Government Has Implemented New Tax Relaxation in Indonesia Following COVID-19 Situation

 As the Covid-19 pandemic kept taking its toll, the government impose tax relaxation in Indonesia to help the economy survive the outbreak. The authorities extended the incentives through Minister of Finance Regulation or Peraturan Menteri Keuangan (PMK) 9/PMK.03/2021. 

This article will summarize a few key points that you should put to your consideration. 

Tax Relaxation in Indonesia To Help Companies Survives The Outbreak

To prevent layoffs or worse bankruptcies, the government has implemented a new stipulation that reduces the corporate income tax in Indonesia. 

For the companies with annual revenue of less than IDR4.8 billion, the CIT or final tax PP 23 will be borne by the Government. As for companies with an income of more than IDR4.8 billion, tax article 25 (PPh 25) will be deferred by 50% and paid with a monthly installment scheme.

However, if the companys’ tax payable account more than the amount they’ve been paid through installment, they need to pay the rest by no later than April 2022.  In Indonesia, a general flat rate of 22% corporate income tax applies.

Individual Income Tax Reduction

To ease the burden of many low-income individuals during this difficult time, employees with annual regular income not exceeding IDR200 million, have Taxpayers Identification Number (NPWP), and within the business classification number (KLU) stated in this regulation, also will be exempted to pay Article 21 Income Tax (PPh 21). 

The details of business classifications number eligible to receive this benefit are listed in the following link. 

Simplifying VAT Tax Refund

For eligible taxpayers requesting a refund for a maximum of IDR5 billion will enjoy a Preliminary Value Added Tax (VAT) refund. However, some criteria need to be met, such as having a KITE license and must be within the business classification number (KLU) stated in this regulation. The details of the qualification can be found in PMK 9/PMK.03/2021 which can be accessed through this link. 

The Deadlines for Tax Reporting in Indonesia

Due to the current public health situation, the newest tax calendar in Indonesia that you should be referring to in order to ensure compliance is as follows:

• For individual annual tax returns and payments, the deadline is 31 March 2021.
• For corporate annual tax returns and payments, the deadline is 30 April 2021.

Besides the report deadline, the recent policy highlights that all taxpayers must submit a realization report by 20th of the following month to enjoy all types of tax incentives except for VAT Tax Refund. 

Furthermore, this regulation also allows taxpayers to revise the report at the latest by the end of the month following the month of the reporting deadline.

Ensure Compliance amid Coronavirus Outbreak in Indonesia

As a leading consulting company in Indonesia, Cekindo’s tax consultants and experts’ team always keeps up with the newest tax regulations. You are welcome to consult any matter related to taxation and compliance in Indonesia with our people.

Moreover, we also provide tax outsourcing services to ensure compliance for your business in Indonesia, especially amid the coronavirus outbreak in Indonesia.

Whatever your taxation need is, do not hesitate to discuss with us. Fill in the form below now. We are happy to help.