CONCERNING

INCOME TAX FACILITIES FOR INVESTMENTS IN CERTAIN BUSINESS SECTORS AND/OR CERTAIN REGIONS

BY THE GRACE OF ALMIGHTY GOD
THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

 

a.

that to further encourage and enhance direct investments, in terms of economic growth, development of the business sector, legal certainty to improve a more conducive business climate for direct investments in certain business sectors and/or certain regions receiving high priorities on the national scale as well as equity and acceleration of development of certain business sectors and/or certain regions, it is necessary to replace Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions which has been amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions;

b.

that to fulfil the implementation of electronically integrated business permit services and accelerate the implementation of doing business, it is necessary to regulate the simplification of procedures for the provision of tax facilities;

c.

that based on the considerations referred to in letter a and letter b as well as to implement the provisions under Article 31 A paragraph (2) of Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 36 of 2008, it is necessary to enact a Government Regulation concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions;

 

 

1.

Article 5 paragraph (2) of the 1945 Constitution of the Republic of Indonesia;

2.

Law Number 7 of 1983 concerning Income Tax (State Gazette of the Republic of Indonesia of 1983 Number 50, Supplement to the State Gazette of the Republic of Indonesia Number 3263) as amended several times, last amended by Law Number 36 of 2008 concerning the Fourth Amendment to Law Number 7 of 1983 concerning Income Tax (State Gazette of the Republic of Indonesia of 2008 Number 133, Supplement to the State Gazette of the Republic of Indonesia Number 4893);

 

 

GOVERNMENT REGULATION CONCERNING INCOME TAX FACILITIES FOR INVESTMENTS IN CERTAIN BUSINESS SECTORS AND/OR CERTAIN REGIONS.

 

 

Referred to herein this Government Regulation:

1.

Investment is all forms of investing activities, both by domestic investors and foreign investors, to conduct business in the territory of the Republic of Indonesia.

2.

Certain Business Sectors are business sectors in the economic activity sector that receive high priorities on the national scale.

3.

Certain Business Sectors and Certain Regions are business sectors in the economic activity sector and regions that economically have feasible potentials to be developed with high priorities on the national scale.

4.

The Online Single Submission Management and Organiser Institution, hereinafter referred to as the OSS Institution, is a non-ministerial government institution that administers governmental affairs in the field of investment coordination.

5.

Electronically Integrated Business Permit or Online Single Submission, hereinafter abbreviated to OSS, is a business permit issued by the OSS Institution for and on behalf of ministers, heads of institutions, governors or regents/mayors to entrepreneurs through an integrated electronic system.

6.

Main Business is business sectors and types of production/services upon the application for Income Tax facilities by Taxpayers as stated in principle permit, investment permit, Investment registration issued by the Indonesian Investment Coordinating Board/Investment Service and Provincial Integrated Service and Investment Services/Regency/Municipal Integrated Service and Investment Services or business permit issued by the OSS Institution obtained by the Taxpayer.

 

 

(1)

Resident corporate Taxpayers performing Investments in Main Business, both new Investments and the spin-off of the existing business, in:

 

a.

Certain Business Sectors listed in Appendix I which constitutes an integral part of this Ministerial Regulation; and/or

 

b.

Certain Business Sectors and Certain Regions listed in Appendix II which constitutes an integral part of this Ministerial Regulation,

 

and fulfil certain criteria and requirements, may be given Income Tax facilities.

(2)

The spin-off of the existing business referred to in paragraph (1) does not include the replacement and/or addition of machines and/or equipment carried out in production lines that have started commercial production.

(3)

The criteria referred to in paragraph (1) include:

 

a.

having a high investment value or for export;

 

b.

having large labour absorption; or

 

c.

having high local content.

(4)

The requirements referred to in paragraph (1) are listed in Appendix I or Appendix II which constitutes an integral part of this Ministerial Regulation.

