Outsourced accounting service in Indonesia is a term used for all-in accounting services provided by an external party. Typically, outsourced accountants provide the-day-to-day management of payable accounts, receivable accounts, financial reporting, cash flow reporting and many others. Outsourced accountants generally consist of several individuals forming a small team, which will cost considerably less than hiring actual employees.
Types of Outsourced Accounting Service in Indonesia
Bookkeeping
In this service, we will organize your pre-existing books and ledgers. Should it be necessary, we shall create new ones. Furthermore, we will assist you in keeping tabs of claim forms, bank slips, bank statements, and various accounting reports that your company might have.
Financial Reports
In this service, we will record, organize, and compile records of your monthly accounts. Including balances, statements, receivables, and payables. Everything will be organized in order and will be ready for your disposal within your preferred timeline.
Payment Records
When conducting business, it is very likely that you will strike a partnership with external vendors. With outsourced accounting service in Indonesia, we will assist you in reviewing and managing invoices from vendors. We will make sure everything is orderly and make sure the figures are exactly correct.
Financial Planning
In doing business, planning your finances properly is strongly advised. In this service, we will give you suggestions on budgeting, forecast your financial condition in the future, and make sure everything goes smoothly.
Account Review
Streamlining and improving the accounting system is a must in order for the company to succeed. Therefore in this service, we will renew your accounting policies to the current developments. We will make sure that even the tiniest details will be kept in the records properly.
Benefits of Outsourced Accounting
Freedom
Most outsourced accounting service in Indonesia these days use cloud-based accounting software. With this method, you will be free to access your accounting records from anywhere in the world at any given time.
Cost Saving
It is quite expensive to hire and train dedicated accounting personnel. However, by hiring an outsourced accountant, you will eliminate potential hiring and training costs.
Continuity
When you hire accounting staff and they leave the company, important information goes out with them. By using outsourced staff, there is no risk of knowledge loss and you can get some continuity.
Type of Companies That Use Outsourced Accounting Service in Indonesia
Small Business
Small businesses do not usually need full-time accountants, considering that they are mostly still in the process to establish other departments. As such, recruiting outsourced accountants usually becomes a solution
Company Struggling to Hire
There are many cases where companies struggle to recruit full-time accountants, be it for requirements or experience reasons. When it happens, they tend to use outsourced accounting service in Indonesia.
Non-Profit Organizations
Just like their name, profit and finances and cash flow management are not typically the main priorities of this type of company, but there are times where they are still needed. Therefore in this scenario, it becomes a good solution to hire outsourced accountants.
How can Double M help?
Using Outsourced Accounting Service in Indonesia is a great way to manage your finances. With Double M’s help, you can focus on other aspects of businesses and leave the accounting matters to us.
Fintech Company in Indonesia has been thriving for quite sometime. Financial technology, commonly abbreviated as fintech, is a new form of technology that aims to disrupt the usage of traditional financial methods in providing financial services. Generally, there are four pillar areas of fintech: Artificial Intelligence, Blockchain, Cloud computing, and big data. Most people know Fintech in Indonesia for their usage of smartphone technology for mobile banking, investing, loan services, and cryptocurrency. In recent years, fintech companies are growing larger in Indonesia, both in numbers and revenues.
Reasons Why Fintech Company in Indonesia is Thriving
Here are 5 reasons why fintech company in Indonesia is thriving:
1. High Demographic, High Internet Usage, Low Bank Usage
With a population almost reaching the figure of 280 million, Indonesia is the fourth most populous country in the world. Around 204 million, or 70% percent of the population are active internet users. Considering the fact that fintech is internet-based, it makes Indonesia such a fertile market for these enterprises to invest in.
During the peak of the Covid-19 pandemic in 2020, about 129 million Indonesian used e-commerce and conducted transactions which amounted to IDR 266 trillion in total transaction value. As the most popular form of online payment these days, fintech companies are reaping the benefits of this upwards trend.
According to the e-Conomy SEA Report conducted by Google, Temasek, and Bain & Company, it was stated that 92 million Indonesians are unbanked, meaning they do not have any bank account at all, while 47 million are underbanked, meaning that they have a bank account but do not have access to credit cards as form of payment. This is an enormous opportunity for fintech companies that provide internet banking and digital payment services.
