The Ministry of Finance has re-extended the application period for income tax facilities in the context of handling Covid-19 as regulated under Government Regulation No. 29 of 2020 concerning Income Tax Facilities in the Context of Handling Covid-19 (Gov. Reg. 29/2020).

The incentive has been extended twice. First, it was extended until 31 December 2020 through the Minister of Finance Regulation No. 143/PMK.03/2020. Second, it was extended until the end of June 2021 through the Minister of Finance Regulation No. 239/PMK.03/2020. The incentive is now re-extended until 31 December 2021.

The extension is outlined in the Minister of Finance Regulation No. 83/PMK.03/2021 concerning Amendments to the Minister of Finance Regulation No. 239/PMK.03/2020 concerning the Granting of Tax Facilities on Goods and Services Required in the Context of Handling the Covid-19 Pandemic and Extension of the Application of Income Tax Facilities Based on Government Regulation No. 29 of 2020 concerning Income Tax Facilities in the Context of Handling Covid-209 (MoF Reg. 83/2021).

The tax facilities are extended to encourage public participation in handling Covid-19 in the form of producing medical devices and/or household health supplies, giving donations, providing human resources and health facilities to address Covid-19. Promulgated on 1 July 2021, this regulation has come into effect thereafter.

The validity period of four income tax facilities has been extended. First, additional net income deduction for resident taxpayers that produce medical devices and/or household health supplies.

As per the provisions under Gov. Reg. 29/2020, resident taxpayers that produce medical devices, antiseptic hand sanitizers, and disinfectants are entitled to an additional 30% reduction in net income of costs. The medical devices include surgical masks and N95 respirators, personal protective clothing, surgical gloves, examination gloves, ventilators, and diagnostic test reagents for Covid-19.

Second, donations that are deductible from gross income. Taxpayers giving donations or contributions in the context of addressing the Covid-19 outbreak may take into account the donations or contributions as a deduction from gross income.

Contributions that can be taken into account include donations in the form of money, goods, services, or the use of assets without compensation, which are given to the National Disaster Management Agency (Badan Nasional Penanggulangan Bencana/BNPB), Regional Disaster Management Agency (Badan Penanggulangan Bencana Daerah/BPBD), Ministry of Health, Ministry of Social Affairs, or other institutions with a permit to collect donations.

Third, the imposition of a 0% income tax rate that is final on additional income received by human resources in the health sector. As per the provisions under Gov. Reg. 29/2020, health workers and health support personnel whose task is to provide health services to handle Covid-19 and receive honoraria or other benefits from the government are entitled to the additional income in full as they are subject to 0% income tax.

These health workers include doctors and nurses. Health support personnel, on the other hand, include assistant health workers, cleaning staff, ambulance drivers, administrative staff, undertakers, and students in the health sector who are seconded in health care facilities.

Fourth, the imposition of a 0% income tax rate that is final on income in the form of compensation or replacement for the use of assets. Taxpayers who lease land, buildings, or other assets to the government in the context of handling Covid-19 receive rental income from the government. They are entitled to the income in full as they are subject to 0% income tax.

Extended Income Tax Facilities to Address Covid-19