On  March  31st  2020,  The  President  of  Republic  of  Indonesia  has  issued  a  Government  Regulation in  liue  of  Law  ,  known  as  PERPPU  number  1/2020   (“PERPPU  1”)  regarding  State Financial  Policy and  Stability  of  the  Financial  System  during  the  Corona  Virus  Disease  2019  (Covid-­19)  Pandemic.

This  regulation  was  placed   in  regards  to   the  dangerous  threats  this  pandemic  can  bring  to  the National  Economy  and/or  Financial  System  Stability.

The  summary  of  the  tax  policy  as  highlighted  in  the  PERPPU   1   are  as  follows:

1) Adjustment  of  the  corporate  tax  rate  and  permanent  establishment;

2) Extension  of  exercise  of  rights  and  obligation  of  taxation;

3) Tax  treatment  in  trading  activities  through  the  electronic  system  (PMSE);

4) Granting  authority  to  the  Minister  of  Finance  to  provide  customs  facilities  in  the  form of  exemption  or  relief  of  import  duties  in  respect  of  handling    emergency  condition  and recovery/strengthen  of  national  economic

1. Adjustment   of   the   Corporate   Tax   Rate   for   Corporate   Taxpayer   and   Permanent Establishment

a. To  decrease  corporate  tax  rate  to  become  22%  (previously  25%)  for  tax  year  2020  and 2021;

b. To  decrease  corporate  tax  rate  to  become  20%  for  tax  year  2022;

c. Additional  3%  decrease  of  the  corporate  tax  rate  as  referred  to  in  letter  (a)  and  (b)  above for  the  listed  companies  which  at  least  40%  of  the  total  capital  paid  in  is  traded  in  the Indonesia  stock  market  and  fulfill  certain  requirements. Certain  requirements  shall  be  regulated  by  the  Government  Regulation.

2. Extension  of  Exercise  of  Rights  and  Obligations  of  Taxation

a.   To  be  extended  for  the  maximum  6  months    if  the  deadline  of  submission  of  the  objection letter   as   referred   to     in   the   Article   25   (3)   of   the   Law   number   6/1983   jo.   Law   number 16/2009,     is  fall  in  the  Covid-­19  period, ;

b.   To  be  extended  for  the  maximum  1  month    if  the  deadline  of  tax  refund  as  referred  to  in Article  11  (2)  of  the  Law  number  6/1983  jo   Law  number  16/2009,  is  fall  in  the  Covid-­19 period;

c.   In  regard  to  rights   of  the  taxpayer,  which  consist  of  :

• The  deadline  for  the  Tax  Office  in  regard  to  the  request  for  tax  refund  as  referred to  in  the  Article  17B  (1)  of  Law  number  6/1983  jo.  Law  Number  16/2009;
• The   deadline   for   the   Tax   Office   in   regard   to   issue   a   decision   of   the   submitted objection  letter  as  referred  to  in   the  Article  26  (1)  of  Law  number  6/1983  jo.  Law Number 16/2009;
• The  deadline  for  the  Tax  Office  in  regard  to  issue  a  decision    of  the  request  for reduction  or  write  off  of  the  administrative  sanction  or  cancellation  of  incorrect  tax assessment   as   referred   to   in   the   Article   36   (1)   of   Law   number   6/1983   jo.   Law Number  16/2009;

If  the     deadline  falls  during  the  Covid-­19  period,    it  will  be   extended   to  the  maximum of  6 months.

Determination  in  regard  to  the  “Covid-­19  Period”  as  referred  to  C   (i),  (ii)  and  (iii) above   has   to   rely   on   the   determination   of   the   Government   through   Head   of   the National  Disaster Management  Agency  (BNPB).

