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RSM Indonesia Client Alert is part of our firm newsletters, however it is not designed for a consistent periodical basis, and its publishing depends on whether there is new technical issues that we would like to share to our clients.
RSM Indonesia Client Alert - 2024
RSM Indonesia Client Alert – 2 February 2024
On 29 December 2023, the Minister of Finance issued Regulation No. 168 Year 2023 concerning Guidelines for the Implementation of Withholding Tax on Income Earned by Individuals from Employment, Services or Activities (“PMK-168”). PMK-168 is the implementing regulation for Government Regulation
No. 58 Year 2023 that was issued on 27 December 2023 (“GR-58”).
For details of GR-58, please refer our Client Alert dated 11 January 2024.
PMK-168 revokes the following regulations:
1. Minister of Finance (“MoF”) Regulation No.250/PMK.03/2008 (“PMK-250”),
2. MoF Regulation No. 252/PMK.03/2008 (“PMK-252”),
3. MoF Regulation No. 102/PMK.010/2016 (“PMK-102”),
4. MoF Regulation No. 262/PMK.03/2010 (“PMK-262”) (specific clauses only), and
5. DGT Regulation No. PER-16/PJ/2016 (“PER-16/2016”).
When is PMK-168 applicable?
RSM Indonesia Client Alert – 1 February 2024
Minister of Finance Regulation No. 172 regarding Application of Arm’s Length Principle on Transaction Affected by Special Relationship was issued on 29 December 2023 (“MoFR-172”). MoFR-172 was mandated by Article 37 of Government Regulation No. 55 of 2022 (GR-55). It applies to any taxpayer conducting transaction affected by special relationship. In addition to providing additional clarification and guidance, MoFR-172 combines the regulatory content of three previous Minister of Finance regulations: MoFR-213/2016, which regulates transfer pricing documentation; MoFR-49/2019, which oversees the administration of the Mutual Agreement Procedure (“MAP”), and MoFR-22/2020, which contains administrative regulations for the Advance Pricing Agreement (“APA”) as well as the norm for applying the arm’s length principle (“ALP”). Therefore, these regulations are now revoked. This Client Alert summarises MOFR-172 and highlights key points for taxpayers conducting transactions where there is a special relationship.
When is MoFR-172 effective?
RSM Indonesia Client Alert – 11 January 2024
On 27 December 2023, the Government issued Regulation No. 58 Year 2023 concerning Income Tax Rate on Income earned from Employment or Service Activities for Individual Taxpayers (“GR-58”). In general, GR-58 creates a simplified system for calculating the amount of Article 21 income tax to be withheld during the year from payments to employees. It does not amend the rates of income tax used to determine the income tax due by resident employees on their annual income.
It applies for any employee receiving income in connection with work or services include state officials, civil servants, members of the Indonesian national armed forces, Indonesian national police, and retirees.
Although the title of GR-58 also refers to income tax on income earned by individuals from service activities, in practice the subject of GR-58 is limited to employees.
When is GR-58 applicable?
RSM Indonesia Client Alert - 2023
RSM Indonesia Client Alert – 14 July 2023
On 27 June 2023, the Minister of Finance issued Regulation No. 66 Year 2023 concerning Income Tax Treatment of Reimbursement or Compensation related to Employment or Services received or earned On 27 June 2023, the Minister of Finance issued Regulation No. 66 Year 2023 concerning Income Tax Treatment of Reimbursement or Compensation related to Employment or Services received or earned in On 27 June 2023, the Minister of Finance issued Regulation No. 66 Year 2023 concerning Income Tax Treatment of Reimbursement or Compensation related to Employment
On 27 June 2023, the Minister of Finance issued Regulation No. 66 Year 2023 concerning Income Tax Treatment of Reimbursement or Compensation related to Employment or Services received or earned in
the form of Benefit in Kind (“PMK-66”). PMK-66 is the long-expected regulation implementing the taxation
of Benefits in Kind (“BIK”) in accordance with Government Regulation No. 55 Year 2022 that was issued
on 20 December 2022 ("PP-55”).
As an implementing regulation, PMK-66 does not change the stipulation per Law No 7/2021 on the Harmonization of Tax Regulations that BIK are income tax objects for the recipient and the expense will be deductible for the provider if the costs are related to gaining, collecting or maintaining taxable income.
PMK-66 provides further details regarding what BIK are not included as an income tax object, how to determine the value of certain BIK, and the obligation to withhold. Importantly, PMK-66 also clarifies the obligations for BIK received in 2022 and those received during January - June 2023.
RSM Indonesia Client Alert – 29 May 2023
Government Regulation No 12 Year 2023 concerning the Granting of Business Licenses, Ease of Doing Business, and Investment Facilities for Business Players in Ibu Kota Nusantara (“GR-12”) was issued on 6 March 2023 to encourage investment by businesses in Ibu Kota Nusantara (“IKN”) and specific areas nearby, known as Partner Regions.
