Extension of tax incentives in relation to COVID-19.

On July 1, 2021, the Minister of Finance (MoF) issued Regulation No. 82/PMK.03/2021 (PMK-82) as an amendment of MoF Regulation No.9/PMK.03/2021 (PMK-9). PMK-82 extends the tax incentives that were previously provided under PMK-9 up to December 2021.

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The incentives provided under this PMK-82 remain the same with what has been provided earlier by the Government. However, there is a significant reduction in the number of business classifications (Klasifikasi Lapangan Usaha/KLUs) that can enjoy these incentives which are as follows:

  1. Article 21 Employee Income Tax (EIT) borne by the Government for employees earning annual regular income not exceeding IDR 200 million which is applicable for 1,189 KLUs (please refer to the attachment of PMK- 82 below)
  2. Article 22 Income Tax on imports by eligible taxpayers will be exempted for 132 KLUs (previously 730 KLUs  – please refer to the attachment of PMK-82)
  3. Article 25 monthly Income Tax instalment of eligible taxpayers will be reduced by 50% for 216 KLUs (previously 1,018 KLUs – please refer to the attachment of PMK-82) below
  4. The 0.5% final tax based on Government Regulation No.23 Year 2018 will be borne by the Government
  5. The final income tax for construction services in relation with “Program Percepatan Peningkatan Tata Guna Air Irigasi/P3-TGAI” will be borne by the Government
  6. Preliminary Value Added Tax (VAT) refunds will be available for eligible taxpayers requesting a refund for a maximum IDR 5 billion for 132 KLUs (previously 725 KLUs – please refer to the attachment of PMK-82 below).Please note that the KLU refers to the KLU number stated on the submitted 2019 CITR or based on the tax office administration’s Master File.

In order to utilise the above incentives in July-Dec 2021, the taxpayer is required to re-apply for the incentives and/or for the exemption letter (Surat Keterangan Bebas/SKB) under PMK-82 even though the taxpayer has utilised similar incentives in Jan –June 2021. Especially for Art 21. EIT, Art. 22 Income Tax and Art. 25 Income Tax incentives, it should be submitted at the latest by Aug 15, 2021 if the taxpayer intended to utilise these tax incentives starting from July 2021 period.

Similar with the previous regulations, taxpayers who utilises these tax incentives (other than the VAT refund incentive) must prepare realisation report on a monthly basis which is required to be submitted at the latest by the 20th of the following month. For Art. 21 EIT and 0.5% final tax incentives, the taxpayer can revise their monthly realisation report at the latest by the end of the following month after the realisation report submission. Specifically for the Art. 21 EIT and 0.5% final tax incentives, if a taxpayer fails to submit the monthly realisation report, such taxpayers will not be entitled to utilise these incentives for that particular period.

In addition, for taxpayers who have submitted the realisation report on utilisation of the Art. 21 EIT, 0.5% final tax and final income tax for construction incentives in Jan-June 2021, are allowed to revise the realisation report at the latest by Oct 31, 2021.

If you have any further queries or require further guidance in relation to the above, please do not hesitate to contact us.

Extension of tax incentives in relation to COVID-19
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