2. Government Support
Law and regulation compliance often become a tricky obstacle in the financial sector. Strict laws and regulations are there to protect the consumers. In Indonesia, the government realizes the needs for an inclusive financial system. That is precisely why every fintech in Indonesia operates under the license, authorization, and guidance from the OJK (Financial Services Authorities). The Minister of Finance, Sri Mulyani also reaffirmed the intent of the Indonesian government to support the optimization of fintech company in Indonesia. Apart from easing regulations, the Indonesian government also collaborates alongside fintechs for the distribution and sales of Surat Berharga Negara (National Securities). The government also struck a deal with fintech companies to distribute cash relief for at-risk citizens during the peak of the Covid-19 pandemic.
3. Huge Investment
Investment is an instrumental factor for the success of a company, and fintech company in Indonesia is no exception. According to Statista, global fintech financing went from USD 59.2 billion and almost quadrupled to USD 320.2 billion in 2021. This upward trajectory is also evident in Indonesia which is constantly rising. In 2018 there were 46 fintech financing being done with a total valuation of USD 300 million.
A year after, the number of deals increased to 65 with a total valuation of USD 700 million. In 2020, the number of deals went down to 57 with a total valuation of USD 500 million, this could be seen as the impact of the Covid-19 pandemic.
After the temporary downfall, the numbers substantially increased to 97 deals worth USD 1.6 billion in 2021, tripling the previous numbers. Throughout the first half of 2022, the number of deals went down to 51 but the total valuation increased to USD 1.8 billion. This constant growth in investment shows the confidence of the market to the Indonesian fintech ecosystem. As Indonesia progresses closer in its quest to become one of the world’s biggest internet economies, fintech company in Indonesia will reportedly continue to prosper and excel.
4. SMEs
The Conversation suggests that there are more than 60 million SMEs in Indonesia. They contribute to 60% of the country’s economy and absorb 97% of the workforce. This shows that SMEs are one of the linchpins of the country’s economy, However, only 12% of them were able to get financing or bank loans. The Covid-19 pandemic made the situation worse, considering approximately 50% or 30 million SMEs were closing because demands are diminishing. This becomes a huge opportunity for fintech company in Indonesia, especially for those operating in loan services/P2P lending. With millions of SMEs looking to bounce back, the fintech ecosystem will be back to its absolute peak.
How can Double M help?
Fintech company in Indonesia play a huge part in Indonesia’s economy. Double M can help you establish your own fintech company or link you with existing fintech company for business matchmaking.
Tax System in Indonesia – Before the inception of the Integrated Information System, the Indonesian government faced the obstacle of not being able to gain information about the flow of cash and goods. Recently, there is a problem regarding the export quota for Crude Palm Oil (CPO). Furthermore, information regarding the flow of cash and goods is also important since it directly affects the intensification of the country’s income, which is tax.
To further integrate the information system, the government has tried several solutions. First, introduce the Automatic Exchange of Information (AEOI), an information system to help the tax matters of companies in the banking, stock market, insurance sectors. Second, involving the National Land Agency (Badan Pertanahan Nasional) and Notary to gain information regarding the ownership of tax-mandatory properties such as land and building. Third, involving the Regional Revenue Department (Dinas Pendapatan Daerah) and One-Stop Administration Services Office (SAMSAT) to gain information on the ownership of tax-mandatory objects, specifically cars, motorcycles, and other vehicles. Fourth, mending the Law of Value-Added (VAT) Tax, done by changing some of the goods/services that are not previously VAT Tax objects into VAT Tax objects.
New Rule in Tax System in Indonesia
With the inception of the Rule Number PER-03/PJ/2022 in the tax system in Indonesia, the Directorate General of Tax is trying to introduce the use of ID Number (Nomor Induk Kependudukan) in order to oversee the flow of cash and goods. With this newly introduced rule, the government will be able to identify the tax-mandatory income of Indonesian citizens, specially those who are yet to acquire a Tax ID Number (NPWP).
