On 7 October the House of Representatives passed the harmonized taxation bill with aiming to support tax reforms and provide a fair, prudence, effective, and accountable tax system.

The bill contains the following key income tax changes:

  • The government intends to maintain the CIT rate at 22% (as for fiscal year 2021) for fiscal years 2022 and subsequent years. 
  • The reduction in the CIT rate applicable to public companies meeting certain criteria would be adjusted from 5% to 3%, in line with the change made by UU-2.
  • Benefits-In-Kind (BIK) related to earning, collecting, or maintaining income would be tax deductible for employers and taxable for employees.
  • VAT rate increased to 11% applicable from 1 April 2022, further rise to 12% by 1 January 2025, at the latest.
  • Introduction of carbon tax at a minimum of 30 rupiah per kilogram of CO2 equivalent (CO2e) on coal-fired power plants from April 2022.

The Bill will be submitted to the president to be signed and ratified into law.