a.

that to realise a just, prosperous and well-off Indonesian society based on Pancasila and the 1945 Constitution of the Republic of Indonesia which upholds the rights and obligations of Indonesian citizens and residents, it is necessary to place taxation as one of the manifestations of state obligations in an effort to increase welfare, justice and social development;

b.

that to increase sustainable economic growth and support the acceleration of economic recovery, fiscal consolidation strategies that focus on improving the budget deficit and increasing the tax ratio are required, which among others, are conducted through implementing policies to increase tax revenue performance, tax administration reforms, increasing the tax base, establishing a taxation system that prioritises the principles of justice and legal certainty as well as increased Taxpayer’s voluntary compliance;

c.

that to implement fiscal consolidation strategies that focus on improving the budget deficit and increasing the tax ratio referred to in letter b, it is necessary to adjust policies in the field of general provisions and tax procedures, value added tax and excise as well as the comprehensive regulation of carbon tax and policies in the form of a voluntary disclosure program for Taxpayers in 1 (one) Law;

d.

that based on the considerations referred to in letter a, letter b and letter c, it is necessary to establish a Law concerning the Harmonisation of Tax Regulations;

 

 

 

 

 

 

 

1.

Article 5 paragraph (1), Article 20 and Article 23A of the 1945 Constitution of the Republic of Indonesia;

2.

Law Number 6 of 1983 concerning General Provisions and Tax Procedures (State Gazette of the Republic of Indonesia of 1983 Number 49, Supplement to the State Gazette of the Republic of Indonesia Number 3262) as amended several times, last amended by Law Number 16 of 2009 concerning the Enactment of Government Regulation in Lieu of Law Number 5 of 2008 concerning the Fourth Amendment to Law Number 6 of 1983 concerning General Provisions and Tax Procedures into a Law (State Gazette of the Republic of Indonesia of 2009 Number 62, Supplement to the State Gazette of the Republic of Indonesia Number 4999);

3.

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);

4.

Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (State Gazette of the Republic of Indonesia of 1983 Number 51, Supplement to the State Gazette of the Republic of Indonesia Number 3264) as amended several times, last amended by Law Number 42 of 2009 concerning the Third Amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (State Gazette of the Republic of Indonesia of 2009 Number 150, Supplement to the State Gazette of the Republic of Indonesia Number 5069);

5.

Law Number 11 of 1995 concerning Excise (State Gazette of the Republic of Indonesia of 1995 Number 76, Supplement to the State Gazette Number 3613) as amended by Law Number 39 of 2007 concerning the Amendment to Law Number 11 of 1995 concerning Excise (State Gazette of the Republic of Indonesia of 2007 Number 105, Supplement to the State Gazette Number 4755);

6.

Law Number 11 of 2016 concerning Tax Amnesty (State Gazette of the Republic of Indonesia of 2016 Number 131, Supplement to the State Gazette of the Republic of Indonesia Number 5899);

7.

Law Number 2 of 2020 concerning the Enactment of Government Regulation in Lieu of Law Number 1 of 2020 concerning State Financial Policy and Financial System Stability to Control Corona Virus Disease 2019 (COVID-19) Pandemic and/or in Response to Dangerous Threats to the National Economy and/or the Stability of the Financial System into a Law (State Gazette of the Republic of Indonesia of 2020 Number 134, Supplement to the State Gazette of the Republic of Indonesia Number 6516);

8.

Law Number 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573);

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LAW CONCERNING THE HARMONISATION OF TAX REGULATIONS.

 

 

 

 

 

 

 

 

(1)

This Law is administered based on the principles of:

 

a.

justice;

 

b.

simplicity;

 

c.

efficiency;

 

d.

legal certainty;

 

e.

expediency; and

 

f.

national interests.

(2)

This law is established with the aim of:

 

a.

promoting sustainable economic growth and supporting the acceleration of economic recovery;

 

b.

optimising state revenues to finance national development independently towards a just, prosperous and well-off Indonesian society;

 

c.

realising a tax system that is more just and has legal certainty;

 

d.

implementing administrative reforms, consolidated tax policies and broadening the tax base; and

 

e.

increasing Taxpayers’ voluntary compliance.

(3)

To achieve the objectives referred to in paragraph (2), this Law regulates strategic policies which include:

 

a.

the amendment to Law Number 6 of 1983 concerning General Provisions and Tax Procedures as amended several times, last amended by Law Number 16 of 2009 concerning the Enactment of Government Regulation in Lieu of Law Number 5 of 2008 concerning the Fourth Amendment to Law Number 6 of 1983 concerning General Provisions and Tax Procedures into a Law;

 

b.

the amendment to Law Number 7 of 1983 concerning Income Tax 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;

 

c.

the amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as amended several times, last amended by Law Number 42 of 2009 concerning the Third Amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods;

 

d.

the regulation of Taxpayers’ voluntary disclosure programs;

 

e.

the regulation of carbon tax; and

 

f.

the amendment to Law Number 11 of 1995 concerning Excise as amended by Law Number 39 of 2007 concerning the Amendment to Law Number 11 of 1995 concerning Excise.

 

 

 

 

 

 

 

 

Several provisions under Law Number 6 of 1983 concerning General Provisions and Tax Procedures (State Gazette of the Republic of Indonesia of 1983 Number 49, Supplement to the State Gazette of the Republic of Indonesia Number 3262) as amended several times, last amended by Law Number 16 of 2009 regarding the Enactment of Government Regulation in Lieu of Law Number 5 of 2008 concerning the Fourth Amendment to Law Number 6 of 1983 concerning General Provisions and Tax Procedures into a Law (State Gazette of the Republic of Indonesia of 2009 Number 62, Supplement to State Gazette of the Republic of Indonesia Number 4999) are amended as follows:

 

 

 

 

 

 

 

1.

Between paragraph (1) and paragraph (2) of Article 2, 1 (one) paragraph is inserted, namely paragraph (1a), Article 2 paragraph (5) is deleted and 1 (one) paragraph is added, namely paragraph (10), thereby, Article 2 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Any Taxpayer that has fulfilled subjective and objective requirements as stipulated by statutory tax provisions shall be obliged to register at the office of the Directorate General of Taxes whose working area covers the Taxpayer’s residence or domicile and be provided with a Taxpayer Identification Number.

 

(1a)

The Taxpayer Identification Number referred to in paragraph (1) for an individual Taxpayer constituting an Indonesian resident shall use a national identification number.

 

(2)

Taxpayers constituting Entrepreneurs that are subject to tax under the Value Added Tax Law of 1984 and the amendments thereto shall be obliged to report their business to the office of the Directorate General of Taxes whose working area covers the Entrepreneurs’ residence or domicile and the place of business to be registered as Taxable Persons.

 

(3)

The Director General of Taxes may determine:

 

 

a.

the place of business registration and/or reporting other than those referred to in paragraph (1) and paragraph (2); and/or

 

 

b.

the place of registration at the office of the Directorate General of Taxes whose working area covers the residence of the Taxpayer and the office of the Directorate General of Taxes whose working area covers the place of business of certain individual entrepreneur Taxpayers.

 

(4)

The Director General of Taxes may issue a Taxpayer Identification Number and/or register a Taxable Person ex-officio in the event that a Taxpayer or a Taxable Person does not fulfil the obligations as referred to in paragraph (1) and/or paragraph (2).

 

(4a)

The tax obligations of Taxpayers whose Taxpayer Identification Numbers are issued and/or are registered as Taxable Persons ex officio as referred to in paragraph (4) shall commence from the time the Taxpayers fulfil subjective and objective requirements as stipulated by statutory tax provisions, for a maximum period of 5 (five) years prior to the issuance of Taxpayer Identification Numbers and/or the registration as Taxable Persons . ***)

 

(5)

Deleted.

 

(6)

Taxpayer Identification Numbers are deregistered by Director General of Taxes in the event that:

 

 

a.

an application for Taxpayer Identification Number deregistration is submitted by Taxpayers and/or their heirs when the Taxpayers no longer fulfil subjective and/or objective requirements as stipulated by statutory tax provisions;

 

 

b.

a corporate Taxpayer is liquidated as a result of business termination or merger;

 

 

c.

a permanent establishment Taxpayer terminates its business in Indonesia; or

 

 

d.

the Director General of Taxes deems it necessary to deregister the Taxpayer Identification Number of a Taxpayer that no longer fulfils subjective and/or objective requirements as stipulated by statutory tax provisions.

 

(7)

The Director General of Taxes after conducting an audit must issue a decision on Taxpayer Identification Number deregistration within 6 (six) months for an Individual Taxpayer or 12 (twelve) months for a Corporate Taxpayer from the date the application is completely received.

 

(8)

The Director General of Taxes may ex officio or based on a Taxpayer’s application perform VAT deregistration.

 

(9)

The Director General of Taxes after conducting an audit must issue a decision on an application for VAT deregistration within 6 (six) months from the date the application is completely received.

 

(10)

In the context of the use of a national identification number as the Taxpayer Identification Number as referred to in paragraph (1a), the minister who administers domestic governmental affairs shall provide population data and user feedback data to the Minister of Finance to be integrated with the tax database.

 

 

 

 

 

 

 

2.

The provisions of paragraph (4) Article 8 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Taxpayers may voluntarily amend filed Tax Returns by submitting a written statement, provided that the Director General of Taxes has not performed an audit.

 

(1a)

In the event that the amended of Tax Returns  referred to in paragraph (1) states loss or tax overpayment, the amended Tax Returns must be filed no later than 2 (two) years before the statute of limitation of the tax assessment.

 

(2)

In the event that Taxpayers voluntarily amend Annual Tax Returns resulting in a higher amount of tax payable, they shall be subject to an administrative penalty in the form of interest at monthly interest rate determined by the Minister of Finance of the tax underpayment, calculated from the due date of Tax Return filing to the payment date for a maximum of 24 (twenty-four) months and a fraction of a month is treated as 1 (one) full month.

 

(2a)

In the event that Taxpayers voluntarily amend Periodic Tax Returns resulting in a higher amount of tax payable, they shall be subject to an administrative penalty in the form of interest at monthly interest rate determined by the Minister of Finance of the tax underpayment, calculated from the payment due date to the payment date for a maximum of 24 (twenty-four) months and a fraction of a month is treated as 1 (one) full month.

 

(2b)

The monthly interest rate determined by the Minister of Finance as referred to in paragraph (2) and paragraph (2a) is calculated based on the reference interest rate plus 5% (five per cent) and divided by 12 (twelve) which applies on the date the calculation of penalties commences.

 

(3)

Even though a preliminary audit has been conducted, Taxpayers may voluntarily disclose in a written statement concerning the untruth of their actions, as follows:

 

 

a.

not filing Tax Returns; or

 

 

b.

filing incorrect or incomplete Tax Returns or attaching incorrect information,

 

 

as referred to in Article 38 or Article 39 paragraph (1) subparagraph c and subparagraph d insofar as the commencement of the Investigation has not been notified to the Public Prosecutor through official investigators of the Indonesian National Police.

 

(3a)

The disclosure of the untruth of actions as referred to in paragraph (3) shall be accompanied by the settlement of actual tax payable underpayment and an administrative penalty in the form of a 100% (one hundred per cent) fine of the total tax underpayment.

 

(4)

Even though the Director General of Taxes has conducted an audit, provided that the Director General of Taxes has not submitted a notice of tax audit findings, Taxpayers may voluntarily disclose in a separate report the incorrect completion of filed Tax Returns according to the actual situation and the audit process shall continue.

 

(5)

The tax underpayment arising as a result of disclosure of incorrect Tax Return completion as referred to in paragraph (4) must be settled by the Taxpayer before the separate report is submitted along with an administrative penalty in the form of interest at monthly interest rate determined by the Minister of Finance of the tax underpayment, from:

 

 

a.

the due date of Annual Tax Return filing to the payment date, for disclosure of incorrect Annual Tax Return completion; or

 

 

b.

the payment due date to the payment date, for disclosure of incorrect Periodic Tax Return completion

 

 

for a maximum of 24 (twenty-four) months and a fraction of a month is treated as 1 (one) full month.

 

(5a)

The monthly interest rate determined by the Minister of Finance as referred to in paragraph (5) is calculated based on the reference interest rate plus 10% (ten per cent) and divided by 12 (twelve) which applies on the date the calculation of penalties commences.

 

(6)

Taxpayers may amend filed Tax Returns in the event that the Taxpayers receive notices of tax assessment, Objection Decision Letters, Amendment Decision Letters, Appeal Decisions or Civil Review Decisions on previous Tax Year or several preceding Tax Years, which state tax losses that are different from the tax loss that has been carried forward in the Tax Returns to be amended, within a period of 3 (three) months after receiving the notices of tax assessment, Objection Decision Letters, Amendment Decision Letters, Appeal Decisions or Civil Review Decisions, provided that the Director General of Taxes has not commenced an audit.