In the rule it is mandatory for taxable employers (Pengusaha Kena Pajak), as the providers of taxable goods (Barang Kena Pajak) and taxable services (Jasa Kena Pajak), to list information such as name, address, Tax ID number (NPWP), and ID Number (NIK) on a Tax Invoice. If the taxable employers fail to provide this information, they could potentially receive an administrative sanction, which is a 1% fine deducted from the tax base value (Dasar Pengenaan Pajak).
From the side of the recipients of taxable goods and services, they have to be more careful when it comes to either doing transactions or reporting their expenses and revenues. Every transaction involving taxable goods/services that are not final consumption or direct consumption, is considered to have business purposes. In this situation, it is more likely for the nearest Tax Office to ask questions regarding the revenue and income source of the taxpayer.
Changes on Tax Invoice Regulation
The following are the changes on regulation regarding Tax Invoice in accordance with the Directorate General of Taxes Rule Number PER-03/P/2022. First, The information that must be on the Tax Invoice regarding the handover of taxable goods/services to the recipients are name, address, Tax ID Number, and ID Number. Next, the name, Tax ID number in the Tax Invoice must be the exact match with the name and Tax ID number registered on the SKPP.
Meanwhile, the address must be a match with the registered taxable goods/services. Furthermore, you must upload the electronic Tax Invoice (E-Faktur) on the 15th of each month. Taxable employers whose all/parts of business endeavors involve the handover of taxable goods/services to final consumers via electronic trades. Finally, taxable employers who do not report their Tax Invoice will get an administrative sanction which is a 1% fine.
How can Double M help?
The government is updating the tax regulations in order to track cash flow more efficiently. Double M strives to keep you updated about the ever-changing regulations. Should you have any inquiries, please contact us.
Annual Tax Report in Indonesia – Many companies have started the process of the ledger. What is the ledger? An activity that summarizes all the results based on the existing accounting, and financial cycles in the business. Simply put, the company is in the final phase of closing the report for that period.
Based on existing procedures, closing the books includes various preparations that should be determined by the company, starting from financial statements and tax returns. Taxes are the most significant part because every income earned may object of taxes. Therefore, how to prepare it? What will be done so that there are no problems?
Why Prepare Tax Returns Early?
To avoid problems and minimize errors, companies should prepare the reports early, including preparation of financial statements, Corporate Income Tax Returns, determination of fiscal adjusment and it’s supporting documents which should be attached on the Corporate Income Tax Return.
If the company prepares the returns fastly, company would found several problems, errors and quality of reporting. Therefore, time management should be considered to minimize tax exposure and risks.
Significant Elements in Annual Tax Report in Indonesia
1. Tax Planning
Tax Planning is a strategy carried out by companies to review and save income taxes. Thus, the company can minimize tax payments and avoid tax risks without violating the tax regulation.
2. Tax Review
Not only preparing tax planning, companies should also pay attention to tax reviews. At this stage, the company should analyze and review on their tax returns in advance to ensure the company comply with the existing tax regulation and obligations.
Annual Tax Report Terms for Companies in Indonesia
1. Supporting Documents
The annual tax reporting process, companies should prepare Corporate Income Tax Returns and several supporting documents/data or information as follows:
Financial Statement
Proof of tax payment
Proof of withhold tax slip as tax credit
Fiscal depreciation and amortization
Determination of Debt on Equity (DER) Ratio
Nominatif list of entertainment and promotion expense
Statement of related partiy transactions
Calculation of Fiscal Net Income
2. Book Keeping Review
If all of transaction was posted on the book keeping, the company should continue to review the process to generate financial statements and find out for company’s developments, which must look at the accuracy and provisions of the prepared report.
3. Conducting Tax Equalization
Tax equalization is the process to look at the provisions or suitability based on other types of taxes. This stage is very helpful for tax planning at the end of the year and reduce tax exposure or tax risk.
4. Analysis of Taxes Payable
If the company prepare to deeper analysis, the estimation results regarding under- or over-tax can be known.
How can Double M help?
Double M is providing market entry solution services in South East Asia including tax services. Should you have any inquiries, please contact us at info@double-m.co
The Law on Harmonization of Tax Regulations in Indonesia (UU HPP), Law No. 7 of 2021 regulated on October 29 2021 – Nearing the end of this year, a new regulation on Tax activities in Indonesia will attract a lot of attention and questions. Starting from 2022, the taxpayers of this country must bear in mind the changes on their tax calculation.
