On 16 July 2020, the Ministry of Finance (MoF) issued Regulation No.86/PMK.03/2020 (PMK-86) providing the expansion of tax incentives in response to COVID-19. The regulation revokes and replaces MOF Regulation 44/PMK.03/2020.
Tax incentives for taxpayers affected by the coronavirus outbreak was first issued by Regulation No. 23/PMK.03/2020 dated March 23, 2020. Later MOF issued Regulation No. 44/PMK.03/2020 dated April 27, 2020 which revokes and replaces MOF Regulation 23.
The incentives and requirements under PMK-86 and SE-43 are comprehensively similar to those under PMK-44 and SE-43, as follows:
- For article 21 of income tax, 1189 industry sectors are now entitled to the tax incentives (previously are 1,062 under MOF Regulation 44).
- For income tax article 22, the Indonesian government expands the industry sectors that are entitled to the tax incentives to 721 (previously are 431 under MOF Regulation 44).
- For article 25 of income tax, the Indonesian government expands the industry fields that are entitled to the tax incentives to 1,013 (previously are 846 under MOF Regulation 44).
- For value added tax, the Indonesian government expands the industry fields that are entitled to the tax incentives to 716 (previously are 431 under MOF Regulation 44).
- All taxpayers who have already enjoyed the tax incentives (i.e. Income Tax Article 21, Income Tax Article 22, Income Tax Article 25, VAT and Final Tax on Small and Medium-Sized Enterprises) under MOF Regulation 44 can take advantage of the incentives until December 2020 (previously only until September 2020) without having to resubmit the reports in accordance with MOF Regulation 86.
- Notification of the use of incentives under Article 21 of income tax for both a head office and branch offices is now only issued by the head office (previously both the head office and the branches were required to submit a notification separately).
- Small and medium enterprises are now only required to submit a realization report to enjoy the tax incentives for final income tax (previously small and medium enterprises are required to request a statement letter).
Taxpayers who were not eligible for PMK-23 or PMK-44 tax incentives should check PMK-86 to see if their businesses are now eligible. Taxpayers currently benefiting from the incentives should ensure that their reporting formats comply with the amended requirements in PMK-86.
