Amendment of the Income Tax Incentives Implementation for Investors in Certain Industries and/or Regions
On July 27, 2020, the Minister of Finance (the “Minister”) amended the implementing regulation of Government Regulation No. 78 of 2019 (“GR 78”), namely, the Minister Regulation No. 96/PMK.01/2020 of 2020 dated July 27, 2020 on the Amendment of the Minister Regulation No. 11/PMK.010/2020 on the Implementation of Government Regulation No. 78 of 2019 on the Income Tax Incentives for Investments in Certain Industries and/or Regions (“Minister Reg. 96”).
As a brief background, the Minister Regulation No. 11/PMK.010/2020 (“Minister Reg. 11”) as the main implementing regulation of GR 78 regulates matters related with the provisions of income tax incentives for investors in certain industries and/or regions, which includes (i) the requirements for tax incentives over tangible fixed assets, (ii) the application procedures to obtain tax incentives, and (iii) the requirements to utilize the tax incentives. Further elaboration on the income tax incentives referred to herein may be read on our Newsflash on GR 78.
In summary, Minister Reg. 96 amends the authorizations of the government officials on the procedures of the income tax incentives provisions. The differences between Minister Reg. 11 and Minister Reg. 96 will be elaborated below.
| Minister Reg. 11 | Minister Reg. 96 | Remarks |
| Amendment of Article 5 | ||
| The determination of the value of intangible fixed assets as the basis of income tax incentive calculation shall be made by the Director of General Taxation (the “Director”). | The determination shall be made by the Minister. | |
| Amendment of Article 6(6) | ||
| The OSS System will notify the Minister through the Director when the application of income tax incentive is completed. | The OSS System will notify the Minister directly when the application of income tax incentive is completed. | Article 6 stipulates provisions on the application procedures for an investor to be granted with the income tax incentive.
Based on such article, the OSS System will automatically determine whether or not an investor is eligible to be granted with the income tax incentive, based on the criteria set out under GR 78. The OSS System will then send a notification to the relevant investor if they are eligible, and such investor will be required to submit certain copies of documents through the OSS System. If the OSS System declares that the application is completed and acceptable, the OSS System will send a notification to the Minister of Finance as a suggestion of the granting of the income tax incentive. |
| Amendment of Article 7(2) | ||
| In the event the OSS System is not available, the application shall be submitted offline to the Director through the Head of the Capital Investment Coordinating Body (Badan Koordinasi Penanaman Modal or “BKPM”). | In the event the OSS System is not available, such application shall be submitted offline to the Minister through the Head of BKPM. | |
| Addition of Article 8A | ||
| The granting of the income tax incentive shall be made by the Head of BKPM, for and on behalf of the Minister.
The Head of BKPM will issue a granting decision by no later than 5 (five) days after all requirements have been met. The decision consists of information of the relevant investor, as follows: a. the name, taxation identification number, and address; b. the details of the type of income tax incentive; c. the business registration numbers, the principal license, the investment license, the capital investment registration, or the business license, and the business or project location submitted for the incentive; d. the starting period of the income tax incentive; e. obligations of the relevant taxpayer (or investor); f. prohibitions of the taxpayer; and g. the business field, the Indonesia Standard Industrial Classification (KBLI), the scope of product, and the value of the capital investment plan. The implementation of the income tax incentive granting by the Head of BKPM must be reported to the Minister quarterly. |
Based on Article 8 of Minister Reg. 11, the granting of the income tax incentive is determined by the Minister and issued by the Director instead of the Head of BKPM.
The Minister Reg. 11 also did not stipulate the information contained in the issued decision. |
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Minister Reg. 96 is effective 15 (fifteen) days since the date of promulgation, which is as of August 11, 2020.
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August 27, 2020
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