Incentives for Indonesian taxpayers

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Indonesian taxpayers

On 26 June 2019, Indonesia’s government issued Regulation No. 45 of 2019 (GR-45/2019) regarding the calculation of taxable income and payment of income tax within the current year.

The regulation came into force on 26 June 2019, and it amends Government Regulation No. 94 of 2010. GR-45/2019 expands the criteria for taxpayers eligible for tax incentives and the types of tax incentives these taxpayers can receive.

Implications for taxpayers

Before GR-45/2019 was issued, only corporate taxpayers in the pioneer industries and several other industries could receive tax facilities (as either a tax allowance or a tax holiday). GR-45/2019 has expanded the criteria for taxpayers that may enjoy tax facilities, irrespective of the industries.

Below are the criteria of domestic corporate taxpayers that may now enjoy tax facilities:

  1. Domestic corporate taxpayers that make new investments or pursue business expansion in certain business sectors that: (i) are labour-intensive industries; and (ii) do not obtain facilities referred to in article 31A of the Income Tax Law, or facilities referred to in article 29 paragraph (1) of GR-45/2019;
  2. Domestic corporate taxpayers that carry out work practices, apprenticeships and/or learning activities in the context of coaching and developing certain competency-based human resources; and
  3. Domestic corporate taxpayers conducting certain research and development activities in Indonesia.

The tax facilities provided vary depending on which of the above criteria the domestic corporate taxpayer meets.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by emailing Danian Zhang at [email protected].