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Tax Incentives for Taxpayers Affected by COVID-19 - Expansion

On 23 March, the Minister of Finance issued Regulation No. 23/PMK.03/2020 dated 21 March 2020 (“PMK-23/2020”) to assist taxpayers that are being affected by the impacts of COVID-19. 

The issuance of PMK-23/2020 was intended to support economic stability, purchasing power, and  productivity of certain sectors, and potentially provided tax incentives for the following:

  • Article 21 tax to be borne by the Government (“ditanggung”) for employees of businesses in specified sectors, subject to their gross employment income
  • Article 22 on imports will be exempted (“dibebaskan”) for businesses in specified sectors
  • Article 25 corporate income tax instalments can be reduced by 30% for businesses in specified sectors
  • Advance restitution of VAT for businesses in specified sectors 

Please refer our earlier Client Alert :

Tax Incentives for Taxpayers Affected by COVID 19 - April 2020

Although the title of the regulation suggested it had broad coverage and benefit, the tax incentives were limited to specific sectors - mostly industry/manufacturing and some ancillary sectors based on the taxpayer’s KLU (Business Classification Code). Therefore there were widespread requests for a revision to assist the many non-manufacturing businesses being impacted by the economic disruption from COVID-19.

In response, the Minister of Finance has issued Regulation No. 44/PMK.03/2020 dated 27 April 2020 (“PMK-44/2020”) which revokes PMK 23/2020. 

PMK-44/2020 still uses a KLU-based approach for granting the tax incentives, however, it significantly expands the number of KLU. In addition it now provides relief from tax for those small and medium-sized  businesses (UMKM) that were currently accessing the Final Tax regime under Government Regulation No. 23 of 8 June 2018 (“PP-23/2018”).

For further reading :

Tax Incentives for Taxpayers Affected by COVID19 - Expansion - May 2020.pdf