The appearance of a tax harmonization law is a new opportunity for Indonesia, especially in getting fresh injections of funds and reducing the deficit by 2022. CORE Indonesia economist Yusuf Rendy also sees the HPP Law as an effort by the government to meet future needs. So, is the HPP Law part of structural reform on business in Indonesia? Read more.
History of the Tax Regulations in Indonesia
The Law of Harmonization of Tax Regulations will be enforced as to perform strategic policy based on the previous regulations regarding Tax in Indonesia, as such :
Amendment on Law No. 6 year 1983 concerning the General Terms and Conditions on Taxation, previously amended by Law No. 16 of 2009 concerning the Stipulation on Government Regulation in Lieu of Law (PERPPU) No. 5 of 2008.
Amendment on Law No. 7 year 1983 concerning the Withholding Tax, previously amended with the latest Law No. 36 of 2008.
Amendment on Law No. 8 year 1983 concerning the Value Added Tax on Goods and Service and Value Added Tax on Luxurious Goods, previously amended with the latest Law No. 42 of 2009.
Amendment of Law No. 11 year 1995 concerning Customs, previously amended with the latest Law No. 39 of 2007.
Forms of Indonesian Tax Reform Section
The enforcement of the Law on the Harmonization of Tax Regulations is part of the reform process. Not only focus on administration but also impact on policy. Thus, its presence becomes a stepping stone for Indonesia to be much more stable in its economical growth moving forward.
Sri Mulyani (Minister of Finance) explained that the HPP Law provides space for Indonesia to continue developing the existing economic sector. Not only that, this is part of a form of a sustainable economy, equity, inclusiveness, and supporting human resources who can compete and have quality in the existing fields.
The existence of the HPP Law is the government’s commitment to turn the situation from a crisis into an opportunity. During the Covid-19 pandemic, she explained that many countries were affected by the domino effect of the pandemic, causing the economy to decline and income to be polluted. Whilst income is reduced, the uprising need of the country is unavoidable if there is no strategic step.
The existence of the HPP Law provides an increase in sustainable economic growth. This aspect allows the economy to be wiser and the potential for state revenues to be optimally regulated.
The world economy is declining due to a prolonged pandemic, the HPP Law is expected to be a solution to overcome these problems. So that national development will soon be realized, and produce a competitive and prosperous Indonesian nation.
Results of the HPP Law for Indonesia
There are many significant roles from the presence of the HPP Law, the need for better data integration, and minimizing gaps that are detrimental to the state. In the opinion of the Director of the Center for Economic and Legal Studies (Gelios), he explained that the HPP Law is good news for national taxation because it forms a more focused and measurable database.
1. Number of ID cards Become Tax ID
Creating data in one large database is indeed the dream of the Indonesian government, this is in line with the presence of the HPP Law. To simplify the process of monitoring and administrative efficiency, the Identity Number (Nomor Induk Kependudukan – NIK) will become the Taxpayer ID Number (Nomor Pokok Wajib Pajak – NPWP). This requirement only applies to individual taxpayers (Wajib Pajak Orang Pribadi – WP OP). However, business entities will have their Business Identification Number (NIB) be recognized as the Taxpayer ID Number.
Through the Director-General of Taxes at the Ministry of Finance, Suryo Utomo explained whether this policy regarding the Taxpayer ID will take effect in 2023. Focusing on 2022, the Government of Indonesia is still in the preparation stage regarding information systems and technology optimization to assist this enormous integration.
2. Value Added Tax and Taxable Income Rates
Value Added Tax Rates
The regulation clears out several sectors of goods and services from the list of taxable goods and services, previously stipulated in Law No. 8 year 1983 as detailed in below table :
Then the HPP Law will also impose increase rates on VAT of 10% to : 11% by April 2022 and 12% by the latest January 2025.