 

 

 

 

 

 

 

3.

The provisions of paragraph (1) and paragraph (3) Article 13 are amended, between paragraph (3a) and paragraph (4) Article 13, 2 (two) paragraphs are inserted, namely paragraph (3b) and paragraph (3c), thereby, Article 13 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Director General of Taxes may issue a Notice of Tax Underpayment Assessment within 5 (five) years after the date taxes become payable or after the end of a Taxable Period, a Fraction of a Tax Year or a Tax Year following an audit, under the following conditions:

 

 

a.

there are unpaid or underpaid taxes;

 

 

b.

Tax Returns are not filed within the period referred to in Article 3 paragraph (3) and after being reprimanded in writing, the Tax Returns are not filed within the time specified in the Reprimand Letter;

 

 

c.

there are Value Added Tax and Sales Tax on Luxury Goods that should not have otherwise been carried forward over the tax overpayment or should not have been subject to a 0% (zero per cent) rate;

 

 

d.

the obligations referred to in Article 28 and Article 29 have not been fulfilled, thereby, the amount of tax payable cannot be determined;

 

 

e.

for the Taxpayers, the Taxpayer Identification Numbers are issued ex officio and the Taxable Persons are registered ex officio as referred to in Article 2 paragraph (4a); or

 

 

f.

Taxable Persons do not supply Taxable Goods and/or Taxable Services and/or export Taxable Goods and/or Taxable Services and have been given refunds of Input VAT or have credited Input VAT as referred to in Article 9 paragraph (6e) of the Value Added Tax Law of 1984 and the amendments thereto.

 

(2)

The amount of tax underpayment in a Notice of Tax Underpayment Assessment as referred to in paragraph (1) subparagraph a and subparagraph e shall be added with an administrative penalty in the form of interest at monthly interest rate determined by the Minister of Finance, calculated from the date a tax becomes payable or from the end of a Taxable Period, a fraction of a Tax Year or a Tax Year to the issuance of the Notice of Tax Underpayment Assessment for a maximum of 24 (twenty-four) months and a fraction of a month shall be treated as 1 (one) full month.

 

(2a)

The amount of tax underpayment in a Notice of Tax Underpayment Assessment as referred to in paragraph (1) subparagraph f shall be added with an administrative penalty in the form of interest at monthly interest rate determined by the Minister of Finance, from the due date of the compensation to the issuance of the Notice of Tax Underpayment Assessment for a maximum of 24 (twenty-four) months and a fraction of a month shall be treated as 1 (one) full month.

 

(2b)

The monthly interest rate determined by the Minister of Finance referred to in paragraph (2) and paragraph (2a) is calculated based on the reference interest rate plus 15% (fifteen per cent) and divided by 12 (twelve) and is effective on the date the calculation of penalties commences.

 

(3)

The amount of tax in the Notice of Tax Underpayment Assessment referred to in paragraph (1) subparagraph b, subparagraph c and subparagraph d shall be added with an administrative penalty in the form of:

 

 

a.

interest of any unpaid or underpaid Income Tax in 1 (one) Tax Year;

 

 

b.

interest of any Income Tax that is not withheld or underwithheld;

 

 

c.

75% (seventy-five per cent) surcharge of any unpaid or underpaid Value Added Tax on Goods and Services and Sales Tax on Luxury Goods; or

 

 

d.

75% (seventy-five per cent) surcharge of any withheld Income Tax that is unremitted or under-remitted.

 

(3a)

In the event that administrative penalties in the form of interest and surcharges are imposed based on audit findings on Value Added Tax and Sales Tax on Luxury Goods as referred to in paragraph (1) subparagraph a and subparagraph c, only one type of administrative penalty, the one with the highest amount, shall be applied.

 

(3b)

The interest referred to in paragraph (3) subparagraph a and subparagraph b amounts to the monthly interest rate determined by the Minister of Finance, calculated from the time the tax becomes payable or the end of a Taxable Period, a Fraction of a Tax Year or a Tax Year to the issuance of the Notice of Tax Underpayment Assessment for a maximum of 24 (twenty-four) months and a fraction of a month shall be treated as 1 (one) full month.

 

(3c)

The monthly interest rate determined by the Minister of Finance referred to in paragraph (3b) is calculated based on the reference interest rate plus 20% (twenty per cent) and divided by 12 (twelve) and applies on the date the calculation of penalties commences.

 

(4)

The amount of tax payable filed by Taxpayers in Tax Returns becomes certain pursuant to statutory tax provisions if within 5 (five) years as referred to in paragraph (1), after the tax becomes payable or the end of a Taxable Period, a fraction of a Tax Year or a Tax Year, no notice of tax assessment is issued, unless the Taxpayers commit any tax crime during the said Taxable Period, a fraction of a Tax Year or Tax Year.

 

(5)

Deleted.

 

(6)

Procedures for the issuance of Notices of Tax Underpayment Assessment referred to in paragraph (1) shall be determined by or based on a Minister of Finance Regulation

 

 

 

 

 

 

 

4.

The provisions of paragraph (1) of Article 14 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Director General of Taxes may issue a Notice of Tax Collection if:

 

 

a.

the Income Tax in the current year is unpaid or underpaid;

 

 

b.

based on examination results, there is tax underpayment due to misspellings and/or miscalculation;

 

 

c.

the Taxpayer is subject to an administrative penalty in the form of a fine and/or interest;

 

 

d.

an entrepreneur that has already been registered as a Taxable Person fails to issue a tax invoice or issues a tax invoice but issues the invoice later than the due date;

 

 

e.

an entrepreneur that has already been registered as a Taxable Person fails to issue a complete tax invoice as referred to in Article 13 paragraph (5) and paragraph (6) of VAT Law of 1984 and the amendments thereto, except the identity of the buyer of Taxable Goods or Taxable Service recipient as well as the name and signature as referred to in Article 13 paragraph (5) subparagraph b and subparagraph g of VAT Law of 1984 and the amendments thereto in the event that the supply is performed by retailer Taxable Persons ;

 

 

f.

deleted;

 

 

g.

deleted;

 

 

h.

there is interest compensation that should not be otherwise given to Taxpayers, in the event that:

 

 

 

1.

a decision is issued;

 

 

 

2.

a decision is received; or

 

 

 

3.

data or information is found,

 

 

i.

there are unpaid or underpaid taxes within the period according to the agreement to install or defer tax payment as referred to in Article 9 paragraph (4).

 

(2)

The Notice of Tax Collection referred to in paragraph (1) has the same legal force as a notice of tax assessment.

 

(3)

The amount of tax underpayment in the Notices of Tax Collection referred to in paragraph (1) subparagraph a and subparagraph b plus an administrative penalty in the form of interest at the monthly interest rate determined by the Minister of Finance shall be calculated from the time the taxes become payable or the end of a Taxable Period, a fraction of a Tax Year or a Tax Year to the issuance of the Notice of Tax Collection for a maximum of 24 (twenty-four) months and a fraction of a month is treated as 1 (one) full month.

 

(4)

Entrepreneurs or Taxable Persons referred to in paragraph (1) subparagraph d or subparagraph e, respectively, in addition to being obliged to remit tax payable, are subject to an administrative penalty in the form of a 1% (one per cent) fine of the Tax Base.

 

(5)

Deleted.

 

(5a)

The monthly interest rate determined by the Minister of Finance referred to in paragraph (3) is calculated based on the reference interest rate plus 5% (five per cent) and divided by 12 (twelve) and applies on the date the calculation of penalties commences.

 

(5b)

The Notice of Tax Collection is issued no later than 5 (five) years after the tax becomes payable or the end of a Taxable Period, a fraction of a Tax Year or a Tax Year.

 

(5c)

Excluded from the provisions on the issuance period referred to in paragraph (5b):

 

 

a.

the Notice of Tax Collection for administrative penalties referred to in Article 19 paragraph (1) is issued no later than the statute of limitation of the collection of Notice of Tax Underpayment Assessment and Notice of Additional Tax Underpayment Assessment and Amendment Decision Letter, Objection Decision Letter, Appeal Decision and Civil Review Decision resulting in an increase in the amount of tax payable;

 

 

b.

the Notice of Tax Collection for administrative penalties referred to in Article 25 paragraph (9) may be issued no later than 5 (five) years from the date of issuance of the Objection Decision Letter if the Taxpayer does not file an appeal; and

 

 

c.

the Notice of Tax Collection for administrative penalties referred to in Article 27 paragraph (5d) may be issued no later than 5 (five) years from the date the Appeal Decision is pronounced by the Tax Court judge in a public trial.

 

(6)

Procedures for the issuance of Notices of Tax Collection are determined by or based on a Minister of Finance Regulation.

 

 

 

 

 

 

 

5.

Between Article 20 and Article 21, 1 (one) article is inserted, namely Article 20A, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Minister of Finance is authorised to co-operate in assistance in the collection of taxes with tax treaty partners.

 

(2)

The assistance in the collection in taxes referred to in paragraph (1) is conducted by the Director General of Taxes, which includes the provision of assistance in the collection of taxes and requests for assistance in the collection of taxes to tax treaty partners.

 

(3)

The provision of assistance in the collection of taxes and requests for assistance in the collection of taxes referred to in paragraph (2) shall be conducted based on a reciprocal international agreement.

 

(4)

The tax treaty partners referred to in paragraph (1) are countries or jurisdictions bound with the Government of Indonesia in international agreements.

 

(5)

The international agreements referred to in paragraph (3) constitute bilateral or multilateral agreements that stipulate co-operation on matters relating to assistance in the collection of taxes, including:

 

 

a.

tax treaties;

 

 

b.

the convention on mutual administrative assistance in tax matters; or

 

 

c.

other bilateral or multilateral agreements.

 

(6)

The assistance in the collection of taxes referred to in paragraph (2) may be conducted after a tax claim is received from the tax treaty partner.

 

(7)

The tax claim referred to in paragraph (6) constitutes a legal instrument from the tax treaty partners which at least contains:

 

 

a.

the value of the tax claim for which assistance in collection is requested; and

 

 

b.

identity of the tax bearer on the tax claim.

 

(8)

The tax claim referred to in paragraph (7) constitutes a tax base for which tax collection shall be conducted with a Distress Warrant pursuant to statutory provisions in the field of taxation that apply mutatis mutandis to applicable provisions on tax collection in tax treaty partners.

 

(9)

Proceeds from the tax collection on tax claims from tax treaty partners are deposited in other government accounts before being remitted to tax treaty partners.

 

 

 

 

 

 

 

6.

The provisions of paragraph (9) and paragraph (10) of Article 25 are amended and the elucidation of paragraph (7) Article 25 is amended to be as listed in the elucidation of article by article, thereby, Article 25 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Taxpayers may only file objections to the Director General of Taxes against:

 

 

a.

Notices of Tax Underpayment Assessment;

 

 

b.

Notices of Additional Tax Underpayment Assessment;

 

 

c.

Notices of Nil Tax Assessment;

 

 

d.

Notice of Tax Overpayment Assessment; or

 

 

e.

withholding tax or tac collection by third parties pursuant to statutory tax provisions.

 

(2)

Objections shall be filed in writing in the Indonesian Language and state the amount of tax payable, the amount of withheld taxes or the amount of losses as calculated by the Taxpayers, supported by underlying reasons of the calculation basis.

 

(3)

Objections shall be filed within 3 (three) months from the date the notice of tax assessment is sent or the date of withholding tax referred to in paragraph (1) unless the Taxpayers can demonstrate that the period cannot be fulfilled due to circumstances beyond their control.

 

(3a)

In the event that Taxpayers file objections for notices of tax assessment, the Taxpayers shall settle the tax payable amounting to the minimum amount agreed by the Taxpayers in the closing conference, before the objection letters are submitted.

 

(4)

Objections that do not fulfil the requirements referred to in paragraph (1), paragraph (2), paragraph (3) or paragraph (3a) shall not constitute valid objection letters and, thereby, will not be considered.

 

(5)

The objection letter receipt given by employees of the Directorate General of Taxes appointed to receive such letters or the postage date of objection letters or other means as stipulated by or based on a Minister of Finance Regulation shall constitute the objection letter receipt.

 

(6)

If requested by Taxpayers for the purpose of filing objections, the Director General of Taxes is obliged to provide written information on matters constituting the tax base, the calculation of losses or withholding tax.

 

(7)

In the event that Taxpayers file objections, the due date for tax settlement as referred to in Article 9 paragraph (3) or paragraph (3a) of unpaid taxes at the time the objections are filed, shall be deferred to 1 (one) month from the issuance date the Objection Decision Letter.

 

(8)

The amount of unpaid taxes upon the application of objections as referred to in paragraph (7) does not constitute tax liabilities as referred to in Article 11 paragraph (1) and paragraph (1a).

