Summary of Tax Regulation (May)

Summary of Tax Regulation

PENG-02/PJ.109/2008, Income Tax Sanction Annulment Facility

For individuals voluntarily registering themselves to obtain Tax ID numbers at the latest on 31December 2008 and file their Annual Income Tax Returns of tax year 2007 and the preceding years at the latest on 31 March 2009, administrative sanction annulment wills be granted and no tax audit will be conducted on them. For individual/corporate taxpayers revising their Annual Income Tax Returns of tax year 2006 and the preceding years, administrative sanction annulment will be granted so long that the revision(s) is (are) made at the latest on 31 December 2008.

81 Year 2007, Reduction of Income Tax Tariff for Resident Corporate Taxpayers in Form of Go Public Companies

Resident Corporate taxpayers in form of Go Public companies may obtain reduced tariff of 5% lower than the highest tariff bracket of Corporate Taxpayers under Article 17 of Income Tax Law (Law Number 7 Year 1983 as lastly amended with Law Number 17 Year 2000). However, the reduced tariff shall only be applicable if: 1) total ownership of public shares is at a minimum of 40% from total paid in shares; or 2) shares owned by a minimum of 300 parties where each of which may only own less than 5% of total paid in shares. This provision should be fulfilled by the related taxpayer in at least 6 (six) months within one tax year.

PER-8/PJ/2008, Amendment to Regulation of Director General of Taxes Number PER-161/PJ/2007 on Simplest Annual Individual Income Tax Returns for Tax Year 2007

Form no. 1770 SS (Simplest Annual Income Tax Return for Individual Taxpayers) is used for individuals working for one employer with total gross income not more than IDR 48 million per year and having no other income, except interest income from bank and/or from cooperative. Compared with the previous regulation, limit of income for individual taxpayers using this form was IDR 30 million per year.

43/PMK.03/2008, Utilization of Book Value on Transfer of Assets in Merger, Acquisition or Business Expansion

Taxpayers conducting merger may use book value. For taxpayers conducting business expansion, those who may use book value are non go public companies which will conduct initial public offering or Go Public companies whose all of their business entities under business expansion conduct initial public offering. To enable the use of book value, the related taxpayer should meet the following criteria: 1) to file the application to the Director General of Taxes by enclosing the reason and the objective of merger or business expansion; 2) to settle all tax due of every business entity related; and 3) to fulfill the requirement of business purpose. In addition, the surviving taxpayer conducting merger with book value is not allowed to compensate any loss or remaining loss from the merged taxpayer. The taxpayer receiving asset transfer records asset acquisition value using remaining book value as recorded in the bookkeeping of the party transferring the asset. Depreciation of asset received is made based on the remaining useful life period in the bookkeeping of the party transferring the asset. For merger/business expansion conducted in the current year, the Income Tax Article 25 installment amount of the surviving party shall not be lower than the installment of the merged party. Income tax payment, collection and withholding performed by the merged party prior to the merger or business expansion may be overbooked to the surviving party.

15/PMK.011/2008, Value Added Tax Paid by Government on Transfer of Packaged (Branded) Cooking Oil Within the Country

Upon transfers of packaged (branded) cooking oil within the country by VAT-registered Person, the facility of VAT paid by the Government shall be granted. In relation with this facility, the said VAT-registered Person should put a stamp stating “VAT Paid by Government Ex PMK No.15/PMK.011/2008.”

14/PMK.11/2008, Value Added Tax Paid by Government on Transfer of Unbranded Cooking Oil Within the Country

Upon transfers of subsidized (unbranded) cooking palm oil within the country, the facility of VAT paid by the Government shall be granted. In relation with this facility, the said VAT-registered Person should put a stamp stating “VAT Paid by Government Ex PMK No. 14/PMK.011/2008.”

PER-2/PJ./2008, Administrative Procedure for Value Added Tax Paid by Government on Transfer of Cooking Oil within the Country

This regulation explains further the facility of VAT paid by the Government given under Finance Minister regulation No. 14/PMK.011/2008 and 15/PMK.011/2008. The consequences of this facility explained in this regulation are: 1) No VAT should be collected by Vendor VAT-registered Person/ paid by Buyer VAT-registered Person; 2) Vendor VAT-registered Person should put the stamp of “VAT Paid by Government Ex PMK No.15/PMK.011/2008” or “VAT Paid by Government Ex PMK No. 14/PMK.011/2008” on Tax Invoice to be issued at the time of transfer with transaction code no. 07; 3) Input VAT related to sales having the facility may still be credited by Vendor VAT-registered Person; 4) VAT paid by the Government cannot be credited by Buyer VAT-registered Person; and 5) Vendor VAT-registered Person should make a detailed list of Tax Invoices on transfers having the facility.

08/PMK.03/2008, Fourth Amendment to Finance Minister Decree Number 254/KMK.03/2001 on Appointment of Income Tax Article 22 Withholder, Criteria and Amount Withheld, and Procedure of Its Remittance and Reporting

There is a new tariff of Income Tax Article for import of soybean, wheat, and flour for importer using API (Importer Identification Number) at 0,5% from import value. Whereas based on the previous regulation, any import subject to Income Tax Article 22 would be imposed with tariff of 2,5% (with API) and 7,5% (with no API).

184/PMK.03/2007, Determination of Due Date for Tax Payment and Remittance, Determination of Tax Payment Site and Payment Procedure, Tax Remittance and Reporting, and Procedure of Tax Installment and Payment Postponement

This regulation stipulates in detail the provisions of payment and remittance due date for almost all taxes, including payment of Income Tax Article 25 for taxpayers with certain criteria who report several tax periods in a tax return of one period. Besides the new tax aspects, basically no significant changes of tax provisions are stipulated, among other, as follows: 1) Payment and remittance of Income Tax Article 22 on transfer of fuel, gas and lubricants collected by corporate taxpayers engaged in industry of fuel, gas and lubricant manufacturing is at the latest on the following 10th month after the end of related tax period, whereas based on the previous regulation, Income Tax Article 22 should be firstly paid by related taxpayers prior to payment of Delivery Order; 2) In the event that the tax payment or remittance due date is on holidays including Saturdays or national holidays, it can be performed in the following work day; 3) In the event that the reporting due date is on holidays including Saturdays or national holidays, it also can be performed in the following work day.

197/PMK.03/2007, Form and Procedure of Recording for Individual Taxpayers

Individual Taxpayers excluded from the obligation to perform bookkeeping but still obliged to perform recording are: a). those carrying out business activities/independent personal services allowed to calculate their net income based on Net Income Calculation Norm; b). those not carrying or business activities or independent personal services. Recording should be performed regularly and disclose the actual condition, using Latin alphabetical, Arabic numbers, Rupiah currency, and written in Bahasa Indonesia.

Resident Corporate Taxpayer in form of Go Public Company may obtain reduction of Income Tax tariff of 5% (five percent) lower than the highest Income Tax tariff of Resident Corporate Taxpayer as regulated in Article 17 Paragraph (1) letter b of Law No.17 Year 2000

Article 2 of Government Regulation No. 81 Year 2007, dated 28 December 2007

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