Province).
Business activities in this area consist of:
1. Research, digital economy, and technology development;
2. Education;
3. Health; and
4. Creative industries.
Operational readiness will be outlined in the action plan for the Development of Special Economic Zones for Education, Technology, and International Health which includes infrastructure and facilities, human resources, and administrative control tools.
The National Council of Special Economic Zones can evaluate the completion of the Development and operational readiness of this special zone. If it is considered not ready to operate, the National Council of Special Economic Zones may:
1. Changes in the area of the area;
2. Development Problem Solving;
3. Extension of time is a maximum of 2 years or 3 years due to force majeure.
In the event that efforts have been made to overcome the area that is not ready for operation, but the effort fails and the area is still not ready to operate, then the National Council of Special Economic Zones proposes to revoke the designation of the Banten Special Economic Zone for Education, Technology, and Health while there is a transition period from the Batam Free Trade Zone and Free Port to the Special Economic Zone for Education, Bantens International Health and Technology in the Sekupang and Nongsa areas as regulated in Government Regulation No. 39 of 2024 whose period is set by the National Council of Economic Zones.