Corporate - Tax
Amendments on the Tax Incentives for Taxpayers Affected by Covid-19 Regulation
23 September 2020

The Indonesian government has regulated new provisions related to the tax incentives for taxpayers affected by Corona Virus Disease 2019 (“Covid-19”) through the Ministry of Finance Regulation No. 110/PMK.03/2020 on Amendment to the Ministry of Finance Regulation No. 86/PMK.03/2020 concerning Tax Incentives for Taxpayers Affected by Covid-19 Pandemic (“PMK No. 110/2020”), which has been implemented on 14 August 2020.


  • Article 25 Income Tax


The Indonesian government stated that taxpayers operating in 1,013 certain business fields, companies that obtain import facilities for export purposes, and companies in bonded zones are entitled to additional deductions from Article 25 Income Tax installments. They have decided to increase the Article 25 tax installment from 30 percent to 50 percent. Taking into account the current economic conditions especially with the low level of production and sales, the government has decided to increase such tax incentives. For taxpayers who have previously submitted reduction of monthly tax installment notification, this installment will take effect from the July 2020 tax period. Meanwhile for other taxpayers, the reduction in tax installment will take effect since the notification is submitted. This reduction in tax installment is valid until the tax period of December 2020.


  • Tax incentives for construction services


Through this amendment, the new provision regulates that the government will now borne the final income tax for construction services for taxpayers in the program to accelerate the improvement of irrigation water use (Program Percepatan Peningkatan Tata Guna Air Irigasi or “P3-TGAI”). This tax incentive is valid until December 2020 and is intended to support increased water supply (irrigation) as a labor-intensive project which is an important requirement for the Indonesian agricultural sector. The taxpayers are required to submit realization report through the DJP website no later than the 20th of the following month after the tax period ends.


If there are any queries with regards to how this may affect your business, please contact us for further legal consultation.


This information does not, and is not intended to, constitute as legal advice; instead, all information, content, and materials are for general information only.

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