A new regulation providing a temporary cash flow relief for some taxpayers has been issued by The Ministry of Finance of Indonesia. The regulation is intended to sustain the positive cash flow of certain taxpayers for creating stable macro economy, fostering economic growth, enhancing the competitive advantage of local industries and providing more employment.
The following industries qualified for this tax relief:
- Ready-to-wear clothes industry;
- Textile industry;
- Footwear industry;
- Furniture industry; and
- Children’s toys industry.
A recommendation from the concerned Minister will be required to apply for this relief. An application must first be sent to the Head of the Tax Office in order to obtain the relief.
The relief is allowed as a reduction of monthly estimated tax payments for the tax period of September 2013 until December 2013 on the basis of a reduction of the actual tax payment by the maximum percentage limit, and/or by allowing delayed payment of the annual corporate income tax for the Fiscal Year 2013. This therefore gives the business a cash flow advantage.
The highest limits for the reduction of the estimated monthly tax installment are:
- 25% of the installment for eligible taxpayers which are not export-oriented for the tax period August 2013; or
- 50% of the installment for eligible taxpayers which are export-oriented for the tax period August 2013.
The maximum period of postponement of payment for the annual corporate income tax is three months from the prescribed deadline based on the taxpayer’s book year-end. Any late payment penalty resulting from the postponement of tax payments will be waived by The Director General of Tax (DGT). The regulation is effective from 27 August 2013.
