TAX ALERT 05.2020 – PMK 86/PMK.03/2020 – TAX INCENTIVES FOR TAXPAYERS AFFECTED BY COVID-19

As to deal with the current impact of the COVID-19 pandemic, it is necessary to expand the business sectors which will be provided with tax incentives needed during the recovery period of the national economy by providing greater ease of the use of incentives and extending the period of incentives given. Therefore, the Government issued PMK 86/PMK.03/2020 to update some provisions in order to realize those objectives.

Some of keys points to note from PMK-86 as the replacement of PMK-44:

The tax incentives are now provided until tax period of December 2020.
There is additional Business Classifications (KLU) for several incentives below as previously stated in PMK 44:
– Income Tax Art. 21 Borne by the Government is now given to 1.189 KLU, previously was given only to 1.062 KLU;
– Exemption on Income Tax Art. 22 on Import is now given to 721 KLU, previously was given only to 431 KLU;
– Income Tax Art. 25 reduction by 30% is now given to 1.013 KLU, previously was given only to 846 KLU;
– Preliminary VAT Restitution is now given to 716 KLU, previously was given only to 431 KLU.
Regarding the provision of Income Tax Art. 21 Borne by Government, notification is only filed by the Head Office Taxpayer and it applies for Branch Taxpayer.
In order to utilize the Final Income Tax Borne by the Government, Taxpayers need not file application for Exemption Letter, but only a Realization Report. After the submission of the Realization Report, DGT will then issue an Exemption Letter as long as the Taxpayers fulfil the requirements as regulated in Government Regulation No. 23 Year 2018.
The submission of Realization Report on Tax Exemption of Income Tax Art. 22 from Import and reduction on Installement of Income Tax Art. 25 have to be done by every month starting from period of July to December 2020.