The Indonesian Government has introduced Minister of Finance (MoF) Regulation No. 44/PMK.03/2020 (MoF-44) to extend the fiscal stimulus package concerning the COVID-19, previously stipulated in Minister of Finance (MoF) Regulation No. 23/PMK.03/2020 (MoF-23), to additional industry sectors including the followings (just to name a few):
Below are the salient points from the MoF-44:
The number of industry sectors entitled to this facility has increased to 1,062. Employees of these 1,062 industries who have a tax ID (NPWP) and have an annualised recurring gross income of not more than IDR 200 million is eligible. It is the Government’s intention, that by utilising this facility employees will be flushed with additional disposable income in the form of previously deducted withholding tax (Pay As You Earn tax). This employee income tax will be borne by the Government. This facility is valid from April to September 2020.
However, employers will have to deduct and pay all taxes in relation to non-recurring income such as Tunjangan Hari Raya (13th-month salary) allowances, and bonuses, etc. to the State Treasury as usual.
Employers entitled for this facility are obliged to submit a monthly realisation report of the income tax borne by the Government and prepare tax payment slips or print out an ID Billing with “PPh Pasal 21 Ditanggung Pemerintah Eks PMK No. 44/PMK.03/2020” narrative on the respective tax document. This document is required to be attached to the monthly realisation report.
The number of industry sectors entitled to this facility has increased to 431. This exemption of Art. 22 import tax is provided to the taxpayers through the issuance of exemption letters (Surat Keterangan Bebas/SKB) from the Director General of Tax (DGT). If approved, the SKB will be valid from the issuance date until 30 September 2020.
Taxpayers entitled for this facility are obliged to submit quarterly realisation reports of the income tax borne by the Government. The realisation report is required to be submitted by 20 July 2020 and 20 October 2020 for April to June 2020 and July to September periods respectively.
The number of industry sectors entitled to this facility has increased to 846. This facility provides a 30% discount from the Art. 25 income tax instalment payable. Article 25 related to prepaid corporate income tax and this is a discount on instalments, but a true-up will have to be done at the end of the financial year, and any shortfall will have to be made good. Therefore, this incentive is to ease cash outflows temporarily.
To enjoy this facility, taxpayers are required to submit a notification to the DGT. This incentive will be applicable from the submission of notification until September 2020. Taxpayers utilising this facility are obliged to submit quarterly realisation reports. The realisation report is required to be submitted by 20 July 2020 and 20 October 2020 for April to June 2020 and July to September periods respectively.
The number of industry sectors entitled to this facility has increased to 431. If entitled, taxpayers can submit overpaid VAT returns to request for restitution with an overpayment amount of not more than IDR 5 billion and will be processed with an early refund mechanism as low-risk VAT-able entrepreneurs (Pengusaha Kena Pajak/PKP). This incentive applies to both head office or branch offices that are registered as PKP.
Overpaid VAT returns in relation to the above covers normal and amended VAT returns for the period of April to September 2020 and must be submitted at the latest by 31 October 2020.
From the Indonesian tax perspective, taxpayers will be considered as UMKM if their annual gross revenue does not exceed IDR 4.8 billion. The final income tax rate for UMKM taxpayers is 0.5% of revenue. With this incentive, the Government will bear this 0.5% tax from April to September 2020. UMKMs will not be required to pay the 0.5% final income tax and this will be formalised with the withholding tax agents (as these agents are no longer required to withhold or deduct this 0.5% final income tax when making payments to UMKMs).
To qualify for this benefit, UMKMs will have to obtain a Statement Letter (Surat Keterangan) from the DGT. This facility is valid for the period of April to September 2020 and is dependent on when the Statement Letter from the DGT is obtained.
UMKMs are obliged to submit monthly realisation reports and prepare tax payment slips with “PPh Final Ditanggung Pemerintah Eks PMK No. 44/PMK.03/2020”. This document is required to be attached to the monthly realisation report.
This regulation defines the industry sector based on the taxpayer’s Business Classification (Klasifikasi Lapangan Usaha/KLU) based on the KLU [ KLU for Art. 22 Import Tax | KLU for Art. 25 Instalment | KLU for Employee Income Tax ] reported by the taxpayer on its 2018 Annual Corporate Income Tax Return or based on the taxpayer’s master file data records with the DGT for new taxpayers registered after 2018.
As a transitional provision, taxpayers that have already registered/qualified under MoF-23, are not required to submit separate notification nor application for MoF-44. Such taxpayers can still utilise the incentives provided under Mof-23. However, the realisation report mechanism will need to be completed under the requirements of MoF-44.
Click here to view the details of MoF-44.