(5)

Further provisions on the criteria referred to in paragraph (3) and requirements referred to in paragraph (4) are regulated by ministerial regulations/sector supervisory agencies according to their authority. 

 

 

(1)

Income Tax facilities referred to in Article 2 paragraph (1) are in the form of:

 

a.

reduction in net income of 30% (thirty per cent) of the total Investment value in the form of tangible fixed assets, including land, used for Main Business, expensed for 6 (six) years respectively of 5% (five per cent) per year;

 

b.

accelerated depreciation of tangible fixed assets and accelerated amortisation of intangible assets acquired in the context of Investment, with useful lives and depreciation rates as well as amortisation rates determined as follows:

 

 

1.

for accelerated depreciation of tangible fixed assets:

 

 

 

a)

Group I non-buildings, the useful life becomes 2 (two) years, with a depreciation rate based on the straight-line method of 50% (fifty per cent) or a depreciation rate based on the declining balance method of 100% (one hundred per cent) expensed all at once;

 

 

 

b)

Group II non-buildings, the useful life becomes 4 (four) years, with a depreciation rate based on the straight-line method of 25% (twenty-five per cent) or a depreciation rate based on the declining balance method of 50% (fifty per cent);

 

 

 

c)

Group III non-buildings, the useful life becomes 8 (eight) years, with a depreciation rate based on the straight-line method of 12.5% (twelve point five per cent) or a depreciation rate based on the declining balance method of 25% (twenty-five per cent);

 

 

 

d)

Group IV non-buildings, the useful life becomes 10 (ten) years, with a depreciation rate based on the straight-line method of 10% (ten per cent) or a depreciation rate based on the declining balance method of 20% (twenty per cent);

 

 

 

e)

permanent buildings, the useful life becomes 10 (ten) years, with a depreciation rate based on the straight-line method of 10% (ten per cent);

 

 

 

f)

non-permanent buildings, the useful life becomes 5 (five) years, with a depreciation rate based on the straight-line method of 20% (twenty per cent).

 

 

2.

for accelerated amortisation of intangible assets:

 

 

 

a)

Group I, the useful life becomes 2 (two) years, with an amortisation rate based on the straight-line method of 50% (fifty per cent) or an amortisation rate based on the declining balance method of 100% (one hundred per cent) charged all at once;

 

 

 

b)

Group II, the useful life becomes 4 (four) years, with an amortisation rate based on the straight-line method of 25% (twenty-five per cent) or an amortisation rate based on the declining balance method of 50% (fifty per cent);

 

 

 

c)

Group III, the useful life becomes 8 (eight) years, with an amortisation rate based on the straight-line method of 12.5% (twelve point five per cent) or an amortisation rate based on the declining balance method of 25% (twenty-five per cent);

 

 

 

d)

Group IV, the useful life becomes 10 (ten) years, with an amortisation rate based on the straight-line method of 10% (ten per cent) or an amortisation rate based on the declining balance method of 20% (twenty per cent).

 

c.

the imposition of Income Tax on dividends paid to non-resident Taxpayers other than permanent establishments in Indonesia of 10% (ten per cent) or a lower rate according to the applicable tax treaty; and

 

d.

the loss carry-forward longer than 5 (five) years but not more than 10 (ten) years, with the following conditions:

 

 

1.

an additional 1 (one) year for the Investment referred to in Article 2 paragraph (1) by the Taxpayers;

 

 

2.

an additional 1 (one) year if the Investment referred to in Article 2 paragraph (1) is performed in an industrial area and/or a bonded zone;

 

 

3.

an additional 1 (one) year if the Investment referred to in Article 2 paragraph (1) is performed in the new and renewable energy sector;

 

 

4.

an additional 1 (one) year if incurring costs for economic and/or social infrastructure at the business location of a minimum of IDR10,000,000,000,00 (ten billion rupiah);

 

 

5.

an additional 1 (one) year if using raw materials and/or components produced domestically of a minimum of 70% (seventy per cent) no later than the 2^nd (second) tax year;