 

(9)

In the event that a Taxpayer’s objection is rejected or partially granted, the Taxpayer shall be subject to an administrative penalty in the form of a 30% (thirty per cent) fine of the amount of taxes as specified by the objection decision subtracted by the amount of taxes paid prior to the objection is filed.

 

(10)

In the event that a Taxpayer files an appeal, the administrative penalty in the form of a 30% (thirty per cent) fine referred to in paragraph (9) shall not be imposed.

 

 

 

 

 

 

 

7.

The provisions of paragraph (4a), paragraph (5c) and paragraph (5d) of Article 27 are amended, between paragraph (5d) and paragraph (6) Article 27, 3 (three) paragraphs are inserted, namely paragraph (5e), paragraph (5f) and paragraph (5g) and the elucidation of paragraph (5a) of Article 27 is amended to be as listed in the elucidation of article by article, thereby, Article 27 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Taxpayers may only file appeals to the tax court on Objection Decision Letters as referred to in Article 26 paragraph (1).

 

(2)

The Tax Court Decision is a decision of a special court within the state administrative court.

 

(3)

Applications referred to in paragraph (1) shall be submitted in writing in the Indonesian Language with clearly stated reasons no later than 3 (three) months from the date the Objection Decision Letter is received, attached with a copy of the Objection Decision Letter.

 

(4)

Deleted.

 

(4a)

If requested by Taxpayers for filing appeals, the Director General of Taxes is obliged to provide a written explanation concerning the basis of the Objection Decision Letter issued no later than 1 (one) month since the written application is received by the Director General of Taxes.

 

(5)

Deleted.

 

(5a)

In the event that a Taxpayer files an appeal, the tax settlement period referred to in Article 9 paragraph (3) and paragraph (3a) or Article 25 paragraph (7) of taxes that are not yet paid at the time the objection is filed, shall be deferred to 1 (one) month from the issuance date of the Appeal Decision.

 

(5b)

The amount of taxes that are not yet paid at the time the objection is filed as referred to in paragraph (5a) does not constitute tax liabilities referred to in Article 11 paragraph (1) and paragraph (1a).

 

(5c)

The amount of taxes that are not yet paid at the time the appeal is filed does not constitute tax liabilities referred to in Article 11 paragraph (1) and paragraph (1) until the Appeal Decision is issued.

 

(5d)

In the event that applications for appeals are rejected or partially granted, the Taxpayers shall be subject to an administrative penalty in the form of a 60% (sixty per cent) fine of the amount of taxes stated in the Appeal Decision subtracted by the amount of paid taxes before the objection is filed.

 

(5e)

In the event that the Taxpayer or the Director General of Taxes files a civil review, the implementation of Tax Court decision shall not be suspended or terminated.

 

(5f)

In the event that a Civil Review Decision results in an increased amount of tax payable, an administrative penalty in the form of a 60% (sixty per cent) fine of the total taxes based on the Civil Review Decision subtracted by the taxes paid before the objection is filed shall be imposed.

 

(5g)

The Notice of Tax Collection for administrative penalties referred to in paragraph (5f) is issued no later than 2 (two) years from the date the Civil Review Decision is received by the Director General of Taxes.

 

(6)

The tax judicial body referred to in paragraph (1) and Article 23 paragraph (2) shall be stipulated by laws.

 

 

 

 

 

 

 

8.

Between Article 27B and Article 28, 1 (one) article is inserted, namely Article 27C, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Director General of Taxes is authorised to implement mutual agreement procedure to prevent or resolve problems arising in the application of tax treaties.

 

(2)

The mutual agreement procedure referred to in paragraph (1) may be applied for by:

 

 

a.

resident Taxpayers;

 

 

b.

the Director General of Taxes;

 

 

c.

the competent authority of the tax treaty partner; or

 

 

d.

Indonesian citizens through the Director General of Taxes in relation to the discriminatory treatment in the tax treaty partner which contradicts the provisions on non-discrimination,

 

 

pursuant to the provisions and time limits stipulated under the tax treaty.

 

(3)

Applications for the implementation of the mutual agreement procedure referred to in paragraph (2) subparagraph a, subparagraph b and subparagraph c may be submitted at the same time as a resident Taxpayer’s application for:

 

 

a.

an objection as referred to in Article 25;

 

 

b.

an appeal as referred to in Article 27; or

 

 

c.

the relief or cancellation of an incorrect notice of tax assessment as referred to in Article 36 paragraph (1) subparagraph b.

 

(4)

In the event that the implementation of mutual agreement procedure referred to in paragraph (3) subparagraph b has not resulted in mutual agreement until the Appeal Decision or Civil Review Decision is pronounced, the Director General of Taxes shall:

 

 

a.

continue negotiations, in the event that the matter in dispute being decided in the Appeal Decision or Civil Review Decision do not constitute the materials for which the mutual agreement procedure is applied; or

 

 

b.

use the Appeal Decision or Civil Review Decision as a position in the negotiation or terminate the negotiation, in the event that the matter in dispute being decided constitute the materials for which the mutual agreement procedure is applied.

 

(5)

The Director General of Taxes shall follow up on the results of the mutual agreement procedure referred to in paragraph (1) by issuing a decision letter on mutual agreement.

 

(6)

The decision letter on mutual agreement referred to in paragraph (5) includes the basis for tax refunds referred to in Article 11 paragraph (1a) or the tax base as referred to in Article 18.

 

 

 

 

 

 

 

9.

The provisions of paragraph (3a) of Article 32 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

In exercising their rights and fulfilling obligations pursuant to statutory tax provisions, the following Taxpayers shall be represented:

 

 

a.

entities, by the management;

 

 

b.

entities declared bankrupt, by a curator;

 

 

c.

entities in dissolution, by a person or entity responsible for the settlement;

 

 

d.

entities in liquidation, by the liquidator;

 

 

e.

undivided inheritance, by one of the heirs, executor of the will or trustee; or

 

 

f.

a minor child or person under guardianship, by the custodian or guardian.

 

(2)

Representatives referred to in paragraph (1) shall be responsible, personally and/or collectively for the payment of tax payable, unless they can prove and assure the Director General of Taxes that within their position, it is not possible to assume such a responsibility.

 

(3)

Individuals or entities may appoint an attorney using a special letter of power of attorney to exercise rights and fulfil obligations pursuant to statutory tax provisions.

 

(3a)

The appointed attorney referred to in paragraph (3) must possess certain competencies in the taxation aspect unless the appointed attorney is a husband, wife or relatives by blood or marriage in a lineage of two degrees.

 

(4)

Included in the definition of management referred to in paragraph (1) subparagraph a are individuals that are, in fact, authorised to participate in setting policies and/or making decisions in running the company.

 

 

 

 

 

 

 

10.

Between Article 32 and Article 33, 1 (one) article is inserted, namely Article 32A, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Minister of Finance shall appoint other parties to withhold, collect, remit and/or file taxes pursuant to statutory tax provisions.

 

(2)

The other parties referred to in paragraph (1) are parties that are directly involved or facilitate transactions between the transacting parties.

 

(3)

Assessments, collection, legal remedies and imposition of penalties on Taxpayers stipulated in statutory laws and regulations in the field of taxation shall apply mutatis mutandis to the other parties referred to in paragraph (2).

 

(4)

In the event that the other parties referred to in paragraph (2) constitute electronic system providers, in addition to being subject to penalties as referred to in paragraph (3), the said electronic system providers may be subject to a penalty in the form of access termination after being given a reprimand.

 

(5)

In the event that the other parties referred to in paragraph (4) have performed withholding, collection, remittance and/or filing pursuant to statutory tax provisions after being given a reprimand, the other parties shall not be subject to the penalty in the form of access termination.

 

(6)

In the event that the other parties referred to in paragraph (4) have performed withholding, collection, remittance and/or filing pursuant to statutory tax provisions after the access termination, the other parties shall be subject to access normalisation.

 

(7)

The Minister who administers government affairs in the field of communication and information technology is authorised to terminate access as referred to in paragraph (4) and normalise access as referred to in paragraph (6) based on a request from the Minister of Finance.

 

 

 

 

 

 

 

11.

The provisions of paragraph (3) of Article 34 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Any officials shall be prohibited to disclose any information known or provided to the said officials by a Taxpayer in the course of their position or duties to implement statutory tax provisions.

 

(2)

The prohibition referred to in paragraph (1) shall also apply to professionals appointed by the Director General of Taxes to assist the implementation of statutory tax provisions.

 

(2a)

Excluded from the provisions referred to in paragraph (1) and paragraph (2) are:

 

 

a.

officials and professionals acting as witnesses or expert witnesses in trial proceedings; or

 

 

b.

officials and/or professionals appointed by the Minister of Finance to provide information to officials of state institutions or Government agencies authorised to audit state finances.

 

(3)

For the interest of the state, in the context of investigations, prosecutions or co-operation with state institutions, government agencies, legal bodies incorporated through Laws or Government Regulations or other parties, the Minister of Finance is authorised to issue a written permit to the officials referred to in paragraph (1) and professionals referred to in paragraph (2) to provide information and present written evidence from or concerning a Taxpayer to appointed parties.

 

(4)

For litigation purposes at courts in criminal or civil cases, upon a request from the Judges according to the Criminal Procedure Law and Civil Procedure Law, the Minister of Finance may issue written permit to the officials referred to in paragraph (1) and professionals referred to in paragraph (2) to provide and present the Taxpayer’s written evidence and information in their possession.

 

(5)

The request from the judges referred to in paragraph (4) shall state the name of the suspect or defendant, requested information and the relation between the criminal or civil case and the requested information.

 

 

 

 

 

 

 

12.

The provisions of Article 40 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

A tax crime cannot be prosecuted after a period of 10 (ten) years has elapsed from the time the tax becomes payable, the end of a Taxable Period, the end of a Fraction of a Tax Year or the end of the Tax Year concerned

 

 

 

 

 

 

 

13.

The provisions of paragraph (2) of Article 43A are amended, between paragraph (1) and paragraph (2), 1 (one) paragraph is inserted, namely paragraph (1a) and the elucidation of paragraph (1) of Article 43A is amended to be as listed in the elucidation of article by article, thereby, Article 43A reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Director General of Taxes, based on information, data, reports and complaints, is authorised to conduct a preliminary audit prior to a tax crime investigation.

 

(1a)

Preliminary Audits shall be conducted by Civil Servant Investigators within the Directorate General of Taxes receiving the preliminary audit order.

 

(2)

In the event of indications of tax crime involving employees of the Directorate General of Taxes, the Minister of Finance may instruct internal auditors within the the Ministry of Finance to conduct a preliminary audit.

 

(3)

In the event that from preliminary evidence, any elements of criminal acts of corruption are discovered, the involved employees of the Directorate General of Taxes shall be processed pursuant to the legal provisions on Criminal Acts of Corruption.

 

(4)

Procedures for preliminary audits of tax crime referred to in paragraph (1) and paragraph (2) shall be stipulated by or based on a Minister of Finance Regulation.

 

 

 

 

 

 

 

14.

The provisions of paragraph (2) and paragraph (3) of Article 44 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Tax crime investigations may only be conducted by certain Civil Servants within the Directorate General of Taxes granted with special authority as tax crime investigators.

 

(2)

The authority of investigators referred to in paragraph (1) includes:

 

 

a.

receiving, seeking, gathering and examining information or reports pertaining to a tax crime, thereby, the information or reports are more comprehensive and clearer;

 

 

b.

examining, seeking and gathering information on individuals or entities with respect to the correctness of actions committed in connection with a tax crime;

 

 

c.

requesting information and evidence from individuals or entities in connection with a tax crime;

 

 

d.

examining books of accounts, records and other documents in connection with a tax crime;

 

 

e.

conducting searches to obtain evidence in the form of bookkeeping, recording and other documents and other evidence that are allegedly connected to the tax crime and/or to confiscate such evidence;

 

 

f.

seeking the assistance of professionals in the context of conducting tax crime investigations;

 

 

g.

preventing and/or prohibiting individuals from leaving a room or premise while an investigation is in progress and examining the identity of individuals, objects and/or confiscated documents;

 

 

h.

photographing any individuals in connection with a tax crime;

 

 

i.

summoning individuals to provide information and be examined as a suspect or witness;

 

 

j.

blocking the suspect’s assets according to statutory provisions and/or confiscating the suspect’s assets according to the Law concerning code of criminal procedures, including but not limited to the permission of the presiding judge of the local district court;

 

 

k.

terminating investigations; and/or

 

 

l.

conducting other necessary activities to expedite tax crime investigations pursuant to statutory provisions.

 

(3)

Investigators referred to in paragraph (1) shall notify the commencement of an investigation and submit investigation results to the public prosecutor through official investigators of the Indonesian National Police pursuant to the provisions under the Code of Criminal Procedures Law.

 

(4)

To implement the investigation authority referred to in paragraph (1), investigators may seek assistance from other law enforcement officials.

