Implementing Regulation on Tax Incentives for Taxpayers Affected by the Covid-19 Pandemic

s Deborah
s Puput Bayu Wibowo
By Deborah, Puput Bayu Wibowo
Deborah
Puput Bayu Wibowo
The Director General of Taxes has issued an implementing regulation on tax incentives for taxpayers affected by the Covid-19 pandemic. These provisions are outlined in Circular No. SE-44/PJ/2021 concerning Implementation Guidelines of the Minister of Finance Regulation No. 9/PMK.03/2021 concerning Tax Incentives for Taxpayers Affected by the Corona Virus Disease 2019 Pandemic as amended by the Minister of Finance Regulation No. 82/PMK.03/2021 (SE-44/2021). This policy has taken effect as of 1 July 2021.
 
This regulation has been issued as the guidelines in implementing the Minister of Finance Regulation No. 82/PMK.03/2021 concerning Amendments to the Minister of Finance Regulation No. 9/PMK.03/2021 concerning Tax Incentives for Taxpayers Affected by the Corona Virus Disease 2019  Pandemic (MoF Reg. 82/2021). SE-44/2021 outlines 8 important points.
 
First, procedures for the granting of incentives and the submission of realization reports on the use of Article 21 Income Tax borne by the government (Ditanggung Pemerintah/DTP) (Article 21 Income Tax DTP) incentives.
 
Article 21 Income Tax DTP for January 2021 to June 2021 taxable periods is granted to employees that satisfy three requirements cumulatively. These three requirements include receiving or accruing income from employers with certain criteria, having a Taxpayer Identification Number (TIN) (Nomor Pokok Wajib Pajak/NPWP), and accruing annualized fixed and regular gross income below IDR200 million in the relevant periods.
 
These certain criteria include having a Business Classification (KLU) as per the Appendix of the Minister of Finance Regulation No. 9/PMK.03/2021 concerning Tax Incentives for Taxpayers Affected by the Corona Virus Disease 2019 Pandemic (MoF Reg. 9/2021), designated as an Import Facility for Export (Kemudahan Impor Tujuan Ekspor/KITE) company or having obtained a bonded zone operator permit, a bonded zone entrepreneur permit, or an operator within bonded zone (Penyelenggara di Kawasan Berikat/PDKB) permit.
 
Next, Article 21 Income Tax DTP for July 2021 to December 2021 tax periods is given to employees that satisfy the criteria of accruing income from employers with KLU as per the Appendix of MoF Reg. 82/2021, having a TIN, and accruing annualized fixed and regular gross income below IDR200 million in the relevant periods.
 
If the above requirements are fulfilled, the employers must notify the use of Article 21 Income Tax DTP incentives online through the www.pajak.go.id webpage. As per the checking results by the application system on the webpage indicating whether an employer is or is not entitled to utilize the Article 21 Income Tax DTP incentives, the application system will issue a notification letter concerning whether the said employer is or is not eligible for the incentives.
 
Employers that have filed a notification on Article 21 Income Tax DTP are required to prepare a Tax Payment Slip (Surat Setoran Pajak/SSP) or a printed billing code that is stamped or inscribed with “ARTICLE 21 INCOME TAX BORNE BY THE GOVERNMENT AS PER MoF REG. NUMBER 82/PMK.03/2021”. Employers that have taken advantage of the Article 21 Income Tax DTP incentives are required to submit a realization report on the use of Article 21 Income Tax DTP incentives no later than the 20th of the following month after the taxable period ends.
 
Second, procedures for the granting of incentives and submission of realization reports on the use of final tax incentives based on Government Regulation No. 23 of 2018 concerning Income Taxes on Income from Business Received or Accrued by Taxpayers with Certain Gross Turnover (Gov. Reg. 23/2018) or referred to as Gov. Reg. 23 Final Tax DTP.
 
These incentives are granted to taxpayers that satisfy the criteria based on Gov. Reg. 23/2018 for January 2021 to December 2021 taxable periods. The incentives are only given to taxpayers that submit realization reports online no later than the 20th of the following month after the taxable period ends. The obligation to file Periodic Income Tax Returns is deemed fulfilled if the taxpayers have submitted the realization report. Taxpayers that do not submit the realization report by the deadline are not eligible for these incentives for the taxable period concerned.
 
Third, procedures for the granting of incentives and submission of realization reports on the use of final tax DTP incentives on income from construction services business (construction service final tax DTP). Construction service final tax DTP is granted to taxpayers receiving the Acceleration Program for Irrigation Water Use (Program Percepatan Peningkatan Tata Guna Air Irigasi/P3-TGAI) for January 2021 to December 2021 taxable periods.
 
