that to implement the provisions under Article 6 paragraph (1) subparagraph i, subparagraph j, subparagraph k, subparagraph l and subparagraph m of Law Number 7 of 1983 concerning Income Taxes as amended several times, last amended by Law Number 36 of 2008 concerning the Fourth Amendment to Law Number 7 of 1983 concerning Income Taxes, it is necessary to enact a Government Regulation concerning National Disaster Management Donations, Research and Development Donations, Education Facility Donations, Sports Development Donations and Social Infrastructure Development Costs Constituting Deductible Expenses;

 

1.

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

2.

Law Number 7 of 1983 concerning Income Taxes (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 Taxes (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 NATIONAL DISASTER MANAGEMENT DONATIONS, RESEARCH AND DEVELOPMENT DONATIONS, EDUCATION FACILITY DONATIONS, SPORTS DEVELOPMENT DONATIONS AND SOCIAL INFRASTRUCTURE DEVELOPMENT COSTS CONSTITUTING DEDUCTIBLE EXPENSES.

 

Donations and/or expenses that can be deducted up to a certain amount from gross income in the context of calculating taxable income for taxpayers consist of:

a.

Donations in the context of national disaster management, which are donations for national disaster victims that are submitted directly through disaster management agencies or submitted indirectly through institutions or parties that have obtained a permit from the agencies/institutions authorised to collect disaster management funds;

b.

Donations in the context of research and development, which are donations for research and development carried out in the territory of the Republic of Indonesia submitted through research and development institutions;

c.

Education facility donations, which are donations in the form of education facilities submitted through educational institutions;

d.

Donations in the context of sports development, which are donations to foster, develop and coordinate an organisation or a group of organisations of branches/types of professisonal sports submitted through sports development institutions; and

e.

Expenses for developing social infrastructure are expenses incurred to construct public and nonprofit means and infrastructure.

 

Donations and/or expenses referred to in Article 1 may constitute deductible expenses provided that:

a.

the Taxpayer has net fiscal income based on the Annual Income Tax Return for the previous Tax Year;

b.

the donations and/or expenses do not result in a loss in the Tax Year the donations are given;

c.

supported by valid evidence; and

d.

institutions that receive donations and/or expenses have a Taxpayer Identification Number, except for entities excluded from tax subjects as regulated under the Law concerning Income Tax.

 

The amount of donations and/or social infrastructure development costs that may constitute deductible expenses referred to in Article 1 for 1 (one) year is limited to not exceed 5% (five per cent) of the net fiscal income of the previous Tax Year.

 

Donations and/or expenses referred to in Article 1 do not constitute deductible expenses for the donor if the donations and/or expenses are given to parties with a special relationship as referred to under the Law concerning Income Tax.

 

(1)

Donations referred to in Article 1 letter a, letter b, letter c and letter d may be given in the form of money and/or in-kind.

(2)

The expenses for developing social infrastructure referred to in Article 1 letter e are provided only in the form of means and/or infrastructure.

 

(1)

The value of donations in the form of in-kind referred to in Article 5 paragraph (1) is determined based on:

 

a.

the acquisition value if the donated goods have not been depreciated;

 

b.

the acquisition value if the donated goods have not been depreciated; or

 

c.

the cost of goods sold if the donated goods are self-produced goods.

(2)

The value of the expenses for building social infrastructure referred to in Article 5 paragraph (2) is determined based on the amount actually incurred to construct the means and/or infrastructure.

 

Donations and/or expenses referred to in Article 1 must be recorded according to the designation by the donor.

 

(1)

Disaster management agencies and institutions or parties receiving donations referred to in Article 1 letter a must submit a report on the receipt and distribution of donations to the Director General of Taxes every quarter.

(2)

Institutions receiving donations and/or expenses referred to in Article 1 letter b, letter c, letter d and letter e are required to submit a report on the receipt of donations to the Director General of Taxes no later than the end of the Tax Year the donations and/or expenses are received.

(3)

Institutions receiving donations and/or expenses that have a Taxpayer Identification Number report donations and/or expenses referred to in paragraph (1) as an attachment to the financial statements in the Annual Income Tax Return for the Tax Year the donations are received.

 

Further provisions on procedures for the recording and reporting of donations and/or expenses are stipulated by a Minister of Finance Regulation.

 

This Government Regulation shall come into force from the 2010 Tax Year.

 

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

 

Enacted in Jakarta

on 30 December 2010

PRESIDENT OF THE REPUBLIC OF INDONESIA,

signed

DR. H. SUSILO BAMBANG YUDHOYONO

 

Promulgated in Jakarta

on 30 December 2010

MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA,

signed

PATRIALIS AKBAR

 

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2010 NUMBER 160

 

 

 

NATIONAL DISASTER MANAGEMENT DONATIONS, RESEARCH AND DEVELOPMENT DONATIONS, EDUCATION FACILITY DONATIONS, SPORTS DEVELOPMENT DONATIONS AND SOCIAL INFRASTRUCTURE DEVELOPMENT COSTS CONSTITUTING DEDUCTIBLE EXPENSES

 

 

I.

