Ministry of Finance Regulation on Depreciation of Assets

Finance Minister issued P M K 72/2023 to consolidate several previous minister regulation number 248/2008, number 126/2012, and 96/2009. This consolidation seems to improve accessibility and also address outdated regulations concerning depreciation o f assets. In this regulation, taxpayers can choose to measure permanent buildings based o n their actual useful life and should submit notification no later than April 30,2024.

The useful lives of non-building tangible assets are grouped into group 1 (one), group 2 (two), group 3
(three), and group 4 (four).

Types of non-building tangible assets that are n o t listed in the appendix, for the purposes of fiscal depreciation should use the useful life in group 3 (three).

In the event that the taxpayer does not use the useful life in group 3 (three), the taxpayer must submit an application to the Director General of Taxes to obtain a determination of the useful life in group 1 (one), group 2 (two), or group 4 (four).

Depreciation of tangible assets begins in the month the expenditure is incurred to acquire these assets. For tangible assets that are still in the process of being worked on, starting in the month the work on the assets is completed; for tangible assets that have never been used or have not yet been produced, starting in the month the assets are used to obtain, collect and maintain income or in the month
the assets concerned start producing, with the approval of the Director General of Taxes. Taxpayers must submit an application to the Director General of Taxes to obtain a stipulation at the start of depreciation.

Tangible Assets of Buildings:
Taxpayers who have depreciated permanent buildings that have a useful life
of more than 20 years:

• Owned and used before the 2022 Tax Year; And
• Has been depreciated according to the useful life of 20 years in equal
  parts, can choose to depreciate according to the useful life based on the
  taxpayer’s bookkeeping, provided that it is carried out according to the
  prevailing principles. Taxpayers must submit notifications to the Director
  General of Taxes no later than the end of the 2022 Tax Year.

In the event that the Taxpayer chooses to depreciate with the actual useful
life based on the Taxpayer’s books and has not submitted a notification, the
Taxpayer can submit a notification no later than April 30, 2024.

Depreciation For Special Application Software:
Charging expenses to obtain software in the form of Special Application Software that are
owned and used to obtain, collect and maintain income, which has a useful life of more than 1 (one) year, is carried out through amortization of intangible assets in group 1 (one) for 4 years. Expenditures to obtain and increase the capacity of Software resources in the form of Common Application Software which are owned and used to obtain, collect and maintain income, are recognized as expenses or routine operational costs which are charged all at once in the relevant year.

Depreciation of tangible assets owned and used in certain business fields that only produce after being planted or cared for more than 1 (one) year:
Tangible assets that are owned and used constitute basic commodities in certain business fields, namely:

• Forestry plants for the forestry business sector;
• Perennials for the field of perennials plantation business, including spices and refreshments; or
• Livestock for the livestock business sector, including bull livestock.

Depreciation starts in the month of commercial production of tangible assets. The month of commercial production is the month when sales start.

PDF: PMK 72/2023: Changes and Updateson Depreciation of Assets