 

 

 

 

 

 

 

15.

The provisions of Article 44A are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

Investigators referred to in Article 44 paragraph (1) shall terminate Investigations referred to in Article 44 paragraph (2) subparagraph k in the event that:

 

a.

the Taxpayer discloses the untruth of actions as stipulated in Article 8 paragraph (3);

 

b.

there is insufficient evidence;

 

c.

the event does not constitute a tax crime; or

 

d.

by law.

 

 

 

 

 

 

 

16.

The provisions of paragraph (2) of Article 44B are amended, between paragraph (2) and paragraph (3) Article 44B, 3 (three) paragraphs are inserted, namely paragraph (2a), paragraph (2b) and paragraph (2c) and Article 44B paragraph (3) is deleted, thereby, Article 44B reads as follows:

 

 

 

 

 

 

 

 

 

(1)

For state revenue purposes, upon a request from the Minister of Finance, the General Attorney may terminate a tax crime investigation within a maximum of 6 (six) months from the date of the request letter.

 

(2)

The termination of tax crime investigations referred to in paragraph (1) shall only be conducted after the Taxpayer or suspect has settled:

 

 

a.

losses to state revenues as referred to Article 38 plus an administrative penalty in the form of a fine of 1 (one) time the losses to state revenues;

 

 

b.

losses to state revenues as referred to Article 39 plus an administrative penalty in the form of a fine of 3 (three) times the losses to state revenues; or

 

 

c.

the amount of taxes in the tax invoice, withholding receipt and/or tax payment slip as referred to in Article 39A plus an administrative penalty in the form of a fine of 4 (four) times the amount of taxes in the tax invoice, tax collection receipt, withholding receipt and/or tax payment slip.

 

(2a)

In the event that the criminal case has been transferred to the court, the defendant may still settle:

 

 

a.

losses to state revenues plus the administrative penalty referred to in paragraph (2) subparagraph a or subparagraph b; or

 

 

b.

the amount of taxes in the tax invoice, tax collection receipt, withholding receipt and/or tax payment slip plus the administrative penalty referred to in paragraph (2) subparagraph c.

 

(2b)

The settlement referred to in paragraph (2a) shall be a consideration for prosecution without any sentence to imprisonment.

 

(2c)

In the event that the payment by the Taxpayer, suspect or defendant at the investigation stage up to the trial proceeding does not fulfil the amount referred to in paragraph (2), that payment can be considered the payment of the sentence of fine imposed on the defendant.

 

(3)

Deleted.

 

 

 

 

 

 

 

17.

Between Article 44B and Article 45, 2 (two) articles are inserted, namely Article 44C and Article 44D, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The sentence of fine referred to in Article 39 and Article 39A cannot be substituted by imprisonment and must be paid by the convict.

 

(2)

In the event that the convict does not pay the sentence of fine referred to in paragraph (1) no later than 1 (one) month after the court decision which has obtained permanent legal force, the prosecutor shall confiscate and auction the convict’s assets to pay the sentence of fine pursuant to statutory tax provisions.

 

(3)

In the event that after assets are investigated and confiscated, the convict does not have sufficient assets to pay the sentence of fine, that convict may be sentenced to imprisonment for a length of time not exceeding the decided imprisonment sentence.

 

 

 

 

 

 

 

 

 

(1)

In the event that the defendant has been legally summoned and is not present at the trial proceedings without any valid reasons, the tax crime case may still be examined and decided without the presence of the defendant.

 

(2)

In the event that the defendant referred to in paragraph (1) is present at the trial proceeding before the decision is pronounced, the defendant must be examined and all witness statements and letters read out in preceding trial proceedings are considered pronounced in the trial proceedings.

 

 

 

 

 

 

 

18.

Between CHAPTER IX and CHAPTER X, 1 (one) chapter is inserted, namely CHAPTER IXA, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19.

Between Article 44D and Article 45, 1 (one) article is inserted, namely Article 44E, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Further provisions on the provision of data in the context of integration of the population database with the tax database referred to in Article 2 paragraph (10) shall be stipulated by or based on a Government Regulation.

 

(2)

Further provisions on:

 

 

a.

the period of registration and reporting as well as the procedures for registration and VAT registration as referred to in Article 2 paragraph (1), paragraph (2), paragraph (3) and paragraph (4), including the use of national identification numbers as Taxpayer Identification Numbers, the deregistration of Taxpayer Identification Numbers and/or VAT deregistration;

 

 

b.

the granting and requests for assistance in the collection of taxes as referred to in Article 20A paragraph (2);

 

 

c.

collection and remittances of proceeds from the tax collection on tax claims as referred to in Article 20A paragraph (9);

 

 

d.

the implementation of mutual agreement procedure as referred to in Article 27C paragraph (1);

 

 

e.

the exercise of tax rights and fulfilment of tax obligations by an attorney as referred to in Article 32 paragraph (3) as well as certain competencies to be possessed by an attorney as referred to in Article 32 paragraph (3a);

 

 

f.

the appointment, withholding, collection, remittance and/or filing of taxes that have been withheld or collected by other parties as referred to in Article 32A paragraph (2);

 

 

g.

assessments, collection and legal remedies as referred to in Article 32A paragraph (3);

 

 

h.

reprimands as referred to in Article 32A paragraph (4) as well as requests for the termination and normalisation of access as referred to in Article 32A paragraph (7); and

 

 

i.

requests for the termination of tax crime investigations as referred to in Article 44B paragraph (1) and settlement as referred to in Article 44B paragraph (2) and paragraph (2a),

 

 

shall be stipulated by or based on a Minister of Finance Regulation.

 

 

 

 

 

 

 

 

Several provisions under 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) are amended as follows:

 

 

 

 

 

 

 

1.

The provisions of paragraph (1), paragraph (1a), paragraph (2) and paragraph (3) of Article 4 are amended and Article 4 paragraph (1d) is deleted, thereby, Article 4 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

A taxable object is income, which refers to any increase in economic capacity received by or accrued by a Taxpayer, either from Indonesia or overseas, which may be utilised for consumption or increasing the Taxpayer’s wealth, in whatever name and form, including:

 

 

a.

reimbursement or remuneration in respect of employment or services received or accrued, including salaries, wages, allowances, honoraria, commissions, bonuses, gratuities, pension or other forms of remunerations, including benefits in kind and/or fringe benefits, unless otherwise stipulated under this Law;

 

 

b.

lottery prizes or prizes from work or activities and reward;

 

 

c.

business profits;

 

 

d.

capital gains, including:

 

 

 

1.

capital gains to a company, a partnership and another entity in exchange for shares or capital contribution;

 

 

 

2.

capital gains  to its shareholders, partners or members accrued by a company, a partnership or another entity;

 

 

 

3.

gains from a liquidation, merger, consolidation, spin-offs, split-up, acquisition or restructuring in whatever name and form;

 

 

 

4.

capital gains  in the form of grants, aids or donations, unless they are given to relatives in a lineage of one degree and to religious bodies, educational or other social entities including foundations, cooperatives or to any individual conducting micro and small business, provided that there is no business, employment, ownership nor control relationship between the parties concerned; and

 

 

 

5.

gains from the sale or the transfer of part or all of mining rights, participation in financing or capitalisation in a mining company;

 

 

e.

refund of tax payments which has already been deducted as an expense and any additional payment of tax;

 

 

f.

interest including premium, discounts and compensation for loan repayment guarantee;

 

 

g.

dividends, in whatever name and form, including dividends from an insurance company to its policyholders;

 

 

h.

royalty or compensation from the use of right;

 

 

i.

rents and other income from the use of property;

 

 

j.

periodic payments;

 

 

k.

gains from the discharge of indebtedness, except up to a certain amount stipulated by a Government Regulation;

 

 

l.

gains from foreign exchange;

 

 

m.

gains from revaluation of assets;

 

 

n.

insurance premium;

 

 

o.

contributions received or accrued by an association from its members that constitute taxpayers engaged in business or independent personal services;

 

 

p.

an increase in net wealth from income which has not been taxed;

 

 

q.

income from sharia business;

 

 

r.

interest compensation referred to under the Law stipulating general provisions and tax procedures; and

 

 

s.

surplus of Bank Indonesia.

 

(1a)

Excluded from the provisions referred to in paragraph (1), a foreign national who constitutes a resident taxpayer is subject to Income Tax only on income received or accrued from Indonesia under the following conditions:

 

 

a.

having certain skills pursuant to statutory provisions; and

 

 

b.

this provision is valid for 4 (four) tax years since he/she becomes a resident taxpayer. (1b) Included in the definition of income received or accrued from Indonesia as referred to in paragraph (1a) is income received or accrued by a foreign national in connection with work, services or activities in Indonesia in whatever name and form paid outside Indonesia.

 

(1c)

Provisions referred to in paragraph (1a) do not apply to a foreign national taking advantage of the Tax Treaty between the Government of Indonesia and the government of a Tax Treaty partner where the foreign national accrues income overseas.

 

(1d)

Deleted.

 

(2)

The following income may be subject to final taxes:

 

 

a.

income in the form of deposit interests and other savings accounts, interests on bonds and government securities, interests or discounts of short-term securities traded in the money market and deposit interests paid by cooperatives to individual cooperative members;

 

 

b.

income in the form of lottery prizes;

 

 

c.

income from share and other securities transactions, derivative transactions traded on the stock exchange and sales of shares transactions or transfers of capital participation in the partner company received by a venture capital company;

 

 

d.

income from transactions of property in the form of land and/or buildings, construction service businesses, real estate businesses and land and/or building rents; and

 

 

e.

certain other income, including business income received or accrued by Taxpayers with certain gross turnover,

 

 

as stipulated by or based on a Government Regulation.

 

(3)

Excluded from taxable objects are:

 

 

a.

1.

aids or donations, including zakat, infaq and sadaqah received by amil zakat board or other amil zakat institutions incorporated or approved by the government and received by eligible zakat recipients or compulsory religious donation for the followers of religions acknowledged by the government, received by religious institutions incorporated and approved by the government and received by eligible donees, the provisions thereto are stipulated by or based on a Government Regulation; and

 

 

 

2.

grants received by relatives within a lineage of one degree and to religious bodies, educational or other social entities including foundations, cooperatives or any individual conducting micro and small business,

 

 

 

provided that there is no business, employment, ownership nor control relationship between the parties concerned;

 

 

b.

inheritance;

 

 

c.

assets including cash received by an entity as referred to in Article 2 paragraph (1) subparagraph b in exchange for shares or capital contribution;

 

 

d.

reimbursements or remunerations in connection with employment or services received or accrued in the form of in-kind or fringe benefits, including:

 

 

 

1.

food, foodstuff, beverage ingredients and/or beverages provided for all employees;

 

 

 

2.

remunerations in the form of in-kind and/or fringe benefits provided in certain areas;

 

 

 

3.

remunerations in the form of in-kind and/or fringe benefits to be provided by the employer in the implementation of work;

 

 

 

4.

remunerations in the form of in-kind and/or fringe benefits sourced from or financed by the State Budget, the Local Government Budget and/or the Village Budget; or

 

 

 

5.

remunerations in the form of in-kind and/or fringe benefits of certain types and/or thresholds;

 

 

e.

payments by an insurance company to an individual due to accident, illness or death of the insured person and payment of scholarship insurance;

 

 

f.

dividends or other income provided that:

 

 

 

1.

domestically-sourced dividends received or accrued by Taxpayers:

 

 

 

 

a)

resident individual insofar as the dividends are invested in the territory of the Unitary State of the Republic of Indonesia within a certain period; and/or

 

 

 

 

b)

resident corporates;

 

 

 

2.

foreign-sourced dividends and income after tax from an overseas permanent establishment received or accrued by a resident corporate Taxpayer or a resident individual Taxpayer, insofar as they are invested or used to support other businesses in the territory of the Unitary State of the Republic of Indonesia within a certain period and fulfil the following requirements:

 

 

 

 

a)

the invested dividends and income after tax amount to a minimum of 30% (thirty per cent) of net income after tax; or

 

 

 

 

b)

dividends sourced from a non-listed offshore company are invested in Indonesia before the Director General of Taxes issues a notice of tax assessment on such dividends in connection with the application of Article 18 paragraph (2) of this Law;

 

 

 

3.

foreign-sourced dividends referred to in number 2 are:

 

 

 

 

a)

distributed dividends that are sourced from a listed offshore company; or

 

 

 

 

b)

distributed dividends that are sourced from a non-listed offshore company as per the proportion of shareholding;

 

 

 

4.

if the dividends referred to in number 3 point b and income after tax from an overseas permanent establishment referred to in number 2 invested in the territory of the Unitary State of the Republic of Indonesia amount to less than 30% (thirty per cent) of net income after tax as referred to in number 2 point a, the following provisions shall apply:

 

 

 

 

a)

the invested dividends and income after tax are excluded from Income Tax;

 

 

 

 

b)

the difference of 30% (thirty per cent) of net income after tax less the invested dividends and/or income after tax as referred to in point a) is subject to Income Tax; and

 

 

 

 

c)

the net income after tax less the invested dividends and/or income after tax as referred to in point a) as well as the difference referred to in point b), are not subject to Income Tax;

 

 

 

5.

if the dividends referred to in number 3 point b and income after tax from an overseas permanent establishment as referred to in number 2 invested in the territory of the Republic of Indonesia amount to more than 30% (thirty per cent) of net income after tax as referred to in number 2 point a), the following provisions shall apply:

 

 

 

 

a)

the invested dividends and income after tax are excluded from Income Tax; and

 

 

 

 

b)

the net income after tax less the invested dividends and/or income after tax as referred to in point a) are not subject to Income Tax;

 

 

 

6.

if dividends sourced from a non-listed offshore company are invested in Indonesia after the Director General of Taxes issues a notice of tax assessment in connection with the application of Article 18 paragraph (2) of this Law, these dividends are not excluded from Income Tax as referred to in number 2;

 

 

 

7.