Taxable Income Rates
The Ministry of Finance website explained that the Law on the Harmonization of Tax Regulations has ratified several changes related to VAT and WHT rates. For Non-Taxable Income (PTKP) rates yearly,please see below table as reference :
Furthermore, the stipulation of the HPP Law provides an overview of tax individuals earning (PKP) has only 2 points on change, which previously the tax layer is up to IDR 50 Million on Taxable Income, with this regulation it is now up to IDR 60 Million (with no changes on the rates) and the Taxable Income for Income with layer more than IDR 5 Billion will be taxed 35 percent. These changes are part of social justice for all Indonesian people, especially in the government’s alignment with individual MSMEs and corporate MSMEs. In contrast to individual taxes, the HPP Law provides attractive concessions for foreign investors doing business in Indonesia. Because, there is a significant determination that Corporate Income Tax is only 22 percent while previously the rate for Corporate Income Tax is on 28 percent, even the lowest for the Asian region. The focus and goal are to maintain an increasingly better investment climate, it’s predicted that in the following years Indonesia will receive a lot of foreign injections, so it is not surprising that the Corporate Income Tax is given lower thanks to this regulation, which for business owners and operators, providing it feels like a mutually beneficial form. The difference of across the world are seen in the Average Income Tax of ASEAN (22.17%), OECD Countries (22.81%, American countries (27.16%), and G-20 countries (24.17%).
3. Carbon Tax
Delivering the impact of sustainable economic progress, Indonesia has a significant role in realizing a healthy economy and reducing exhaust emissions that affect climate change. Through the HPP Law, the government provides a tax on carbon in the steam power plant (PLTU) sector and coal sector. The fare is at minimum of Rp. 30,000 per kilogram of carbon dioxide equivalent (CO2e).
Other than that the Carbon Tax will also be calculated from the purchase of goods consisting carbon, by the end of calendar year on the activities producing carbon emission in specific amount or by other time as will be furtherly stipulated by the Government or based on the Government Regulation.
The process is gradual, must be seen and adjusted from the green economy roadmap. However, those whose activities are related to the participation of carbon emission trading, carbon emission development and/or other mechanism stipulated through the governed regulated law in the filed of environment, might have the access to carbon tax reduction.
The terms related to carbon tax will be enforced on April 1 2022.
4. Tax Amnesty volume II
The results of the ratification of the HPP Law explain that the Tax Amnesty program or the voluntary disclosure program is only valid for six months. The implementation itself will take place from 01/01/2022 – 30/06/2020. Thus, the Indonesian government provides an opportunity for taxpayers (WP) to report and disclose voluntarily.
Having a good and measurable state income, providing a much healthier APBN effectiveness. Especially in the functions of distribution, allocation, and stabilization to create a just and prosperous society. This will affect the management of state spending that is more qualified and financing that is more attractive, innovative, and sustainable.
2. Investment Trends Will Increase Positively
The determination of the company income tax at 22 percent makes Indonesia an attractive field to invest in South-East Asia market. Of course, this is an advantage for both parties in investing, because Indonesia is one of the lowest income tax earners for the ASEAN region and several other countries.
3. The Right Steps to Overcome the Crisis
The COVID-19 pandemic has affected the economic sector, a disaster that has lurked for almost two years and is still ongoing today has hit many countries. The government’s role in ratifying the HPP Law is a strategic and rapid part of recovering from these haunting problems.
What is the Biggest Impact of Businessmen Regarding the Enforcement of the HPP?
The focus of the Indonesian government is to invite local and foreign investors to start investing in Indonesia. The enactment of the HPP Law provides an increasingly attractive and competitive global economic climate. Especially with the tax reform, all state products can be managed and regulated optimally.
On the other hand, the Government of Indonesia takes part in reducing the impact of global warming, thereby providing quality and sustainable economic growth. That way, the business sector gets maximum profit and can develop its business direction optimally in the future.
How can Double M help?
Double M is providing market entry solution services in South East Asia including tax and legal services. Should you have any inquiries, please contact us at info@double-m.co
Bank Account in Indonesia – If you plan to stay in Indonesia at a certain time as an expatriate, or perhaps even in a long term, then it is recommended to open an Indonesian bank account. Although this is not a necessity, it will make life easier for you. By having a local bank account, you can easily manage and do all sort of financial activities such as bill payments, salary transfers and cash withdrawals.