3. Tax  Treatment  in  Trading  Activities  through  the  Electronic  System  (PMSE),

1. Tax  treatment  in  trading  activities  through  PMSE  in  the  form  of:
   • VAT   imposition   on   the   utilization   of   the   taxable   intangible   goods   and/or   offshore taxable  services  of  outside  customs  area  into  the  custom  area  through  the  PMSE; and
   • Income  tax  imposition  or  tax  on  the   electronic  transaction  through  PMSE  conducted by  overseas  taxpayer  which  fulfills   requirement  if   significant  economic  is  present;;
2. VAT  imposition  on  the  utilization  of  the  taxable  intangible  goods  and/or  taxable  services of  outside  customs  area  into  the  customs  area   through  PMSE  as  referred  to  paragraph 1(a),   to   follow  the  VAT  Law;
3. VAT  imposition  on  the  utilization  of  the  taxable  intangible  goods  and/or  taxable  services of  outside  customs  area  into  the  customs  area  as  referred  to  paragraph  (2)  is  collected, paid,   and  reported  by  offshore  trader,  offshore  service  provider,  offshore  PPMSE,  and/or onshore  PPMSE,  which  are  appointed  by  the  Ministry  of  Finance;
4. PPMSE  as  referred  to   in   paragraph  (3)  is  a  business  provider  of  electronic  communication facilities   used  for  the  trading  transactions;
5. Offshore  trader  or  offshore  service  provider   as  referred  to  in  paragraph   (3)  is  an  individual or   corporation   which   domicile   or   reside   outside   Indonesia   custom   area   who   conducts transactions  with  the  buyers  of  goods  or  the  service  recipient  in  the  custom  area  through the  electronic  system;
6. Offshore  Trader,  offshore  service  provider,   and/or  offshore  PPMSE  which  fulfill  provisions for   significant   economic   presence   can   be   treated   as   a   permanent   establishment   and subject  to  income  tax;
7. Provisions  for  significant  economic  presence  as  referred  to  in  paragraph  (6)  are  in  the form  of  :
   • Gross  turnover  of  the  consolidated  group  until  a  certain  amount;
   • Sales  in  Indonesia  up  to  a   certain  amount  and/or
   • Active  users  of  the  digital  media  in  Indonesia  up  to  a  certain  amount;;
8. In   case   determination   of   a   permanent   establishment   as   referred   to   in   paragraph   (6) cannot  be  applied  because  of  the  double  taxation  agreement  (  tax  treaty),  the  offshore traders,   offshore   service   providers   and/or   offshore   PPMSE   which   fulfill   provisions   for significant  economic  presence,  are  subject  to  tax  on  the  electronic  transaction;
9. Tax   on   the   electronic   transaction   as   referred   to   in   paragraph   (8)   is   subject   to   sales transactions  of  goods  and/or  services  of  offshore  through  PMSE  to  the  buyer  or  user  in Indonesia   carried   out   by   the   overseas   tax   subject   ,   both   directly   or   through   PPMSE abroad;
10. Income  tax,   as  referred  to  in  paragraph  (6),   or  electronic  transaction  tax,  as  referred  to in  paragraph  (8),   is  paid  and  reported  by  the  offshore  trader,  offshore  service  provider and/or  offshore  PPMSE;
11. Offshore   traders,   offshore   service   providers,   and/or   offshore   PPMSE   as   referred   to   in paragraph   (3)   and   paragraph   (10)   can   appoint   a   representative   who   domiciles   in Indonesia  to  collect,  to  pay  and  to  report  VAT  payable  as  referred  to  in  paragraph  (3)and/or  to  fulfill  income  tax  obligation  as  referred  to  in  paragraph  (6)  and/or  tax  on  the electronic  transaction  as  referred  to  in  paragraph  (8);
12. The  amount  of  tax   rate,  tax  base,  and  procedure  of  income  tax  calculation  as  referred to  in  paragraph  (6)  and  tax  on  the  electronic  transaction  as  referred  to  in  paragraph shall  be  regulated  by  or  based  on  the  Government  Regulation
13. Further  provisions  in  regards   to:
    • Appointment  procedure,  collection,  and  payment  and  VAT  reporting  as  referred  to in  paragraph  (3)
    • Significant  economic  presence  as  referred  to  in  paragraph  (7),  income  tax  payment and   reporting   procedure      or   tax   on   the   electronic   transaction   as   referred   to   in paragraph  (10),  and
    • Procedure  to  appoint  a  representative  as  referred  in  to  paragraph  (11)

Shall  be  regulated  in  accordance  with  Minister  of  Finance  regulation

4. Customs  Facilities  in  the  form  of  exemption  or  relief

Customs  facilities  in  the  form  of  exemption  or  relief  can  be  granted  by  the  Minister  of  Finance in respect  of:

a)   Handing  Corona  Virus  Disease  2019  (Covid-­19)  and/or

b)   Facing  dangerous  financial  economic  and/or  threaten  of  the  National  stability  system

PDF : PERPU 1 Year 2020