 

 

6.

additional 1 (one) year or 2 (two) years:

 

 

 

a)

an additional 1 (one) year if adding a minimum of 300 (three hundred) Indonesian workers and maintaining that number for 4 (four) consecutive years; or

 

 

 

b)

an additional 2 (two) years if adding a minimum of 600 (six hundred) Indonesian workers and maintaining that number for 4 (four) consecutive years;

 

 

7.

an additional 2 (two) years if incurring research and development costs domestically in the context of product development or production efficiency of a minimum of 5% (five per cent) of the total Investment within a period of 5 (five) years; and/or

 

 

8.

an additional 2 (two) years if exporting a minimum of 30% (thirty per cent) of the total sales value in a tax year, for Investment in the business sectors regulated under Article 2 paragraph (1) subparagraph a performed outside the bonded zone.

(2)

The additional loss carry-forward referred to in paragraph (1) subparagraph d number 1 and number 2 is provided for losses in the first tax year, second tax year and/or third tax year since the start of commercial production.

(3)

The additional loss carry-forward referred to in paragraph (1) subparagraph d number 3, number 4, number 5, number 6, number 7 and number 8 is given for losses until the end of the utilisation period of the facilities referred to in paragraph (1) subparagraph a.

(4)

Income Tax facilities referred to in paragraph (1) may be utilised since:

 

a.

the start of commercial production, for a reduction in net income of 30% (thirty per cent) of the total Investment value referred to in paragraph (1) subparagraph a;

 

b.

the issuance of a decision on approval for the granting of Income Tax facilities, for:

 

 

1)

accelerated depreciation of tangible fixed assets and accelerated amortisation of intangible assets referred to in paragraph (1) subparagraph b;

 

 

2)

the imposition of Income Tax on dividends paid to non-resident Taxpayers other than permanent establishments in Indonesia of 10% (ten per cent) or a lower rate according to the applicable tax treaty as referred to in paragraph (1) subparagraph c;

 

 

3)

the additional loss carry-forward referred to in paragraph (1) subparagraph d number 1 and number 2;

 

c.

the decision on the additional loss carry-forward incentive, for the additional loss carry-forward referred to in paragraph (1) subparagraph d number 3, number 4, number 5, number 6, number 7 and number 8.

(5)

Further provisions on the requirements and procedures for:

 

a.

the determination of the value of tangible fixed assets referred to in paragraph (1) subparagraph a; and

 

b.

the utilisation of Income Tax facilities referred to in paragraph (4), 

 

are regulated in a Minister of Finance Regulation.

 

 

(1)

Income Tax facilities referred to in Article 3 paragraph (1) subparagraph a are granted to tangible fixed assets, including land, with the following conditions:

 

a.

acquired by the Taxpayers in a new condition, unless it is a relocation as a whole as an Investment package from another country;

 

b.

stated in the principle permit, investment permit, Investment registration, issued by the Indonesian Investment Coordinating Board/Provincial Integrated Service and Investment Services/Regency/Municipal Integrated Service and Investment Services or business permit issued by the OSS Institution which constitutes the basis for the granting of Income Tax facilities; and

 

c.

owned and used for Main Business.

(2)

In addition to the provisions referred to in paragraph (1), for tangible fixed assets other than land, the following provisions must be fulfilled:

 

a.

tangible fixed assets acquired after the business permit is issued by the OSS Institution.

 

b.

tangible fixed assets acquired after:

 

 

1)

the principle permit;

 

 

2)

the Investment permit;

 

 

3)

Investment registration; or

 

 

4)

business permit, issued by the OSS Institution for changes to the principle permit, investment permit or Investment registration,

 

 

issued after Government Regulation Number 18 of 2015 concerning Income Tax facilities  for Investment in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions, insofar as the scope of Taxpayer’s products is outlined in Appendix I or Appendix II of Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions.

