JAKARTA (TheInsiderStories) – Finance Minister Sri Mulyani Indrawati has signed a revision of the regulation on reducing corporate income tax or tax holiday. The revised regulation is part of the latest 16th Economic Policy Package to attract investment in an effort to improve Indonesia’s balance of payments.
The Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso said on Thursday (11/29), the Minister of Finance (MoF) Regulation Number 150 Year 2018 is a revision of MoF Regulation Number 35 Year 2018.
He explained that the regulation was signed on Oct. 26, and officially took effect after the Ministry of Law and Human Rights was promulgated on Nov. 27, 2018.
According to Moegiarso, there is an addition in the scope of businesses that can receive tax holiday facilities in the latest regulations. There is also a simplification of the tax holiday submission process through the Online Single Submission (OSS) licensing system.
Based on the explanation from the Directorate General of Taxes, the latest rules also introduce a scheme for setting up a mini tax holiday.
In Article 3 it states, that there are 18 pioneer industrial sectors that received corporate income tax reduction facilities, changing from the previous 17 sectors. These changes are due to the existence of two additional sectors, agricultural, plantation, forestry-based processing industries, digital economy sector which includes data processing, hosting, and activities related to it.
On the other hand, there is a combination of the main computer component sectors and smart phones becoming the main components of electronic or telematics equipment.
The government imposes a tax holiday or reduction of corporate income tax by 100 percent for large investments worth over Rp500 billion (US$34.13 million) in 18 pioneer industrial sectors. Meanwhile, for investments worth Rp100 billion to Rp500 billion in the pioneer industrial sector, there is a mini tax holiday facility or a reduction in corporate income tax by 50 percent.
Later, investors will get a notification when processing permits via OSS if the investment is entitled to get a tax holiday. The inter-ministerial process which has been extending the processing time of the tax holiday facility will be shortened by OSS.
In accordance with Article 13 and 14, the Director General of Taxes is required to provide a report to the MoF within three months regarding the tax holiday facility. The tax holiday facility will be published and evaluated regularly.
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