The regulation is effective on 6 March 2023.
There are two broad types of investment facility:
Those under the authority of the Central Government:
⇒ Income tax
⇒ VAT and Sales Tax on Luxury Goods
⇒ Customs
Those under the authority of the IKN Authority:
⇒ Special tax and special revenue facilities
⇒ Facilitation, provision of land and infrastructure to implement investment activities in IKN
This Client Alert summarizes the tax facilities for income tax, VAT and Sales Tax on Luxury Goods.
The over-arching concept is that the facilities are only available in relation to activity and income generated in the IKN by taxpayers located in the IKN.
RSM Indonesia Client Alert - 2022
RSM Indonesia Client Alert – 31 May 2022
In recognition of increased crypto asset trading activity, the Ministry of Finance (MoF) issued regulation No. 68/PMK.03/2022 on 30 March 2022 (PMK-68) to regulate the taxation of these transactions.
When is it effective?
PMK-68 is effective on 1 May 2022.
What is crypto asset?
PMK-68 defines crypto asset as an intangible commodity in the form of a digital asset that uses cryptography, peer-to-peer networks, and a distributed ledger to manage the creation of new units, verify transactions and secure transactions without the intervention of other parties.
RSM Indonesia Client Alert – 28 April 2022
Participants of the Voluntary Disclosure Program (VDP) can reduce the rate of final tax due for the assets being declared if those assets will be invested in Government Debt Securities or as an equity investment in Natural Resource Processing businesses and/or Renewable Energy businesses. Please refer our Client Alert dated 31 January 2022.
Article 16 of Minister of Finance (MoF) Regulation No. 196/PMK.03/2021 (PMK-196) further states:
⇒ The investment into Natural Resource Processing businesses and/or Renewable Energy businesses shall be carried out in the form of new business establishment and/or equity participation in companies conducting IPO and/or right issues.
⇒ The activities for the Natural Resources Processing sector refers to the processing of natural sourced raw materials into semi-finished goods or finished goods that add value to those raw materials.
⇒ The activities for the renewable energy sector refer to exploitation (generation) of energy from renewable materials.
In accordance with Article 16(4) of PMK-196, the MoF has issued Decision No. 52/KMK.010/2022 on 24 February 2022 (KMK-52) to list the business sectors that a participant of the VDP may invest in to access the lower rate of final tax.
RSM Indonesia Client Alert – 26 April 2022
On 30 March 2022, the Minister of Finance issued 14 regulations to implement changes to VAT as a consequence of the enactment of Law No. 7/2021 to Harmonize Tax Regulations (Law 7). These were primarily issued to reflect the imposition of the new 11% rate of VAT, effective on 1 April 2022, and the 12% rate that will be applied no later than 1 January 2025. However, there are also other amendments to some of the existing regulations.
This Client Alert summarises key aspects of Minister of Finance regulation No.60/PMK.03/2022 (PMK-60) that amends 48/PMK.03/2020 (PMK-48) regarding the application of VAT for foreign e-commerce businesses. PMK-60 and, previously, PMK-48 regulate the collection of VAT where intangible goods and/or services are provided from overseas to buyers/users in the Indonesian customs area via e-commerce (Perdagangan Melalui Sistem Elektronik or PMSE). E-commerce refers to trade conducted through electronic systems.Therefore PMK-60 regulates the collection of VAT by foreign e-commerce businesses that undertake relevant transactions with parties located in Indonesia.
Please refer our Client Alerts dated 20 May 2020 and 4 August 2020 for details of PMK-48 and its implementing regulation, Director General of Taxation regulation No. PER-12/PJ/2020 (PER-12).
RSM Indonesia Client Alert – 16 March 2022
On 21 February 2022, Government Regulation No. 9 Year 2022 (GR-9) was issued to amend the final tax rates on construction service businesses that were previously regulated by Government Regulation No. 51 Year 2008 jo Government Regulation No. 40 Year 2009 concerning Income Tax on Income from Construction Service Business (GR-51 jo GR-40). The stated reason for the amendment is to assist development of the construction sector, especially when considering the impacts of COVID-19.
RSM Indonesia Client Alert – 31 January 2022
As stipulated in Law No 7 to Harmonise Tax Regulations (the HPP Law), the Voluntary Disclosure Program (VDP) is now active, running from 1 January until 30 June 2022. To support implementation of the VDP, including guidance for submission, Minister of Finance Decree No. 196/PMK.03/2021 dated 22 December 2021 (PMK-196) has been issued, with effect from 23 December 2021.
This Client Alert summarises PMK-196 and aspects of the HPP Law with regards to the VDP.