Local banks offer savings and checking accounts in Rupiah or a foreign currency (usually in US Dollars). In addition, banks also offer term deposits, credit cards and foreign exchange services. After checking which bank services you need, the next step is to open a bank account. Before applying for a local bank account, it is advised that you should check what documents are needed. You can check this by visiting the bank website or the branch directly. However, these are some of the documents you likely need:
Valid passport
Temporary resident permit (KITAS)
Proof of address in Indonesia
Residency contacts
Domicile letter
If you have work-related KITAS, a recommendation letter from your employer and your employer’s NPWP (tax identification number).
Your NPWP (tax identification number).
Choosing the Right Bank
Based on the banking statistics of the Financial Services Authority, in 2021 there are 107 commercial banks operating in Indonesia. With that number of banks, it is certainly difficult to choose the most suitable. Therefore, to make it easier for you, here we provide 3 bank recommendations for expatriates.
This is one of the oldest banks in Indonesia and is currently owned by OCBC Singapore. OCBC NISP offers a multi-currency account, Tanda 360 Plus. Tanda 360 Plus can manage 12 currencies in one account. The 12 currencies are the following.
This bank is a joint venture between CIMB Group Malaysia and Bank Niaga. CIMB Niaga has a wide network and presence in ASEAN countries such as Malaysia, Singapore, Thailand, Cambodia, Philippines, Brunei, Laos, and Myanmar. If you are an expatriate who often travels around South East Asia, this will facilitate your financial activities.
Mandiri is currently the state-owned bank with the largest assets. The advantage of using Mandiri is their huge network of offices and the terms and conditions for inter-bank transfers, both domestic and overseas, are easier than other banks.
How can DOUBLE M help you?
Double M is providing market entry solution services in South-East Asia. Should you have any inquiries, please contact us at info@double-m.co
The Covid-19 pandemic has hit Indonesia for nearly thirteen months since the government confirmed the first infection in Indonesia on March 2, 2020. Not only causing a public health crisis, but the Covid-19 pandemic has also significantly disrupted national economic activity. The Indonesian government is taking action to expand tax incentives to maintain economic stability
The government’s decision to implement Large-Scale Social Restrictions (PSBB) since April 2020 has had a broad impact on the process of production, distribution, and other operational activities, which ultimately leads to economic performance. The Indonesian economy in 2020 will grow negatively. Unemployment and poverty rates are increasing. Various regulations have been released by the government to put the national economy back into a positive trajectory after the pandemic.
Various economic policies have been established to stand the negative impact of Covid-19.
In reaction to the economic effects of COVID-19, the Indonesian government repealed Ministry of Health Regulation No.44/PMK.03/2020 (PMK-44) and replaced it with Ministry of Finance Regulation No.86/PMK.03/2020 (PMK-86), which takes effect on July 16, 2020.
The list of taxpayers eligible for Article 21 of the Employee Income Tax (EIT), Article 22 of the Income Tax on Imports, Article 25 of the Income Tax Incentive, and Value Added Tax (VAT) has been expanded in PMK-86 (VAT). The list of qualifying taxpayers has been extended to include taxpayers who meet the following criteria:
Have a Business Classification (Business Classification Field / KLU) which is included in the Annex PMK-86;
Declared as a company granted with Import Facility for Export Purposes (Kemudahan Impor Tujuan Ekspor/KITE)
Have a license as an operator and/or business in the Bonded Zone (BZ) area.
Processing and refining were included as eligible industries in the previous PMK-44, and the number of eligible industries has been extended in PMK-86. The particular KLU mentioned in each Attachment to PMK-86 should be used to determine whether or not a taxpayer is eligible. The full list can be found in PMK-86’s addition.
Expand tax list of industries at PMK-86.