Income Tax on foreign-sourced income received or accrued not through any permanent establishments by resident corporate Taxpayers or resident individual Taxpayers is excluded if the income is invested in the territory of the Unitary State of the Republic of Indonesia within a certain period and the following requirements are fulfilled:

 

 

 

 

a)

the income is sourced from an overseas active business; and

 

 

 

 

b)

does not constitute income from an offshore company;

 

 

 

8.

to income taxes that have been paid or payable in a foreign country referred to in number 2 and number 7, the following provisions shall apply:

 

 

 

 

a)

cannot be taken into account in the Income Tax payable;

 

 

 

 

b)

cannot be charged as expenses or deductible expenses; and/or

 

 

 

 

c)

tax refunds cannot be requested;

 

 

 

9.

if the Taxpayer does not invest the income within a certain period as referred to in number 2 and number 7, the following provisions shall apply:

 

 

 

 

a)

the foreign-sourced income is included in the definition of income in the tax year it is accrued; and

 

 

 

 

b)

the Tax on income that has been paid or is payable overseas constitute tax credit as referred to in Article 24 of this Law;

 

 

 

10.

deleted;

 

 

g.

contributions received or accrued by a pension fund whoseincorporation is approved by the Financial Services Authority, either paid by an employer or an employee;

 

 

h.

income from an investment by a pension fund as referred to in subparagraph g in certain sectors;

 

 

i.

surplus or net surplus received or accrued by members of a cooperative, members of a limited partnership, whose capital does not consist of shares, partnership, alliances, firms and joint ventures, including unit holders of collective investment contracts;

 

 

j.

deleted,

 

 

k.

income received or accrued by a venture capital company in the form of surplus of an investee company incorporated and conducting business or engaged in activities in Indonesia, provided that the investee company:

 

 

 

1.

is a micro, small, medium enterprise or engaged in activities in business sectors stipulated by or based on a Minister of Finance Regulation; and

 

 

 

2.

the shares are not traded in the stock exchange in Indonesia;

 

 

l.

scholarships that fulfil certain requirements;

 

 

m.

the surplus received or accrued by an institution or a nonprofit organisation engaged in education and/or research and development listed in corresponding agencies, which is reinvested in the forms of the means and infrastructure of education and/or research and development, within no more than 4 years since it is received or accrued;

 

 

n.

aid or donation paid by the Social Security Administrative Body to certain Taxpayers;

 

 

o.

deposit funds for Hajj Fees and/or Special Hajj Fees and income from the development of hajj finances in certain financial fields or instruments received by the Hajj Financial Management Agency; and

 

 

p.

the surplus received or accrued by social and/or religious bodies or institutions listed in corresponding agencies, which is reinvested in the form of social and religious means and infrastructure within no more than 4 (four) years since the surplus is received or placed as endowment funds.

 

 

 

 

 

 

 

2.

The provisions of paragraph (1) of Article 6 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The amount of Taxable Income for resident Taxpayers and permanent establishments shall be determined based on gross income deducted by the costs to derive, collect and maintain income, including:

 

 

a.

costs which are directly or indirectly related to business, among others:

 

 

 

1.

costs for purchasing materials;

 

 

 

2.

costs related to work or services, including wages, salaries, honoraria, bonuses, gratuities and allowances given in the form of money;

 

 

 

3.

interest, rents and royalties;

 

 

 

4.

travel expenses;

 

 

 

5.

waste management fees;

 

 

 

6.

insurance premiums;

 

 

 

7.

promotional and sales expenses;

 

 

 

8.

administrative expenses; and

 

 

 

9.

taxes other than Income Tax;

 

 

b.

depreciation of costs to acquire tangible assets and amortisation of costs to acquire rights and other costs which have useful life of more than 1 (one) year as referred to in Article 11 and Article 11A;

 

 

c.

contributions to pension funds whose incorporation has been approved by the Financial Services Authority;

 

 

d.

losses due to sales or transfers of property owned and used or held in the company to derive, collect and maintain income;

 

 

e.

losses due to foreign exchange differences;

 

 

f.

costs for research and development of companies conducted in Indonesia;

 

 

g.

costs for scholarships, internships and training;

 

 

h.

bad debts, provided that:

 

 

 

1.

they have been deducted in the commercial income statement;

 

 

 

2.

the Taxpayer must submit a list of bad debts to the Directorate General of Taxes; and

 

 

 

3.

the collection case has been submitted to the District Court or government agency in charge of state receivables; or there is a written agreement regarding the write- off of receivables/relief of debt between the creditor and the debtor concerned; or the collection case has been published in a general or special publication; or the debtor acknowledges that a certain amount of the debt has been written off;

 

 

 

4.

the conditions referred to in number 3 do not apply to the write-off of bad debts of small business debtors as specified in article 4 paragraph (1) subparagraph k;

 

 

i.

donations in the context of national disaster management, the provisions thereto are stipulated by a Government Regulation;

 

 

j.

donations in the context of research and development conducted in Indonesia, the provisions thereto are stipulated by a Government Regulation;

 

 

k.

social infrastructure development costs, the provisions thereto are stipulated by a Government Regulation;

 

 

l.

donations of educational facilities, the provisions thereto are stipulated by a Government Regulation;

 

 

m.

donations in the context of sports development, the provisions thereto are stipulated by a Government Regulation; and

 

 

n.

expenses for reimbursements or remunerations given in kind and fringe benefits.

 

(2)

If gross income, after the deductions referred to in paragraph (1), results in loss, the loss shall be carried forward against income starting the next tax year consecutively for 5 (five) years.

 

(3)

An individual constituting a resident Taxpayer is given deductions in the form of Personal Tax Relief as referred to in Article 7.

 

 

 

 

 

 

 

3.

The provisions of paragraph (1) and paragraph (3) of Article 7 are amended, between paragraph (2) and paragraph (3) Article 7, 1 (one) paragraph is inserted, namely paragraph (2a) and the elucidation of paragraph (2) of Article 7 is amended to be as listed in the elucidation of article by article, thereby, Article 7 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Personal Tax Relief per year is given in a minimum amount of:

 

 

a.

IDR54,000,000.00 (fifty-four million rupiah) for an individual Taxpayer;

 

 

b.

additional IDR4,500,000.00 (four million and five hundred thousand rupiah) for a married taxpayer;

 

 

c.

additional IDR54,000,000.00 (fifty-four million rupiah) for a wife whose income is combined with her husband’s as referred to in Article 8 paragraph (1); and

 

 

d.

additional IDR4,500,000.00 (four million and five hundred thousand rupiah) for each family member related by blood and marriage in a lineage and adopted children, constituting full dependants, a maximum of 3 (three) people for each family.

 

(2)

The application of provisions referred to in paragraph (1) is based on the circumstances at the beginning of a tax year or the beginning of a fraction of a tax year.

 

(2a)

Individual Taxpayers with certain gross turnover referred to in Article 4 paragraph (2) subparagraph e are not subject to Income Tax on the fraction of gross turnover of up to IDR500,000,000.00 (five hundred million rupiah) in 1 (one) tax year.

 

(3)

The adjustments to the amount of:

 

 

a.

the Personal Tax Relief referred to in paragraph (1); and

 

 

b.

the threshold of gross turnover not subject to Income Tax referred to in paragraph (2a),

 

 

shall be stipulated by a Minister of Finance Regulation, after consultation with the House of Representatives of the Republic of Indonesia.

 

 

 

 

 

 

 

4.

The provisions of paragraph (1) of Article 9 are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

To determine the amount of Taxable Income for resident Taxpayers and permanent establishments, the following are non-deductible:

 

 

a.

profit sharing in whatever name and form, such as dividends, including dividends paid by insurance companies to policyholders and profit sharing by cooperatives;

 

 

b.

expenses charged or incurred for the personal benefit of shareholders, partners or members;

 

 

c.

establishment or accumulation of reserve funds, except:

 

 

 

1.

allowances for bad debts for banks and other business entities that provide credit, financial leases, consumer finance companies and factoring companies, calculated based on applicable financial accounting standards with certain thresholds after coordinating with the Financial Services Authority;

 

 

 

2.

reserves for insurance businesses, including social aids established by the Social Security Administrative Body;

 

 

 

3.

guarantee reserves for Deposit Insurance Institutions;

 

 

 

4.

reclamation reserves for mining businesses;

 

 

 

5.

reforestation reserves for forestry businesses; and

 

 

 

6.

reserves for closing and maintaining industrial waste landfill for industrial waste treatment businesses,

 

 

 

that fulfil certain requirements;

 

 

d.

premiums for health insurance, accident insurance, life insurance, endowment insurance and scholarship insurance, which are paid by an individual Taxpayer, unless the premiums are paid by the employer, the premiums shall be calculated as income for the Taxpayer concerned;

 

 

e.

deleted;

 

 

f.

amounts exceeding the reasonable amount paid to shareholders or related parties as remunerations in connection with the work performed;

 

 

g.

gifts, aids or donations and inheritance as referred to in Article 4 paragraph (3) subparagraph a and subparagraph b, except the donations referred to in Article 6 paragraph (1) subparagraph i to subparagraph m and zakat received by amil zakat board or other amil zakat institutions incorporated or approved by the government or compulsory religious donations for the followers of religions acknowledged by the government, received by religious institutions incorporated and approved by the government, the provisions thereto are stipulated by or based on a Government Regulation;

 

 

h.

Income Tax;

 

 

i.

expenses charged or incurred for the personal benefit of the Taxpayers or their dependants;

 

 

j.

salaries paid to members of a partnership, firm or limited liability company without share capital;

 

 

k.

administrative penalties in the form of interest, fines and surcharges as well as sentence of fines relating to the implementation of statutory provisions in the field of taxation.

 

(2)

Costs to derive, collect and maintain income with a useful life of more than 1 (one) year may not be charged in a lump sum but shall be deducted through depreciation or amortisation as referred to in Article 11 or Article 11A.

 

 

 

 

 

 

 

5.

The provisions of paragraph (7) Article 11 are amended, between paragraph (6) and paragraph (7) Article 11, 1 (one) paragraph is inserted, namely paragraph (6a) and Article 11 paragraph (11) is deleted, thereby, Article 11 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Depreciation of costs for the purchase, establishment, addition, repair or changes of tangible assets, except land with ownership right, right to build, right to cultivate and right to use, which are owned and used to derive, collect and maintain income with a useful life of more than 1 (one) year shall be conducted in equal parts over the specified useful life for these assets.

 

(2)

Depreciation of costs to acquire tangible assets as referred to in paragraph (1), other than buildings, may also be conducted in decreasing parts over the useful life, which is calculated by applying the depreciation rate on the costs or net book value and at the end of useful life, are fully depreciated provided that it is conducted as per the consistency principle.

 

(3)

Depreciation commences in the month the costs are incurred, except for assets that are in progress, for which depreciation commences in the month the assets are finished.

 

(4)

Subject to the approval from the Director General of Taxes, Taxpayers are allowed to perform depreciation starting in the month assets are used to derive, collect and maintain income or in the month the assets concerned begin to produce.

 

(5)

If a Taxpayer revalues assets based on the provisions referred to in Article 19, the depreciation basis for these assets shall be the value resulting from the asset revaluation.

 

(6)

The calculation of depreciation, useful life and depreciation rates for tangible assets is stipulated as follows:

 

 

 

 

 

 

 

 

 

Groups of Tangible Assets		Useful Life	Depreciation Rates as referred to in
			Paragraph (1)	Paragraph (2)
I.	Non-buildings
	Group I	4 Years	25%	50%
	Group II	8 Years	12.5%	25%
	Group III	16 Years	6.25%	12.5%
	Group IV	20 Years	5%	10%
II.	Buildings
	Permanent	20 Years	5%
	Non-permanent	10 Years	10%

 

 

 

 

 

 

 

 

(6a)

If permanent buildings referred to in paragraph (6) have a useful life of more than 20 (twenty) years, the depreciation referred to in paragraph (1) shall be conducted in equal parts, according to the useful life referred to in paragraph (6) or according to the actual useful life based on the Taxpayer’s bookkeeping.

