BKPM Issued Guidelines on Tax Incentive Offline Applications

December 7, 2020

For the purpose of implementing the Minister of Finance (the “Minister”) Regulation No. 11/PMK.010/2020 dated February 11, 2020 on the Implementation of Government Regulation No. 78 of 2019 on the Income Tax Incentives for Investments in Certain Industries and/or Regions, as amended by the Minister Regulation No. 96/PMK.010/2020 dated July 27, 2020 (collectively, the “Minister Regulation”), the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) enacted Regulation No. 5 of 2020 dated November 10, 2020 on the Guidelines of Entity Income Tax Incentive Offline Submissions for Investments in Certain Industries and/or Regions (the “BKPM Regulation”). For your reference, our Newsflash on the Minister Regulation may be accessed here.

The highlight of the Minister Regulation is the delegation of authorization from the Director General of Tax to the Chairman of BKPM on behalf of the Minister. Due to such delegation, as of August 11, 2020, the income tax incentives under the Minister Regulation (collectively, the “Tax Incentives”) shall be applied through the Online Single Submission (OSS) System and the granting process of the Tax Incentives shall be done by BKPM through the OSS System.

The BKPM Regulation provides an alternative for the Tax Incentive applications other than by way of the OSS System, in case (i) there is any issue with the OSS System and it is not accessible for 5 (five) business days, (ii) there is no internet connection available in certain regions, or (iii) of any force majeure. In such case, the Tax Incentive applications may be submitted in hard copy to the Chairman of BKPM in the form attached in the BKPM Regulation along with the following requirements:

A copy of the applicant’s Business Identification Number (Nomor Induk Berusaha or NIB);
A copy of the applicant’s Business License/Principle License/Expansion License;
A copy of the applicant’s Taxpayer Registration Number (Nomor Pokok Wajib Pajak or NPWP);
A fiscal statement letter of the shareholders stating that the relevant shareholder (i) has submitted its annual income tax returns for the past two years and its value added tax returns for the past three periods, (ii) does not have any payable tax or has payable tax but it has been granted a permit to postpone the payment of the tax or pay the tax in installment, and (iii) is not in the process of criminal proceeding for tax crime and/or tax-related money laundering;
The details of the fixed assets of the applicant as stated in the capital investment value plan;
A statement letter signed by the applicant indicating that the entity has not commenced commercial production;
A statement letter signed by the applicant indicating the capability to fulfill administrative, technical, and qualitative requirements; and
A power of attorney in case the application is not submitted by the head of company.

The Chairman of BKPM or the appointed official shall issue the Decree of the Granting of Tax Incentive within 5 (five) business days since the application is verified.

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December 7, 2020