(3)

Income Tax facilities referred to in Article 3 paragraph (1) subparagraph b are granted to tangible fixed assets and/or intangible assets owned and used for Main Business.

 

 

(1)

Taxpayers to be eligible for the Income Tax facilities referred to in Article 3 paragraph (1) must apply before the start of commercial production.

(2)

The online application referred to in paragraph (1) through the OSS system is submitted:

 

a.

simultaneously with the registration to obtain a business identification number for new Taxpayers; or

 

b.

no later than 1 (one) year after the issuance of the business permit issued by the OSS Institution for Investment and/or spin-off.

(3)

The Minister of Finance shall decide on the granting of Income Tax facilities based on the application referred to in paragraph (1) that is received completely and correctly.

(4)

Further provisions on procedures for the application for the granting of Income Tax facilities referred to in paragraph (1) are regulated in a Minister of Finance Regulation.

(5)

If the OSS system referred to in paragraph (2) is not available, the application for Income Tax facilities referred to in paragraph (1) may be submitted offline.

(6)

Further provisions on procedures for the offline application for Income Tax  facilities referred to in paragraph (5) are regulated by the Indonesian Investment Coordinating Board Regulation.

 

 

(1)

Tangible fixed assets eligible for the Income Tax facilities referred to in Article 3 paragraph (1) subparagraph a are prohibited from being used other than for the granting of the facilities or transferred unless replaced with new tangible fixed assets, before the end of the longer period between:

 

a.

the period of 6 (six) years from the start of commercial production; or

 

b.

the useful life of tangible fixed assets pursuant to the provisions referred to in Article 3 paragraph (1) subparagraph b number 1.

(2)

Intangible assets eligible for Income Tax facilities referred to in Article 3 paragraph (1) subparagraph b number 2 are prohibited from being used other than for the granting of the facilities  or transferred unless replaced with new intangible assets, before the end of the useful life of the said intangible assets pursuant to the provisions referred to in Article 3 paragraph (1) subparagraph b number 2.

(3)

Provisions on procedures for the replacement of assets referred to in paragraph (1) and paragraph (2) are regulated in a Minister of Finance Regulation.

 

 

(1)

If Taxpayers that have obtained Income Tax facilities no longer fulfil the provisions referred to in Article 2, Article 5 paragraph (1) and/or Article 6, they will be subject to administrative penalties in the form of:

 

a.

the revocation of Income Tax facilities that have been granted pursuant to this Government Regulation; and

 

b.

subject to tax and penalties pursuant to statutory tax provisions.

(2)

In addition to being subject to the administrative penalties as referred to in paragraph (1), Taxpayers may no longer be given Income Tax facilities for Investment in certain business sectors and/or in certain regions.

(3)

Further provisions on the revocation of Income Tax facilities referred to in paragraph (1) subparagraph a are regulated in a Minister of Finance Regulation.

 

 

(1)

Businesses in the Integrated Economic Development Zone that have obtained tax facilities pursuant to Government Regulation Number 20 of 2000 concerning the Tax Treatment in the Integrated Economic Development Zone as amended by Government Regulation Number 147 of 2000 concerning the Amendment to Government Regulation Number 20 of 2000 concerning the Tax Treatment in the Integrated Economic Development Zone, may no longer be granted Income Tax facilities referred to in this Government Regulation.

(2)

Investments eligible for corporate Income Tax exemption or reduction facilities pursuant to the provisions under Government Regulation Number 94 of 2010 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year as amended by Government Regulation Number 45 of 2019 concerning the Amendment to Government Regulation Number 94 of 2010 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year, cannot be granted Income Tax facilities referred to in this Government Regulation.

(3)

Investment eligible for net income reduction facilities for new investment or spin-off in certain business sectors constituting labour-intensive industries pursuant to the provisions under Government Regulation Number 94 of 2010 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year as amended by Government Regulation Number 45 of 2019 concerning the Amendment to Government Regulation Number 94 of 2010 concerning the Calculation of Taxable Income and Settlement of Income Tax in the Current Year, cannot be granted Income Tax facilities referred to in this Government Regulation.

