The Indonesian government has set forth a new regulation on the granting of incentives for taxpayers affected by Covid-19. The provisions on the tax incentives are outlined in the Minister of Finance Regulation No. 9/PMK.03/2021 concerning Tax Incentives for Taxpayers Affected by the 2019 Corona Virus Disease Pandemic (MoF Reg. 9/2021).

This regulation, in essence, provides an extension of previously granted tax incentives, i.e. as stipulated under the Minister of Finance Regulation Regulation No. 86/PMK.03/2020 (MoF Reg. 86/2020) as amended by the Minister of Finance Regulation No. 110/PMK.03/2020 (MoF Reg. 110/2020).

The scope of tax incentives outlined under this regulation includes Article 21 Income Tax Borne by the Government (Ditanggung Pemerintah/DTP), final Income Tax DTP, final Income Tax on construction services borne by the government specifically for the Program for the Acceleration Program for Irrigation Water Use (Program Percepatan Peningkatan Tata Guna Air Irigasi/P3-TGAI), Import Article 22 Income Tax, reduction of Article 25 Income Tax installments, and preliminary refunds of VAT overpayments. Through MoF Reg. 9/2021, the granting of the above tax incentives shall be extended until the June 2021 Tax Period, and specifically, incentives for Import Article 22 Income Tax shall be valid until 30 June 2021.

MoF Reg. 9/2021 constitutes several changes. First, the parties that may use Business Classification (Klasifikasi Lapangan Usaha/KLU) reference code in the masterfile. Formerly, parties that may use the KLU reference code in the master file data were taxpayers that had not had or did not have the obligation to file the 2018 Annual Income Tax Return.

MoF Reg. 9/2021, however, emphasizes that there are other parties that may use the KLU reference code in the masterfile data. First, employers that incorrectly include the KLU in the 2019 Annual Income Tax Return. Second, the central taxpayers that have yet or do not have the obligation to file the 2019 Annual Income Tax Return. Third, government agencies for the Article 21 Income Tax DTP incentives.

Second, there is a policy that accommodates employers to be able to submit corrections to the report on the realization of tax incentives borne by the government no later than the end of the following month. Third, this regulation outlines provisions on penalties for employers that do not submit a realization report until the 20^th of the following month. The penalty imposed on employers that exceed the reporting deadline of the realization of incentives is their ineligibility to utilize the tax borne by the government incentive for the tax period concerned.

Fourth, simplified administration of the application of VAT Exemption Certificates (Surat Keterangan Bebas/SKB) for Import Article 22 Income Tax incentives. Formerly, the application of SKB had to be attached with a ministerial decree regarding the stipulation as a company that obtains the Import Facility for Export (Kemudahan Impor Tujuan Ekspor/KITE) or a permit as an operator in a bonded zone (Penyelenggara di Kawasan Berikat/PDKB). MoF Reg. 9/2021, however, stipulates that application for SKB may be formed by filling in the form listed in the appendix of MoF Reg. 9/2021.

Fifth, the adjustment of the percentage of Article 25 Income Tax installment incentives. Formerly, the reduction of Article 25 Income Tax installments was set at 40%, the new regulation stipulates a 50% reduction. Promulgated on 1 February 2021, this regulation has come into force thereafter. With the enactment of this regulation, MoF Reg. 86/2020 and MoF Reg. 110/2020 have been declared revoked and invalid.

Extension of Tax Incentives for Taxpayers Affected by the Covid-19 Pandemic