 

(7)

Depreciation of tangible assets owned and used in certain business sectors may be regulated separately.

 

(8)

In the event of a transfer or withdrawal of assets as referred to in Article 4 paragraph (1) subparagraph d or a withdrawal of assets for other reasons, the net book value of the assets shall be expensed as a loss and the selling price or insurance compensation received or accrued shall be recorded as income in the year the assets are withdrawn.

 

(9)

If the amount of insurance compensation to be received can only be identified at a later date, subject to the approval from the Director General of Taxes, the amount of the loss as referred to in paragraph (8) shall be recorded as an expense at a later date.

 

(10)

In the event of a transfer of assets which fulfils the requirements referred to in Article 4 paragraph (3) subparagraph a and subparagraph b, the net book value of the assets may not constitute a deductible expense as a loss for the transferor

 

(11)

Deleted.

 

 

 

 

 

 

 

6.

The provisions of paragraph (1a) Article 1 IA are amended and between paragraph (2) and paragraph (3) of Article 11A, 1 (one) paragraph is inserted, namely paragraph (2a), thereby, Article 11A reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Amortisation of costs to acquire intangible assets and other costs including costs to extend the right to build, right to cultivate, right to use and goodwill with a useful life of more than 1 (one) year that are used to derive, collect and maintain income shall be conducted in equal parts or in decreasing parts over the useful life, calculated by applying the amortisation rates on the costs or on the net book value and at the end of the useful life shall be fully amortised provided that it is conducted as per the consistency principle.

 

(1a)

Amortisation shall commence at the month the costs are incurred, except for certain business sectors.

 

(2)

To calculate amortisation, the useful life and amortisation rates are stipulated as follows:

 

 

 

 

 

 

 

 

 

Groups of Intangible Assets	Useful Life	Amortisation Rates based on
		The Straight-Line Method	The Declining Balance Method
Group 1	4 years	25%	50%
Group 2	8 years	12.5%	25%
Group 3	16 years	6.25%	12.5%
Group 4	20 years	5%	10%

 

 

 

 

 

 

 

 

(2a)

In the event intangible assets referred to in paragraph (2) have a useful life of more than 20 (twenty) years, the amortisation referred to in paragraph (1) shall be conducted according to the useful life referred to in paragraph (2) for group 4 intangible assets or according to the actual useful life based on the Taxpayer’s bookkeeping.

 

(3)

Costs incurred for the establishment and expansion of a company’s equity shall be charged in the year the costs are incurred or amortised pursuant to provisions referred to in paragraph (2).

 

(4)

Amortisation of costs to acquire rights and other costs with useful life of more than 1 (one) year in the oil and gas sector shall be conducted using the unit of production method.

 

(5)

Amortisation of costs to acquire mining rights other than that referred to in paragraph (4), forest concession rights and concession rights of natural resources and other natural products with a useful life of more than 1 (one year), shall be conducted using the unit of production method for a maximum of 20% (twenty per cent) per year.

 

(6)

Costs incurred prior to commercial operations with a useful life of more than 1 (one) year shall be capitalised and subsequently amortised pursuant to provisions referred to in paragraph (2).

 

(7)

In the event of a transfer of intangible asset or rights as referred to in paragraph (1), paragraph (4) and paragraph (5), the net book value of the assets or the rights shall not constitute a deductible expense as a loss and the amount received as compensation constitutes income in the year of the transfer.

 

(8)

In the event of a transfer of intangible assets that fulfils the requirements referred to in Article 4 paragraph (3) subparagraph a and subparagraph b, the net book value of such assets shall not be charged as a loss by the transferor.

 

 

 

 

 

 

 

7.

The provisions of paragraph (1), paragraph (2), paragraph (2b) and paragraph (3) of Article 17 are amended, Article 17 paragraph (2a) is deleted, between paragraph (2d) and paragraph (3) of Article 17, 1 (one) paragraph is inserted, namely paragraph (2e) and the elucidation of paragraph (5) and paragraph (6) of Article 17 is amended to be as listed in the elucidation of article by article, thereby, Article 17 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Tax rates applied to Taxable Income of:

 

 

a.

resident individual Taxpayers are as follows::

 

 

 

 

 

 

 

 

 

 

Tax Brackets	Tax Rates
up to IDR60,000,000.00 (sixty million rupiah)	5% (five per cent)
above IDR60,000,000.00 (sixty million rupiah) up to IDR250,000,000.00 (two hundred and fifty million rupiah)	15% (fifteen per cent)
above IDR250,000,000.00 (two hundred and fifty million rupiah) up to IDR500,000,000.00 (five hundred million rupiah)	25% (twenty-five per cent)
above IDR500,000,000.00 (five hundred million rupiah) up to IDR5,000,000,000.00 (five billion rupiah)	30% (thirty per cent)
above IDR5,000,000,000.00 (five billion rupiah)	35% (thirty-five per cent)

 

 

 

 

 

 

 

 

 

b.

resident corporate Taxpayers and permanent establishments of 22% (twenty-two per cent) which will take effect in 2022 tax year..

 

(2)

Rates referred to in paragraph (1) subparagraph a may be changed by a Government Regulation after being submitted by the government to the House of Representatives of the Republic of Indonesia to be discussed and agreed upon in the preparation of the Draft State Budget.

 

(2a)

Deleted.

 

(2b)

Resident corporate Taxpayers:

 

 

a.

in the form of public companies;

 

 

b.

with total fully paid shares traded on the stock exchange in Indonesia amounting to a minimum of 40% (forty per cent); and

 

 

c.

fulfilling certain requirements,

 

 

are eligible for a 3% (three per cent) lower rate than the rate referred to in paragraph (1) subparagraph b.

 

(2c)

Tax rate applied to income in the form of dividends distributed to resident individual Taxpayers shall be a maximum of 10% (ten per cent) and is final.

 

(2d)

Further provisions on the amounts of rates as referred to in paragraph (2c) shall be stipulated by a Government Regulation.

 

(2e)

Further provisions on certain requirements referred to in paragraph (2b) subparagraph c shall be stipulated by or based on a Government Regulation.

 

(3)

The amounts of Tax Brackets referred to in paragraph (1) subparagraph a may be changed by a Minister of Finance Regulation.

 

(4)

For the purpose of the application of tax rates referred to in paragraph (1), the amount of Taxable Income shall be rounded down to full thousands.

 

(5)

The amount of tax payable for resident individual Taxpayers liable to tax in a fraction of a tax year as referred to in Article 16 paragraph (4) shall be calculated based on the number of days in the fraction of a tax year divided by 360 (three hundred and sixty) multiplied by the tax payable for 1 (one) tax year.

 

(6)

For the purpose of the calculation of tax as referred to in paragraph (5), each full month shall be treated as 30 (thirty)days.

 

(7)

A Government Regulation may stipulate separate tax rates on income referred to in Article 4 paragraph (2) provided that the rates do not exceed the highest tax rate referred to in paragraph (1).

 

 

 

 

 

 

 

8.

The provisions of paragraph (1) of Article 18 are amended, Article 18 paragraph (3e) is deleted, the elucidation of Article 18 is added and the elucidation of paragraph (3) of Article 18 is amended to be as listed in the elucidation of article by article, thereby, Article 18 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

The Minister of Finance is authorised to stipulate the threshold of borrowing costs that may be charged to calculate tax based on this Law.

 

(2)

The Minister of Finance is authorised to determine when dividends are accrued by resident Taxpayers for capital participation in an offshore business entity other than listed business entities with the following provisions:

 

 

a.

the capital participation of the resident Taxpayer amounts to a minimum of 50% (fifty per cent) of the total share capital; or

 

 

b.

together with another resident Taxpayer has capital participation of a minimum of 50% (fifty per cent) of the total share capital.

 

(3)

The Director General of Taxes is authorised to adjust the amount of income and deductions and determine debts as equity to calculate the amount of Taxable Income for a Taxpayer that has a special relationship with another Taxpayer according to the arm’s length principle that is not influenced by a special relationship using the comparable uncontrolled price method, reselling price method, cost-plus method or other methods.

 

(3a)

The Director General of Taxes is authorised to enter into an agreement with a Taxpayer and cooperate with the tax authorities of other countries to determine the transfer pricing between related parties as referred to in paragraph (4), which applies to a certain period and to monitor the implementation as well as to renegotiate after the period ends.

 

(3b)

Taxpayers purchasing shares or assets of a company through another party or a special purpose company may be determined as the actual party conducting the purchase, provided that such Taxpayers have a special relationship with the other party or the entity and there is non arm's length pricing.

 

(3c)

Sales or transfers of shares between conduit companies or special purpose companies incorporated or domiciled in tax haven countries that have a special relationship with entities incorporated or domiciled in Indonesia or permanent establishments in Indonesia may be deemed sales or transfers of shares of entities incorporated or domiciled in Indonesia or permanent establishments in Indonesia.

 

(3d)

The amount of income accrued by a resident individual Taxpayer from an employer related to another company that is neither incorporated nor domiciled in Indonesia may be adjusted, in the event that the employer transfers all or part of the resident individual Taxpayer’s income in the forms of expenses or other expenditures that are paid to the company that is neither incorporated nor domiciled in Indonesia.

 

(3e)

Deleted.

 

(4)

the special relationship referred to in paragraph (3) to paragraph (3d), Article 9 paragraph (1) subparagraph f and Article 10 paragraph (1) is deemed to exist if:

 

 

a.

the Taxpayer has direct or indirect capital participation of a minimum of 25% (twenty-five per cent) in another Taxpayer; the relationship between the Taxpayer with capital participation of a minimum of 25% (twenty-five per cent) in two or more Taxpayers; or the relationship between the aforementioned two or more Taxpayers;

 

 

b.

the Taxpayer controls another Taxpayer or two or more Taxpayers are under the same control, either directly or indirectly; or

 

 

c.

there is a family relationship either by blood or marriage in a vertical lineage of one degree  and/or in a horizonal lineage of one degree.

 

(5)

Deleted.

 

 

 

 

 

 

 

9.

The provisions of Article 32A are amended, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

The Government is authorised to establish and/or implement treaties and/or agreements in the field of taxation with the governments of tax treaty partners, either bilaterally or multilaterally in the context of:

 

a.

avoidance of double taxation and prevention of tax evasion;

 

b.

prevention of base erosion and profit shifting;

 

c.

exchange of tax information;

 

d.

assistance in the collection of taxes; and

 

e.

other tax cooperation.

 

 

 

 

 

 

 

10.

Between CHAPTER VII and CHAPTER VIII, 1 (chapter) is inserted, namely CHAPTER VIIA, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.

Between Article 32B and Article 33, 1 (one) article is inserted, namely Article 32C, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

Further provisions on:

 

a.

income in the form of gains from transfers of assets in the form of grants, aids or donations that are excluded from taxable objects because they are given to relatives in a lineage of one degree and to religious bodies, educational or other social entities including foundations, cooperatives or to any individual conducting micro and small business, provided that there is no business, employment, ownership or control relationship between the parties concerned as referred to in Article 4 paragraph (1) subparagraph d number 4;

 

b.

the criteria of certain skills and the imposition of Income Tax on foreign nationals as referred to in Article 4 paragraph (1a);

 

c.

gifts received by relatives within a lineage of one degree, religious bodies, educational entities, social entities including foundations, cooperatives or any individuals conducting micro and small business, provided that there is no business, employment, ownership nor control relationship between the parties concerned as referred to in Article 4 paragraph (3) subparagraph a number 2;

 

d.

reimbursements or remunerations in respect of employment or services received or accrued in the form of in-kind and/or fringe benefits that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph d;

 

e.

the criteria, period and changes to the threshold of invested dividends as well as the provisions on the exclusion from Income Tax on dividends or other income as referred to in Article 4 paragraph (3) subparagraph f;

 

f.

income from investments in certain sectors received by pension funds that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph h;

 

g.

scholarships that fulfil certain requirements that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph l;

 

h.

the surplus received or accrued by an institution or a non-profit organisation engaged in education and/or research and development that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph m;

 

i.

aid or donations paid by the Social Security Administrative Body to certain Taxpayers that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph n;

 

j.

deposit funds for hajj fees and/or special hajj fees and income from the development of hajj finances in certain financial fields or instruments received by the Hajj Financial Management Agency that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph o;

 

k.

the surplus received/accrued by social and/or religious bodies or institutions that are excluded from taxable objects as referred to in Article 4 paragraph (3) subparagraph p;

 

l.

promotional and sales expenses that may be deducted from gross income as referred to in Article 6 paragraph (1) subparagraph a number 7;