 

 

(1)

The implementation of the provisions under this Government Regulation is evaluated within a maximum period of 2 (two) years since this Government Regulation is promulgated.

(2)

The evaluation referred to in paragraph (1) is carried out by a team determined by the minister who coordinates economic policies.

 

 

When this Government Regulation comes into force:

1.

Taxpayers that have obtained a decision on the granting of Income Tax facilities pursuant to Government Regulation Number 1 of 2007 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended several times, last amended by Government Regulation Number 52 of 2011 concerning the Second Amendment to Government Regulation Number 1 of 2007 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions, may utilise the granting of the facilities until the end of the granting of the facilities.

2.

Taxpayers that have obtained a decision on the granting of Income Tax facilities pursuant to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions, may utilise the granting of facilities until the end of the granting of the facilities.

3.

Proposals for the granting of Income Tax facilities pursuant to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions that have been submitted by Taxpayers to the Head of the Indonesian Investment Coordinating Board before the enactment of this Government Regulation, may continue to be processed pursuant to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions.

4.

Taxpayers with a principle permit, investment permit, investment registration issued by the Indonesian Investment Coordinating Board/Provincial Integrated Service and Investment Services/Regency/Municipal Integrated Service and Investment Services issued no later than the enactment of Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions until the enactment of this Government Regulation, may be granted Income Tax facilities pursuant to this Government Regulation, insofar as:

 

a.

for the principle permit, investment permit, Investment registration issued by the Indonesian Investment Coordinating Board/Provincial Integrated Service and Investment Services/Investment Service and Regency/City One Stop Integrated Service, a decision on the approval or rejection of the granting of Income Tax facilities pursuant to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions has never been issued;

 

b.

Certain Business Sectors listed in Appendix I which constitutes an integral part of this Ministerial Regulation or Certain Business Sectors and Certain Regions listed in Appendix II which constitutes an integral part of this Ministerial Regulation;

 

c.

fulfilling the criteria and requirements referred to in Article 2;

 

d.

the application for Income Tax facilities referred to in Article 5 paragraph (1) is submitted before the start of commercial production; and

 

e.

submitted no later than 1 (one) year after this Government Regulation comes into force.

5.

Taxpayers with business permits issued by the OSS Institution before the enactment of this Government Regulation, may be granted Income Tax facilities pursuant to this Government Regulation, insofar as:

 

a.

for the business permit issued by the OSS Institution, a decision on the approval or rejection of the granting of Income Tax facilities pursuant to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions has never been issued;

 

b.

Certain Business Sectors listed in Appendix I which constitutes an integral part of this Ministerial Regulation or Certain Business Sectors and Certain Regions listed in Appendix II which constitutes an integral part of this Government Regulation;

 

c.

fulfilling the criteria and requirements referred to in Article 2;

 

d.

the application for Income Tax facilities referred to in Article 5 paragraph (1) is submitted before the start of commercial production; and

 

e.

submitted no later than 1 (one) year after this Government Regulation comes into force.

 

 

 

When this Government Regulation comes into force, all Statutory Provisions constituting the implementing regulations of Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions (State Gazette of the Republic of Indonesia of 2015 Number 77, Supplement to the State Gazette of the Republic of Indonesia Number 5688), as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions (State Gazette of the Republic of Indonesia of 2016 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5873), are declared to remain valid insofar as they do not contradict the provisions under this Government Regulation.

 

When this Government Regulation comes into force, Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions (State Gazette of the Republic of Indonesia of 2015 Number 77, Supplement to the State Gazette of the Republic of Indonesia Number 5688) as amended by Government Regulation Number 9 of 2016 concerning the Amendment to Government Regulation Number 18 of 2015 concerning Income Tax Facilities for Investments in Certain Business Sectors and/or Certain Regions (State Gazette of the Republic of Indonesia of 2016 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5873), is revoked and declared invalid.