For July 2021 to December 2021 taxable periods, to utilize these incentives, withholding agents are required to prepare SSP or billing codes stamped or inscribed with “CONSTRUCTION SERVICE FINAL TAX BORNE BY THE GOVERNMENT AS PER MoF REG. NUMBER 82/PMK.03/2021”. The tax incentives may only be utilized if the withholding agents submit realization reports online no later than the 20th of the following month after the taxable period ends. Withholding agents that do not submit the realization reports by the deadline cannot utilize the Construction Service Final Tax DTP for the period concerned.
 
Fourth, procedures for the exemptions and submission of realization reports on the use of the incentives of Import Article 22 Income Tax exemptions. Taxpayers are exempt from Import Article 22 Income Tax by the issuance of Import Article 22 Income Tax Withholding Exemption Certificates (Surat Keterangan Bebas/SKB) based on MoF Reg. 9/2021 until 30 June 2021.
 
These incentives are granted to taxpayers that satisfy three criteria, including having KLU codes listed in the Appendix of MoF Reg. 9/2021, having been designated as KITEs company, or having obtained a bonded zone operator permit, a bonded zone entrepreneur permit, or a PDKB permit when goods are released from a bonded zone to other places within the customs area.
 
Moreover, taxpayers are also exempt from Import Article 22 Income Tax as of the date of Import Article 22 Income Tax SKB based on MoF Reg. 82/2021 until 31 December 2021. These incentives shall be granted to taxpayers whose KLU codes are listed in the Appendix of MoF Reg. 82/2021.
 
Exemptions are granted through Import Article 22 Income Tax SKB that may be applied for online through the www.pajak.go.id webpage. Taxpayers exempt from Import Article 22 Income Tax based on MoF Reg. 9/2021 must re-apply for Import Article 22 Income Tax SKB based on MoF Reg. 82/2021. Taxpayers receiving these incentives are required to submit realization reports online no later than the 20th of the following month after the taxable period ends.
 
Fifth, procedures for the utilization of incentives and submission of realization reports on the use of the reduction incentives of Article 25 Income Tax installments. The amount of Article 25 Income Tax installments for January 2021 to June 2021 taxable periods is reduced for taxpayers that fulfill three criteria.
 
These three criteria include having a KLU code listed in Appendix of MoF Reg. 9/2021, having been designated as a KITE company, or having obtained a bonded zone operator permit, a bonded zone entrepreneur permit, or a PDKB permit.
 
The amount of Article 25 Income Tax installments for July 2021 to December 2021 taxable periods is reduced for taxpayers whose KLU codes are listed in the Appendix of MoF Reg. 82/2021. Article 25 Income Tax installment is reduced to 50% of the Article 25 Income Tax installment which should otherwise be payable for each taxable period.
 
To obtain these incentives, taxpayers must notify the use of the reduction incentives of Article 25 Income Tax installments online through the www.pajak.go.id webpage. Taxpayers that have utilized the reduction incentives of Article 25 Income Tax installments for January 2021 to June 2021 taxable periods based on MoF Reg. 9/2021 must re-notify the use of reduction incentives of Article 25 Income Tax installments for July 2021 to December 2021 taxable periods.
 
Next, taxpayers that receive the reduction incentives of Article 25 Income Tax installments are required to submit a realization report on the use of incentives online no later than the 20th of the following month after the taxable period ends. In the event that a taxpayer has not submitted the realization report until the 20th of the following month after the taxable period ends, the DGT information system will notify the Account Representative (AR) of the taxpayer concerned. The AR will subsequently advise the taxpayer to submit a realization report and/or follow up as per statutory provisions in the field of taxation.
 
Sixth, procedures for VAT preliminary refunds. Four requirements are to be fulfilled to obtain the VAT preliminary refunds incentives as follows.
  1. submitted by Taxable Persons for VAT Purposes (Pengusaha Kena Pajak/PKP) whose KLU codes are listed in the Appendix of MoF Reg. 82/2021;
  2. the maximum amount of overpayment in the tax return for which a preliminary refund is applied is IDR5 billion;
  3. the taxable period for which a preliminary refund is applied is between July 2021 and December 2021 taxable periods; and
  4. applications for preliminary refunds are submitted no later than 31 January 2022.
The PKP referred to in the above points include PKP that have been stipulated as low-risk PKPs or those that have not. Further, the head of the Tax Office (Kantor Pelayanan Pajak/KPP) issues a decision on preliminary refunds (Surat Keputusan Pengembalian Pendahuluan Kelebihan Pajak/SKPPKP) based on administrative verification. The verification includes verification on formal and material obligations of preliminary refunds for low-risk PKPs.
 
Moreover, the head of the KPP may not issue SKPPKP and issue a notification letter to the PKP. A notification letter shall be issued if based on verification results, it is found that some formal obligations are not fulfilled or there is no tax overpayment to be refunded. The SKPPKP or notification letter is issued no later than one month after the application letter is received.
 