 

m.

bad debts that constitute deducctible expenses referred to in Article 6 paragraph (1) subparagraph h;

 

n.

expenses for the reimbursements or remunerations given in the form of in-kind and/or fringe benefits constituting deductible expenses referred to in Article 6 paragraph (1) subparagraph n;

 

o.

the establishment or accumulation of reserve funds constituting deductible expenses as referred to in Article 9 paragraph (1) subparagraph c;

 

p.

groups of tangible assets, useful life and the calculation of depreciation as referred to in Article 11 paragraph (6) and paragraph (6a);

 

q.

depreciation of tangible assets held and used in certain business sectors as referred to in Article 11 paragraph (7);

 

r.

the start of amortisation for certain business sectors as referred to in Article 11A paragraph (1a);

 

s.

the calculation of amortisation as referred to in Article 11A paragraph (2) dan paragraph (2a);

 

t.

the threshold of the borrowing costs that may be expensed to calculate tax as referred to in Article 18 paragraph (1);

 

u.

the determination of the time dividends are accrued by resident Taxpayers for capital participation in an offshore business entity other than public-listed business entities that referred to in Article 18 paragraph (2);

 

v.

the application of the arm’s length principle in the context of calculating the amount of Taxable Income for Taxpayers that have a special relationship with other Taxpayers referred to in Article 18 paragraph (3);

 

w.

the implementation of the transaction price pricing between related parties as referred to in Article 18 paragraph (3a);

 

x.

the determination of the actual party conducting the purchase of shares or company assets through a special purpose company as referred to in Article 18 paragraph (3b);

 

y.

the determination on the sales of transfers of shares of entities incorporated or domiciled in Indonesia or permanent establishments in Indonesia as referred to in Article 18 paragraph (3c);

 

z.

adjustment of the amount of income accrued by a resident individual Taxpayer from an employer related to another company that is not incorporated and not domiciled in Indonesia as referred to in Article 18 paragraph (3d);

 

aa.

the criteria of the special relationship referred to in Article 18 paragraph (4);

 

bb.

the establishment and/or implementation of treaties and/or agreements in the field of taxation as referred to in Article 32A,

 

shall be stipulated by or based on a Government Regulation.

 

 

 

 

 

 

 

 

Several provisions under Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (State Gazette of the Republic of Indonesia of 1983 Number 51, Supplement to State Gazette of the Republic of Indonesia Number 3264) as amended several times, last amended by Law Number 42 of 2009 concerning the Third Amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods (State Gazette of the Republic of Indonesia of 2009 Number 150, Supplement to the State Gazette of the Republic of Indonesia Number 5069), are as follows:

 

 

 

 

 

 

 

1.

The provisions of paragraph (2) and paragraph (3) of Article 4A are amended, thereby, Article 4A reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Deleted.

 

(2)

The types of goods not subject to Value Added Tax are certain goods within the following groups of goods:

 

 

a.

deleted;

 

 

a.

deleted;

 

 

b.

deleted;

 

 

c.

food and beverages served in hotels, restaurants, eateries, grocery shops and the like, including food and beverages, either consumed on the premises or not, including food and beverages supplied by catering businesses that constitute taxable objects of local taxes and user charges pursuant to statutory provisions on local taxes and user charges; and

 

 

d.

money, gold bullions for foreign exchange reserves and securities.

 

(3)

The types of services not subject to Value Added Tax are certain services within the following groups of services:

 

 

a.

deleted;

 

 

b.

deleted;

 

 

c.

deleted;

 

 

d.

deleted;

 

 

e.

deleted;

 

 

f.

religious services;

 

 

g.

deleted;

 

 

h.

arts and entertainment services, including all types of services performed by artists and entertainers, that constitute taxable objects of local taxes and user charges pursuant to statutory provisions on local taxes and user charges;

 

 

i.

deleted;

 

 

j.

deleted;

 

 

k.

deleted;

 

 

l.

hospitality services, including bedroom rental services and/or room rental services in hotels that constitute taxable objects of local taxes and user charges pursuant to statutory provisions on local taxes and user charges;

 

 

m.

services provided by the government in the context of general governance, including all types of services in connection with service activities that may only be conducted by the government according to its authority pursuant to statutory laws and regulations and such services cannot be provided by other forms of business;

 

 

n.

car park services, including the provision of car parks by car park owners and/or car park entrepreneurs to car park users that constitute taxable objects of local taxes and user charges pursuant to statutory provisions on local taxes and user charges;

 

 

o.

deleted;

 

 

p.

deleted; and

 

 

q.

catering services, including all services of providing food and beverage that constitute taxable objects of local taxes and user charges pursuant to statutory provisions on local taxes and user charges.

 

 

 

 

 

 

 

2.

The provisions of paragraph (1) and paragraph (3) of Article 7 are amended, 1 (one) paragraph is added, namely paragraph (4) and the elucidation of paragraph (2) of Article 7 is amended to be as listed in the elucidation of article by article, thereby, Article 7 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Value Added Tax rates amount to:

 

 

a.

11% (eleven per cent) effective on 1 April 2022;

 

 

b.

12% (twelve per cent) effective no later than 1 January 2025.

 

(2)

A Value Added Tax rate of 0% (zero per cent) shall be imposed on:

 

 

a.

exports of Tangible Taxable Goods;

 

 

b.

exports of Intangible Taxable Goods; and

 

 

c.

exports of Taxable Services.

 

(3)

Value Added Tax Rates referred to in paragraph (1) may be changed to a minimum of 5% (five per cent) and a maximum of 15% (fifteen per cent).

 

(4)

Changes to the rates of Value Added Tax as referred to in paragraph (3) shall be stipulated by a Government Regulation after being submitted by the Government to the House of Representatives of the Republic of Indonesia to be discussed and agreed upon in the preparation of the Draft State Budget.

 

 

 

 

 

 

 

3.

The provisions of Article 8A paragraph (2) are deleted and 1 (one) paragraph is added, namely paragraph (3), thereby, Article 8A reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Value Added Tax payable is calculated by multiplying the rate referred to in Article 7 with the Tax Base which includes Selling Price, Reimbursement, Import Value, Export Value or other values.

 

(2)

Deleted.

 

(3)

Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods as well as utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory, which in the calculation of Value Added Tax payable uses the Tax Base in the form of other values as referred to in paragraph (1), is creditable.

 

 

 

 

 

 

 

4.

The provisions of paragraph (5), paragraph (6) and paragraph (8) subparagraph f and subparagraph g Article 9 are amended, Article 9 paragraph (4d), paragraph (7), paragraph (7a), paragraph (7b), paragraph (8) subparagraph c and paragraph (13) are deleted and the elucidation of Article 9 paragraph (4) is amended to be as listed in the elucidation of article by article, thereby, Article 9 reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Deleted.

 

(2)

Input VAT in a Taxable Period is credited against Output VAT in the same Taxable Period.

 

(2a)

For Taxable Persons that have not performed supplies of Taxable Goods and/or Taxable Services and/or exports of Taxable Goods and/or Taxable Services, Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods Taxes as well as the utilisation of Intangible Taxable Goods and/or the utilisation of Taxable Services from outside the Customs Territory within the Customs Territory is creditable insofar as the provisions on crediting under this Law are fulfilled.

 

(2b)

Input VAT that is credited must use a Tax Invoice that fulfils the requirements referred to in Article 13 paragraph (5) and paragraph (9).

 

(3)

If in a Taxable Period, Output VAT is greater than Input VAT, the difference constitutes Value Added Tax that must be remitted by Taxable Persons .

 

(4)

If in a Taxable Period, creditable Input VAT is greater than Output VAT, the difference constitutes tax overpayment carried forward to the next Taxable Period.

 

(4a)

For the Input VAT overpayment as referred to in paragraph (4), an application for refunds may be submitted at the end of the accounting year.

 

(4b)

Excluded from provisions referred to in paragraph (4) and paragraph (4a), for the Input VAT overpayment, applications for refunds in each Taxable Period may be submitted by:

 

 

a.

Taxable Persons exporting Tangible Taxable Goods;

 

 

b.

Taxable Persons supplying Taxable Goods and/or supplying Taxable Services to Value Added Collecting Agents;

 

 

c.

Taxable Persons performing supplies of Taxable Goods and/or supplies Taxable Services on which Value Added Tax is not collected;

 

 

d.

Taxable Persons performing exports of Intangible Taxable Goods;

 

 

e.

Taxable Persons performing exports of Taxable Services; and/or

 

 

f.

deleted.

 

(4c)

Refunds of Input VAT overpayment to Taxable Persons as referred to in paragraph (4b) subparagraph a to subparagraph e, having the criteria as low-risk Taxable Persons shall be conducted using preliminary tax refunds pursuant to provisions referred to in Article 17C paragraph (1) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures and the amendments thereto.

 

(4d)

Deleted.

 

(4e)

The Director General of Taxes may audit Taxable Persons as referred to in paragraph (4c) and issue notices of tax assessment after performing preliminary tax refunds.

 

(4f)

If based on audit findings as referred to in paragraph (4e), the Director General of Taxes issues a Notice of Tax Underpayment Assessment, the amount of tax underpayment shall be added with an administrative penalty in the form of interest as referred to in Article 13 paragraph (2) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures and the amendments thereto.

 

(5)

In the event that in a Taxable Period, a Taxable Person performs:

 

 

a.

taxable supplies and Input VAT in respect of the supplies is creditable; and

 

 

b.

taxable supplies and Input VAT in respect of the supplies is non-creditable and/or non- taxable supplies,

 

 

in the event that a fraction of the taxable supplies referred to in subparagraph a may be ascertained from the books of accounts, the amount of creditable Input VAT is the Input VAT in respect of the supplies referred to in subparagraph a.

 

(6)

In the event that in a Taxable Period, a Taxable Person performs:

 

 

a.

taxable supplies and input VAT in respect of the supplies is creditable; and

 

 

b.

taxable supplies and Input VAT in respect of the supplies is non-creditable and/or non- taxable supplies,

 

 

where the Input VAT in respect of the taxable supplies referred to in subparagraph a cannot be ascertained, the amount of creditable Input VAT is calculated using the Input VAT crediting guidelines.

 

(6a)

If within a period of 3 (three) years since the Taxable Period of the first Input VAT crediting as referred to in paragraph (2a), Taxable Persons have not performed supplies of Taxable Goods and/or Taxable Services and/or exports of Taxable Goods and /or Taxable Services related to the Input VAT, the Input VAT that has been credited within the period of 3 (three) years becomes non-creditable.

 

(6b)

Deleted.

 

(6c)

The period referred to in paragraph (6a) for certain business sectors may be set at more than 3 (three) years.

 

(6d)

Provisions referred to in paragraph (6a) also apply to Taxable Persons that dissolve (terminate) businesses, deregister Taxable Persons or subject to ex officio deregistration of Taxable Persons within a period of 3 (three) years since the Taxable Period of the first Input VAT crediting.

 

(6e)

Non-creditable Input VAT referred to in paragraph (6a):

 

 

a.

must be repaid to the state treasury by a Taxable Person , in the event that the Taxable Person :

 

 

 

1.

has received the tax refund of the said Input VAT; and/or

 

 

 

2.

has credited the said Input VAT against the Output VAT payable in a Taxable Period;

 

 

b.

cannot be carried forward to the next Taxable Period and an application for refund cannot be submitted, after the statute of limitation of 3 (three) years referred to in paragraph (6a) elapses or upon dissolution (termination) of business or deregistration of Taxable Persons as referred to in paragraph (6d) by Taxable Persons , in the event that the Taxable Persons carry forward the said tax refunds.

 

(6f)

Repayment of Input VAT as referred to in paragraph (6e) subparagraph a is conducted no later than:

 

 

a.

the end of the following month after the statute of limitation date of the period of 3 (three) years as referred to in paragraph (6a);

 

 

b.

the end of the following month after the statute of limitation date of the period for certain business sectors as referred to in paragraph (6c); or

 

 

c.

end of the month following the date of dissolution (termination) of the business or deregistration of Taxable Persons as referred to in paragraph (6d).

 

(6g)

In the event that Taxable Persons do not fulfil the repayment obligation according to the period referred to in paragraph (6f), the Director General of Taxes issues a Notice of Tax Underpayment Assessment on the amount of tax that should be repaid as referred to in paragraph (6e) subparagraph a by the Taxable Persons plus an administrative penalty in the form of interest as referred to in Article 13 paragraph (2a) of Law Number 6 of 1983 concerning General Provisions and Tax Procedures and the amendments thereto.

 

(7)

Deleted.

 

(7b)

Deleted.