 

To assist government programs and provide opportunities for Taxpayers to participate in national disaster management, development of Indonesian science and technology, development of education in Indonesia, development of Indonesian sports and participate in assisting the government in financing the development of social infrastructure in Indonesia, expenditures for national disaster management donations, research and development donations, education facility donations, sports development donations and social infrastructure development financing in Indonesia incurred by Taxpayers as referred to in Article paragraph (1) subparagraph i, subparagraph j, subparagraph k, subparagraph l and subparagraph m of Law Number 7 of 1983 concerning Income Taxes as amended several times, last amended by Law Number 36 of 2008 concerning the Fourth Amendment to Law Number 7 of 1983 concerning Income Taxes constitute deductible expenses as mandated by Law Number 36 of 2008 concerning the Fourth Amendment to Law Number 7 of 1983 concerning Income Taxes, thereby, these provisions are regulated under a Government Regulation.

 

 

II.

 

Article 1

Expenditures for donations and/or expenses that may constitute deductible expenses in one year by Taxpayers are limited to a certain maximum amount.

 

“Donations” refer to the granting of aid by Taxpayers, including donations in the context of national disaster management, donations in the context of research and development, education facility donations and donations in the context of sports development.

Letter a

“National disaster" refers to an event or series of events that threaten and disrupt people’s lives and livelihoods caused, both by natural factors and/or non-natural factors as well as human factors, resulting in casualties, environmental damage, property losses and psychological impact, as determined by the Central Government.

 

“A disaster management agency” refers to an agency determined by the government to accommodate, distribute and/or manage donations related to national disasters as referred to in Law Number 24 of 2007 concerning Disaster Management.

Letter b

“Research” refers to an activity carried out systematically according to scientific principles and methods to obtain information, data and details related to the understanding and verification of the accuracy or inaccuracy of an assumption and/or hypothesis in the field of science and technology and draw scientific conclusions for scientific and technological progress, including research in the field of Arts and Culture.

 

“Development” refers to science and technology activities aimed at utilising scientific principles and theories that have been proven accurate to improve the functions, benefits and applications of existing science and technology or to produce technology.

 

“Research and development institutions” refer to institutions established to carry out research and development activities in Indonesia, including accredited tertiary institutions.

Letter c

“Education facilities” refer to infrastructure and facilities used for educational activities, including scouting, sports and educational programs in the field of national arts and culture.

 

“Educational institutions” refer to institutions engaged in the field of education, including sports, arts and/or cultural education, either primary or secondary education, registered with the education offices or accredited tertiary institutions.

Letter d

“Sports development institution” refers to a sports organisation that fosters, develops and coordinates one or a group of organisations of branch/types of professisonal sports.

 

“Professional sports” refer to sports that foster and develop athletes in a planned, tiered and continuous manner through competitions to accomplish achievements with the support of sports science and technology.

Letter e

Sufficiently clear.

Article 2

Example:

PT Gunung Raya in 2009 had a net fiscal income of IDR1,000,000,000.00 (one billion rupiah). In 2010, the Taxpayer donated IDR40,000,000.00 (forty million rupiah) in the context of sports development through a sports development institution. In 2010, the Taxpayer had a net fiscal income of IDR30,000,000.00 (thirty million rupiah). The Taxpayer is not allowed to deduct this donation from the 2010 gross income because it will result in a loss of IDR10,000,000.00 (ten million rupiah).

Article 3

Example:

A taxpayer’s net fiscal income is IDR60,000,000,000.00 (sixty billion rupiah), thereby, the donation that may constitute deductible expenses is a maximum of 5% (five per cent) or IDR3,000,000,000.00 (three billion rupiah).

 

If the Taxpayer donates IDR5,000,000,000.00 (five billion rupiah), the amount that may constitute deductible expenses only amounts to IDR3,000,000,000.00 (three billion rupiah).

Article 4

“Special relationship” is as referred to under Article 18 of the Law concerning Income Taxes.

Article 5

Paragraph (1)

“In-kind” may be in the form of goods produced or acquired by the donor Taxpayer.

Paragraph (2)

“Means and/or infrastructure” refer to, among others, houses of worship, art and culture studios and polyclinics.

Article 6

Sufficiently clear.

Article 7

Sufficiently clear.

Article 8

Sufficiently clear.

Article 9

Sufficiently clear.

Article 10

Sufficiently clear.

 

 

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5182