Seventh, the provisions on KLU codes eligible for the incentives of Article 21 Income Tax DTP, Import Article 22 Income Tax exemptions, reduction in Article 25 Income Tax installments, and VAT preliminary refunds. Taxpayers or employers that are to utilize the incentives of Article 21 Income Tax DTP, Import Article 22 Income Tax exemptions, reduction in Article 25 Income Tax installments, and VAT preliminary refunds must have already filed the 2019 Annual Corporate Income Tax Return.
 
The applied KLU code is the KLU code listed and filed in the 2019 Annual Income Tax Return, which is of normal or rectified status. Employers that were not yet or not obliged to file an Annual Income Tax Return for the 2019 tax year shall use the KLU code contained in the head office taxpayer’s master file as the basis for the granting of Article 21 Income Tax DTP incentives.
 
Eighth, procedures for the supervision of the use of the incentives of Article 21 Income Tax DTP, Gov. Reg. 23 Final Tax 23 DTP, Construction Services Final Tax DTP, Import Article 22 Income Tax exemptions, reduction in Article 25 Income Tax installments, and VAT preliminary refunds.
 
If an employer has utilized the Article 21 Income Tax DTP incentives, then data and/or information indicates that the employer’s KLU is not included in the Appendix of MoF Reg. 9/2021 and/or MoF Reg. 82/2021, a Tax Advice Letter (Surat Permintaan Penjelasan atas Data dan/atau Keterangan/SP2DK) shall be issued. SP2DK is also issued if the employer is known to be ineligible for the Article 21 Income Tax DTP incentives as the Minister of Finance Decree concerning the determination of a KITE company, bonded zone operator permits, bonded zone entrepreneur permits, or PDKB permits has been revoked. SP2DK is issued to allow the employer to remit the Article 21 income tax payable that should otherwise be withheld and rectify the Periodic Article 21 Income Tax Return.
 
In the event of notifications from the system or inaccurate realization report data, the AR will follow up by verifying data and so forth. The AR shall undertake four follow-up measures as follows.
  1. advising the withholding agent to rectify the realization report for the relevant taxable period no later than the end of the following month after the filing deadline;
  2. advising the withholding agent to rectify the realization report for January 2021 to June 2021 taxable periods no later than 31 October 2021;
  3. advising the withholding agent to rectify the periodic tax return if the rectified realization report results in the obligation to rectify the periodic tax return; and/or
  4. issuing SP2DK if the withholding agent does not rectify the realization report and/or periodic tax return.
Next, with respect to Gov. Reg. 23 Final Tax DTP incentives, if a taxpayer has utilized these incentives, but has not submitted a realization report, the taxpayer cannot take advantage of the Gov. Reg. 23 Final Tax DTP incentives. The taxpayer concerned must remit 0.5% final tax on business income or carry out tax obligations as per general tax provisions.
 
In addition, if the taxpayer has utilized Gov. Reg. 23 Final Tax DTP incentives and submitted a realization report, but does not include taxpayers subject to income taxes based on Gov. Reg. 23/2018, the said taxpayer cannot take advantage of the Gov. Reg. 23 Final Tax DTP and is obliged to carry out tax obligations as per general tax provisions. In the event of notifications from the system or inaccurate realization report data, the AR will advise the taxpayer to rectify the realization report, ask the withholding agent to rectify the realization report, and/or issue SP2DK.
 
The use of the incentives of Article 22 Import Income Tax exemptions is also subject to supervision. If a taxpayer has utilized the Article 22 Import Income Tax exemptions and then, based on data and/or information on the actual circumstances, the said taxpayer is known to be ineligible for these incentives, the AR will follow up. The follow-up may take the form of an appeal to the taxpayer to pay Article 25 Income Tax or Import Article 22 Income Tax, issuance of SP2DK, or issuance of a Notice of Tax Collection (Surat Tagihan Pajak/STP).
 
The use of reduction incentives of Article 25 Income Tax installments shall be supervised if a taxpayer has utilized the reduction incentives of Article 25 Income Tax installments and then, based on data and/or information on the actual circumstances, said taxpayer is known to be ineligible for these incentives, the AR shall follow up by advising the taxpayer to pay Article 25 Income Tax for the taxable period in question, issuing SP2DK, or issuing STP.
 
Further, the AR also monitors the utilization of the construction services final tax incentives after receiving notification from the system or there are inaccurate realization report data. The AR subsequently follows up by advising the withholding agent to rectify the realization report, rectify the periodic tax return, and/or issue SP2DK.
 
VAT preliminary refunds incentives shall be supervised if SKPPKP has been issued for a PKP but data and/or information indicate that the taxpayer is not included in the KLU under MoF Reg. 82/2021 or not included in companies eligible for preliminary refunds. An audit shall be proposed for the taxable period in which SKPPKP is issued.