 

(8)

Input VAT crediting as referred to in paragraph (2) cannot be applied to expenses for:

 

 

a.

deleted;

 

 

b.

acquisition of Taxable Goods or Taxable Services without a direct relationship with business;

 

 

c.

deleted;

 

 

d.

deleted;

 

 

e.

deleted;

 

 

f.

acquisition of Taxable Goods or Taxable Services for which the Tax Invoice does not fulfil the provisions referred to in Article 13 paragraph (5) or paragraph (9) or does not include the name, address and Taxpayer Identification Number of the buyer of Taxable Goods or the Taxable Service recipient ;

 

 

g.

utilisation of Intangible Taxable Goods or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory for which Tax Invoice does not fulfil the provisions referred to in Article 13 paragraph (6);

 

 

h.

deleted;

 

 

i.

deleted; and

 

 

j.

deleted.

 

(9)

Creditable Input VAT but not yet credited against Output VAT in the same Taxable Period is creditable in the next Taxable Period no later than 3 (three) Taxable Periods after the end of the Taxable Period when the Tax Invoice is prepared provided that it has not been charged as an expense or has not been capitalised in the acquisition prices of Taxable Goods or Taxable Services and fulfils the provisions on crediting under this Law.

 

(9a)

Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods as well as utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory before an Entrepreneur is registered as a Taxable Person , may be credited by Taxable Persons using the guidelines for Input VAT crediting of 80% (eighty per cent) of the Output VAT that should otherwise be collected.

 

(9b)

Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods as well as utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory that are not filed in the Periodic Value Added Tax Returns that are notified and/or found upon audits may be credited by Taxable Persons insofar as provisions on crediting under this Law are fulfilled.

 

(9c)

Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods as well as utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory that is collected with the issuance of tax assessments may be credited by Taxable Persons in the principal amount of Value Added Tax stated in the tax assessment provided that the said tax assessment has been settled and no legal action has been undertaken and provisions on crediting under this Law are fulfilled. ****)

 

(10)

Deleted.

 

(11)

Deleted.

 

(12)

Deleted.

 

(13)

Deleted.

 

(14)

In the event of a transfer of Taxable Goods in the context of a merger, consolidation, spin-off, split- up and acquisition, Input VAT on the transferred Taxable Goods that has not been credited by the transferor Taxable Person may be credited by the transferee Taxable Person provided that the Tax Invoice is received after the transfer and Input VAT has not been charged as an expense or capitalised.

 

 

 

 

 

 

 

5.

Between Article 9 and Article 10, 1 (one) article is inserted, namely Article 9A, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Taxable Persons that:

 

 

a.

have business turnover in 1 (one) accounting year not exceeding a certain threshold;

 

 

b.

conduct certain businesses; and/or

 

 

c.

supply certain Taxable Goods and/or certain Taxable Services,

 

 

may collect and remit Value Added Tax payable on supplies of Taxable Goods and/or Taxable Services in a certain amount.

 

(2)

Input VAT on acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods as well as utilisation of Intangible Taxable Goods and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory, in respect of supplies by Taxable Persons as referred to in paragraph (1) is non-creditable.

 

 

 

 

 

 

 

6.

The provisions of paragraph (2) and paragraph (3) of Article 16B are amended and between paragraph (1) and paragraph (2) of Article 16B, 1 (one) paragraph is inserted, namely paragraph (1a), thereby, Article 16B reads as follows:

 

 

 

 

 

 

 

 

 

(1)

Tax payable is not collected in part or in whole or exempt from taxation, either temporarily or permanently for:

 

 

a.

activities in certain regions or certain places within the Customs Territory;

 

 

b.

supplies of certain Taxable Goods or supplies of certain Taxable Services;

 

 

c.

imports of certain Taxable Goods;

 

 

d.

utilisation of certain intangible Taxable Goods from outside the Customs Territory within the Customs Territory; and

 

 

e.

utilisation of certain Taxable Services from outside the Customs Territory within the Customs Territory,

 

 

shall be stipulated by a Government Regulation.

 

(1a)

Tax payable not collected in part or in whole or exempt from taxation, either temporarily or permanently, as referred to in paragraph (1) is limited for the purpose of:

 

 

a.

encouraging exports and industrial downstreaming which constitute a national priority;

 

 

b.

accommodating the possibility of agreements with other countries in the fields of trade and investment, ratified international conventions as well as other international common practice;

 

 

c.

encouraging the improvement of public health through the procurement of vaccines in the context of the national vaccination program;

 

 

d.

improving national education and intelligence by increasing the availability of general textbooks, scriptures and religious textbooks at relatively affordable prices for the community;

 

 

e.

encouraging the construction of houses of worship;

 

 

f.

ensuring the implementation of government projects financed by grants and/or foreign loans;

 

 

g.

accommodating international common practice in imports of certain Taxable Goods that are exempt from Import Duties;

 

 

h.

increasing the availability of Taxable Goods and/or Taxable Services required in the context of handling natural disasters and non-natural disasters that are designated as national natural disasters and national non-natural disasters;

 

 

i.

ensuring the availability of public air transportation to encourage the smooth traffic of goods and people in certain regions where other adequate transportation facilities are not available, where the ratio between the volume of goods and people to be moved and the available means of transport is very high; and/or

 

 

j.

supporting the availability of certain strategic goods and services in the context of national development, including:

 

 

 

1.

basic staples;

 

 

 

2.

certain medical services and those in the national health insurance program system;

 

 

 

3.

social services;

 

 

 

4.

financial services;

 

 

 

5.

insurance services;

 

 

 

6.

educational services;

 

 

 

7.

public transportation services on land and water and domestic air transportation services which constitute an integral part of foreign air transportation services; and

 

 

 

8.

labour services.

 

(2)

Input VAT paid for acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods and utilisation of Intangible Taxable Goods from outside the Customs Territory within the Customs Territory and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory for which Value Added Tax is not collected on the supplies as referred to in paragraph (1) is creditable.

 

(3)

Input VAT paid for acquisitions of Taxable Goods and/or Taxable Services, imports of Taxable Goods and utilisation of Intangible Taxable Goods from outside the Customs Territory within the Customs Territory and/or utilisation of Taxable Services from outside the Customs Territory within the Customs Territory for which the supplies are exempt from Value Added Tax as referred to in paragraph (1) is non-creditable.

 

 

 

 

 

 

 

7.

Between CHAPTER VA and CHAPTER VI, 1 (one) chapter is inserted, namely CHAPTER VB, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.

Between Article 16F and Article 17, 1 (one) article is inserted, namely Article 16G, thereby, it reads as follows:

 

 

 

 

 

 

 

 

 

Further provisions on:

 

a.

other values as referred to in Article 8A paragraph (1);

 

b.

the criteria of not having supplied Taxable Goods and/or Taxable Services and/or exports of Taxable Goods and/or Taxable Services as referred to in Article 9 paragraph (2a);

 

c.

calculation and procedures for refunds of Input VAT as referred to in Article 9 paragraph (4c);

 

d.

low-risk Taxable Persons that are granted with preliminary tax refunds as referred to in Article 9 paragraph (4c);

 

e.

Input VAT crediting guidelines as referred to in Article 9 paragraph (6);

 

f.

determination of certain business sectors as referred to in Article 9 paragraph (6c);

 

g.

repayment of Input VAT as referred to in Article 9 paragraph (6e) subparagraph a;

 

h.

Input VAT crediting as referred to in Article 9 paragraph (9a), paragraph (9b) and paragraph (9c); and

 

i.

a certain amount of business turnover, certain types of business, certain types of Taxable Goods, certain types of Taxable Services and the amount of collected and remitted Value Added Tax as referred to in Article 9A paragraph (1),

 

shall be stipulated in a Minister of Finance Regulation.

 

 

 

 

 

 

 

 

(1)

Taxpayers may disclose net assets that have not been or under-disclosed in a statement letter insofar as the Director General of Taxes has not found data and/or information on the assets concerned.

(2)

The net assets referred to in paragraph (1) are the value of the assets minus the value of liabilities referred to in Law Number 11 of 2016 concerning Tax Amnesty.

(3)

The statement letter referred to in paragraph (1) is the statement letter referred to in Law Number 11 of 2016 concerning Tax Amnesty.

(4)

The assets referred to in paragraph (2) are assets acquired by Taxpayers from 1 January 1985 to 31 December 2015.

(5)

The net assets referred to in paragraph (1) are considered additional income and subject to final Income Tax.

(6)

Final Income Tax referred to in paragraph (5) is calculated by multiplying the rate by the tax base.

(7)

The rate referred to in paragraph (6) is set at:

 

a.

6% (six per cent) of net assets within the territory of the Unitary State of the Republic of Indonesia, provided that they are invested in:

 

 

1.

business in the natural resource processing sector or the renewable energy sector within the territory of the Unitary State of the Republic of Indonesia; and/or

 

 

2.

government securities;

 

b.

8% (eight per cent) of net assets within the territory of the Unitary State of the Republic of Indonesia and not invested in:

 

 

1.

business in the natural resource processing sector or the renewable energy sector within the territory of the Unitary State of the Republic of Indonesia; and/or

 

 

2.

government securities;

 

c.

6% (six per cent) of net assets outside the territory of the Unitary State of the Republic of Indonesia, provided that:

 

 

1.

transferred to the territory of the Unitary State of the Republic of Indonesia; and

 

 

2.

invested in:

 

 

 

a)

business in the natural resource processing sector or the renewable energy sector within the territory of the Unitary State of the Republic of Indonesia; and/or

 

 

 

b)

government securities;

 

d.

8% (eight per cent) of net assets outside the territory of the Unitary State of the Republic of Indonesia provided that:

 

 

1.

transferred to the territory of the Unitary State of the Republic of Indonesia; and

 

 

2.

not invested in:

 

 

 

a)

business in the natural resource processing sector or the renewable energy sector within the territory of the Unitary State of the Republic of Indonesia; and/or

 

 

 

b)

government securities; or

 

e.

11% (eleven per cent) of net assets outside the territory of the Unitary State of the Republic of Indonesia and not transferred to the territory of the Unitary State of the Republic of Indonesia.

(8)

The tax base referred to in paragraph (6) amounts to the net assets that have not been or underdisclosed in the statement letter.

(9)

The value of assets used as the guidelines for calculating the amount of net assets referred to in paragraph (8) is determined based on:

 

a.

the nominal value, for assets in the form of cash or cash equivalents;

 

b.

the value determined by the government, namely the Sales Value of Taxable Object, for land and/or buildings and the Sales Value of Motor Vehicles, for motor vehicles;

 

c.

the value published by PT Aneka Tambang Tbk., for gold and silver;

 

d.

the value published by PT Bursa Efek Indonesia, for shares and warrants traded at the Indonesia Stock Exchange; and/or

 

e.

the value published by PT Penilai Harga Efek Indonesia (Securities Pricing Agency/SPA), for government securities and debt securities and/or sharia bonds issued by the company,

 

according to the condition and circumstance of the assets at the end of the last Tax Year.

(10)

If no value may be used as a guideline as referred to in paragraph (9) subparagraph b to subparagraph e, the value of the assets is determined based on the value of the results of the assessment by the public appraisal office.

 

 

 

 

 

 

 

(1)

Taxpayers disclose the net assets referred to in Article 5 paragraph (1) through the asset declaration letter and submitted to the Director General of Taxes from 1 January 2022 to 30 June 2022.

(2)

The asset declaration letter must be attached with:

 

a.

payment receipt of final Income Tax;

 

b.

detailed list of assets and the information on ownership of reported assets;

 

c.

the list of liabilities;

 

d.

statement of transferring net assets to the territory of the Unitary State of the Republic of Indonesia, if the Taxpayer intends to transfer net assets located outside the territory of the Unitary State of the Republic of Indonesia into the territory of the Unitary State of the Republic of Indonesia as referred to in Article 5 paragraph (7) subparagraph c and subparagraph d; and

 

e.

the statement to invest net assets in:

 

 

1.

business n the natural resource processing sector or the renewable energy sector within the territory of the Unitary State of the Republic of Indonesia; and/or

 

 

2.

government securities,

 

 

if the Taxpayer intends to invest the net assets as referred to in Article 5 paragraph (7) subparagraph a and subparagraph c.

(3)

The Director General of Taxes issues a certificate for the submission of the asset declaration letter by the Taxpayers.

(4)

If based on examination results, it is known that there is a discrepancy between the disclosed net assets and the actual situation, the Director General of Taxes may amend or cancel the certificate referred to in paragraph (3).

(5)

Taxpayers that have obtained a certificate referred to in paragraph (3) are not subject to administrative penalties referred to in Article 18 paragraph (3) of Law Number 11 of 2016 concerning Tax Amnesty.

(6)

Data and information sourced from the asset declaration letter and the attachments thereto administered by the Ministry of Finance or other parties related to the implementation of this Law cannot be used as a basis for an examination, investigation and/or criminal prosecution of a Taxpayer.

(7)

Further provisions on procedures for the disclosure of net assets are stipulated in a Minister of Finance Regulation.