 

This Government Regulation shall come into force 30 (thirty) days from the date of promulgation.

 

For public cognisance, this Government Regulation shall be promulgated by placement in the State Gazette of the Republic of Indonesia.

 

Enacted in Jakarta
on 12 November 2019
PRESIDENT OF THE REPUBLIC OF INDONESIA,
signed
JOKO WIDODO

 

Promulgated in Jakarta
on 13 November 2019
MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA,
signed
YASONNA H. LAOLY

 

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2019 NUMBER 218

 

 

CONCERNING

INCOME TAX FACILITIES FOR INVESTMENTS IN CERTAIN BUSINESS SECTORS AND/OR CERTAIN REGIONS

 

 

To encourage the acceleration of the realisation of Investments to increase economic growth, equitable distribution of development and acceleration of development in certain regions, deepening the industrial structure as well as encouraging domestic Investments and foreign Investments in certain business sectors and/or certain regions, Taxpayers performing Investments in certain business sectors and/or certain regions may be granted Income Tax facilities.

Certain business sectors and certain regions constituting Investment targets eligible for Income Tax facilities are determined by considering sector development priorities to establish a comprehensive economic ecosystem.

As a form of simplification of procedures for the application and granting of Income Tax facilities, it is necessary to harmonise business permit-related provisions pursuant to Government Regulation Number 24 of 2018 concerning Electronically Integrated Business Permit Services. Procedures for the application and granting of Income Tax facilities shall be carried out online through the OSS system.

 

 

 

Article 1

Sufficiently clear.

Article 2

Sufficiently clear.

Article 3

Paragraph (1)

Subparagraph a

 

Example:

PT A performs an Investment of IDR100,000,000,000 (one hundred billion) in the form of purchasing fixed assets in the form of land, buildings and machinery. PT A may be given a net income reduction incentive of 30% (thirty per cent) x IDR100,000,000,000.- (one hundred billion) = IDR30,000,000,000.- (thirty billion). The expensing is carried out evenly annually for 6 (six) years or expensed by IDR5,000,000,000.- (five billion) per year.

Subparagraph b

Sufficiently clear.

Subparagraph c

Example:

An investor from state X receives dividends from a resident corporate Taxpayer that has been determined eligible for the facilities pursuant to this Government Regulation. If investor X is domiciled in a country that does not yet have a Tax Treaty (P3B) with the Government of the Republic of Indonesia or is domiciled in a country that already has a Tax Treaty with the Government of the Republic of Indonesia with a dividend tax rate for Non-Resident Taxpayers of 10% (ten per cent) or more, the dividend is only subject to Income Tax in Indonesia of 10% (ten per cent).

 

However, if investor X is domiciled in a country that already has a Tax Treaty with the Government of the Republic of Indonesia with a dividend tax rate lower than 10% (ten per cent), the dividend is subject to Income Tax in Indonesia according to the rate stipulated under the Tax Treaty.

Subparagraph d

Pursuant to the provisions under Article 6 paragraph (2) of Law Number 36 of 2008 concerning the Fourth Amendment to Law Number 7 of 1983 concerning Income Tax, tax losses in a tax year may be set off against profits accrued in the following 5 (five) tax years.

 

To encourage Investment, the carry-forward period for such losses may be longer than 5 (five) years but not more than 10 (ten) years. The additional loss carry-forward may be given if that the provisions referred to in this paragraph are fulfilled.

 

“Social infrastructure” refers to facilities and infrastructure for the public interest and non-commercial.

 

“Adding a minimum of 300 (three hundred) or 600 (six hundred) Indonesian workers” refers to the addition of a new workforce of a minimum of 300 (three hundred) or 600 (six hundred) workers as of the decision on the approval of the granting of Income Tax facilities, which may be fulfilled in stages and the minimum number of workers must be maintained for a period of 4 (four) consecutive years.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

 

 

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6418