Through Presidential Decree No. 4 of 2021 concerning the Government Regulation Formulation Program (Pres. Decree 4/2021), the government stipulates 25 draft government regulations (Rancangan Peraturan Pemerintah/RPP). RPP was initiated by various ministries, including the Ministry of Finance, as listed in Appendix of Pres. Decree 4/2021.

Referring to the appendix, the Ministry of Finance initiates two RPPs in the field of taxation as follows.

First, RPP concerning the Second Amendment to Government Regulation No. 51 of 2008 concerning Income Tax from Construction Service Business Income. The main content in this draft regulation is that the Ministry of Finance plans to amend the final income tax rates on construction services.

To date, the final income tax rate on construction services is regulated by Government Regulation No. 51 of 2008 concerning Income Tax on Income from Construction Service Businesses (Gov. Reg. 51/2008) as amended by Government Regulation No. 40 of 2009 (Gov. Reg. 40/2009). Referring to the appendix of Pres. Decree 4/2021, the Ministry of Finance proposes changes in rates for construction service businesses, with details as shown in Table 1.

Table 1 Proposed Changes in Final Income Tax Rates for Construction Service Businesses in the Second Amendment RPP to Gov. Reg. 51/2008

Notes:
1.	Formerly referred to as ‘contractors’.
2.	In the former regulations, there was no term for ‘individuals’.
3.	Formerly referred to as ‘construction planning.

Source: Gov. Reg. 51/2008 as amended by Gov. Reg. 40/2009; Pres. Decree 4/2021.

Second, RPP regarding Amendments to Government Regulation no. 80 of 2010 concerning Withholding Rates and Imposition of Article 21 Income Tax on Income Borne by the State Budget (Anggaran Pendapatan dan Belanja Negara/APBN) or Regional Budget (Anggaran Pendapatan Dan Belanja Daerah/APBD).

The main content in the draft government regulation is that the Ministry of Finance plans to amend the final Article 21 income tax rates on income borne by APBN and APBD. However, the income tax rate adjustment is not carried out on regular and regular monthly income in the form of honorarium or other compensation under whatever name borne by APBN or APBD.

The government regulation drafting program listed in Pres. Decree 4/2021 is set for a period of one year. Pres. Decree 4/2021 requires the RPP initiator to report on the progress of the realization of the formulation of the initiated RPP. The report is prepared quarterly and submitted to the Minister of Law and Human Rights.

The Minister of Law and Human Rights verifies and evaluates the progress report on the realization of the RPP formulation to be subsequently reported to the President. Presidential Decree 4/2021 has taken effect as of 8 March 2021.

Two Draft Government Regulations in the Tax Sector