Attachment A (consisting of 1,189 Klus) for Article 21 EIT incentive, which includes:
Agriculture, Forestry, and Fishery
Mining and Excavation
Processing/manufacturing
Procurement of Electricity, Gas, Steam/Hot Water, and Cold Air
Procurement of Water, Garbage Treatment and Recycle, Waste and Garbage Disposal and Cleaning
Construction
Wholesale and Retail Trade; Repair and Maintenance of Cars and Motorcycles
Transportation and Warehouse
Furnishing of Accommodation and Furnishing of Meal-Drink
Information and Communication
Financial and Insurance Service
Real Estate
Professional, Scientific, and Technical Service
Rental, Manpower, Travel Agency and Other Business Supporting Service
Education Service
Health and Social Activity Service
Culture, Entertainment, and Recreation
Other Service Activities
Attachment H (consisting of 721 Klus) for Article 22 Income Tax on imports and VAT incentives, which includes:
Agriculture, Forestry, and Fishery
Mining and Excavation
Processing/manufacturing
Procurement of Electricity, Gas, Steam/Hot Water, and Cold Air
Procurement of Water, Garbage Treatment and Recycle, Waste and Garbage Disposal and Cleaning
Construction
Wholesale and Retail Trade; Repair and Maintenance of Cars and Motorcycles
Transportation and Warehouse
Real Estate
Attachment M (consisting of 1,013 Klus) for Article 25 Income Tax incentive which includes: Agriculture, Forestry, and Fishery:
Mining and Excavation
Processing/manufacturing
Procurement of Electricity, Gas, Steam/Hot Water, and Cold Air
Procurement of Water, Garbage Treatment and Recycle, Waste and Garbage Disposal and Cleaning
Construction
Wholesale and Retail Trade; Repair and Maintenance of Cars and Motorcycles
Transportation and Warehouse
Furnishing of Accommodation and Furnishing of Meal-Drink
Information and Communication
Financial and Insurance Service
Real Estate
Professional, Scientific, and Technical Service
Rental, Manpower, Travel Agency and Other Business Supporting Service
Education Service
Health and Social Activity Service
Culture, Entertainment, and Recreation
Other Service Activities
Expand Tax incentives in PMK-86 are still the same as PMK-44 which are the following:
For eligible taxpayers, the Article 21 EIT for employees with annual income not exceeding IDR 200 million will be borne by the government.
Exemption of article 22 Income Tax on imports by eligible taxpayers.
30% reduction on article 25 monthly Income Tax installment of eligible taxpayers.
A preliminary VAT refund will be available for eligible taxpayers requesting a refund for a maximum IDR 5 billion.
This incentive is available for the period April – December 2020 but generally applies from the time of notification or application of incentives by taxpayers.
On April 30, 2020, the Directorate General of Taxation (Directorate General of Taxation) released Circular Letter No.SE-29/PJ/2020 (SE-29) as a reference to the introduction of PMK-86. According to SE-29, income tax incentives under Article 25 that are submitted no later than May 15, 2020, and EIT incentives under Article 21 that are submitted no later than May 20, 2020, will also be used beginning in April 2020. The notification, application process and realization report requirements remain the same. Except for Article 21 EIT which previously must be reported every quarter now become a monthly basis.
Final Expand Tax Incentive for SMEs
In addition to expanding the number of eligible taxpayers, PMK-86 includes new incentives for Small and Medium Enterprises (SMEs) that are subject to a 0.5 percent final income tax rate. The final tax regime of 0.5 percent extends to taxpayers with an annual gross turnover of no more than Rp 4.8 billion, according to Government Regulation No.23 of 2018 (GR-23)
The government will bear the final tax under this regime from April to December 2020, according to PMK-86. The final tax regime of 0.5% applies to taxpayers with an annual gross turnover of no more than Rp 4.8 billion.
On the 20th of the following month, qualified taxpayers shall apply a monthly realization report on the final tax borne by the government. PMK-86 specifies more specific operating processes for all qualifying taxpayers and tax holders.
Expand tax transitional
The government has set some transitional provisions regarding the changes from PMK-44 to PMK-86 which are the following:
Regarding the utilization of Article 21 EIT and Article 25 Income Tax Incentives based on PMK-44 do not need to return the same notification based on PMK-86.
Taxpayers who have submitted or granted SKB Article 22 Income Tax on imports based on PMK-44 do not need to reapply for SKB based on PMK-86. Those who have been get tax incentives based on PMK-44 can continue to enjoy the incentives.
For a more complete Positive Investment List please contact Double M.
