Summary of Tax Regulation (June)

Summary of Tax Regulation

PENG-02/PJ.109/2008, Format, Content and Filing Procedure of Periodical Value Added Tax (VAT) Return in Hard Copy for Value Added Tax-registered Persons who are registered at the Pratama Tax Office, in relation to Data and Document Processing at the Tax Data and Document Processing Centre.

There is a new periodical VAT Return, Form no. 1108 consisting of: 1) Main Form; 2) Attachment 1 of Output VAT and Sales Tax on Luxury Goods List (Form No.1108 A); and 3) Attachment 2 of Input VAT and Sales Tax on Luxury Goods List (Form No.1108 B). Those who may use this new VAT return are VAT-registered Persons registered at Pratama Tax Office which are appointed to receive filing of Form No. 1108 in hard copy (KPP Jakarta Gambir I – IV; KPP Jakarta Tanah Abang I – III; and KPP Jakarta Sawah Besar I – II) and issue or conduct crediting of not more than 30 Tax Invoices including Return Note. The VAT returns are filed by a VAT-registered Person manually by: 1) directly submitted to the Tax Office; and 2) submitted through a registered post office or an expedition service. The taxpayers other than the VAT-registered Persons registered at the Pratama Tax Office determined to receive this new VAT return, should file electronic VAT returns using Form No.1107. The VAT-registered Persons who do not meet the prevailing requirements shall be deemed not submitting VAT returns and may be subject to the prevailing tax administrative sanction.

PENG-02/PJ.109/2008, Place of Registration for Certain Taxpayer and or Place of Reporting for Certain VAT-registered Persons

This regulation provides definition of Certain Taxpayer and or VAT-registered Person, Certain Individual Entrepreneur Taxpayer and New Taxpayer. The term of Certain Taxpayer and or VAT-registered Person constitutes: State-owned Companies, certain foreign investment companies, permanent establishment and certain expatriates, certain listed companies – including self regulatory organizations which are incorporated and operates in the Stock Exchange under the Capital Market Law as well as other certain companies conducting businesses in the Stock Exchange, and certain big companies. The term of Certain Individual Entrepreneur Taxpayer constitutes individual taxpayers having business places in some areas. The term of New Taxpayer constitutes taxpayers registering themselves to obtain Taxpayer Identification Number and reporting their businesses as VAT-registered Persons at the time or after the promulgation of this regulation. In addition to the definitions, this regulation determines places of registration and or place of business reporting in relation to appointment of VAT-registered Persons for every type of taxpayer, such as: 1) for BUMN -including subsidiaries whose direct or indirect capital participation from BUMN more than 50% is Tax Office (KPP) of State-owned Companies (BUMN) ; 2) for certain foreign investment companies domiciled in Jakarta is KPP of Foreign Investment (PMA) I -VI; 3) for Permanent Establishment (BUT) and certain expatriate domiciled in Jakarta is KPP Foreign Bodies and Expatriates (Badora) I – II; 4) for certain big companies determined under the decree of Director General of Taxes are KPP of Large Taxpayer and KPP Madya ; 5) for New Taxpayer is KPP whose working area covering the place of domicile or location of the said taxpayer; and 6) For certain individual entrepreneur taxpayers is KPP whose working area covering their place of domicile or location of their business. The Decree of Director General of Taxes No. KEP-67/PJ/2004 as lastly amended with Regulation of Director General of Taxes No.PER-91/PJ/2005 shall be ineffective after the issuance of this regulation.

PENG-02/PJ.109/2008, 27 Year 2008, Income Tax on State Treasury Bill Discount

State Treasury Bill discount gained by taxpayers is subject to Final Withholding Tax at the tariff of: a) 20% for Resident Taxpayers and Permanent Establishment form the total discount; and b) at the tariff of 20% or the tariff applicable under a Tax Treaty for Taxpayers domiciled abroad or Non Resident Taxpayer from the total discount. Discount on State Treasury Bill refers to excess between: a) Nominal value at the maturity date and the acquisition price at the Premier/Secondary Market; b) Sales Price at the Secondary Market and the acquisition price at the Premier/Secondary Market, excluding the Income Tax withheld. Tax withholding is conducted by: 1) The Issuer of State Treasury Bill/Custodian appointed as payer agent, on the discount on State Treasury Bill received by the State Treasury Bill holder at the maturity date; or 2) Securities/bank either as broker or as buyer, on the discount on State Treasury Bill received at the Secondary Market. Tax withholding shall not be conducted on discount on State Treasury Bill received/ acquired by: 1) Banks incorporated in Indonesia/foreign bank branch in Indonesia; 2) Pension Fund whose establishment/incorporation under the approval of The Finance Minister; 3) Mutual Fund registered in the Capital Market Supervisory Agency and Financial Institution, for the first five year period since its establishment/ business license issuance.

54/PMK.09/2008, Tax Monitoring Committee

The Tax Monitoring Committee is a non structural committee that assists the Finance Minister independently in monitoring the administration of tax institutions, including evaluating and providing inputs and or recommendation. The chairman, the vice chairman and the members of this committee are appointed and determined by the Finance Minister. The permanent members of this committee shall be from the Inspectorate General of the Finance Ministry, whereas the other 4 members-at least the 2 members- are not civil servants. In assisting the Finance Minister, the Committee is authorized to a) require and verify information from other parties related to procedures, systems and policy in taxation; b) collecting inputs from the public and other parties and analyze the provision and the implementation of the tax regulations; and c) provide recommendation for improvement and enhancement of the procedures, systems, tax provisions, and policy in taxation. On the other side, the Committee should conform to the Law and maintain the confidentiality of any information acquired in relation to its duty and authority. In performing its duty, this Committee shall establish the procedure of monitoring and analysis and it shall be supported by a Secretariat led by a secretary appointed based on the decision of the Finance Minister. In addition, the Committee may establish a Work Team according to the needs under the Decision of the Committee Chairman, however the budgeting shall be in the approval of the Finance Minister.

63/PMK.03/2008, Procedure for Income Tax Withholding on Discount of State Treasury Bill

Upon discount on State Treasury Bill (State Treasury Bill constitutes Government Debt Obligation with a maturity of 12 month with interest payment at a discount) received/acquired by taxpayers shall be imposed with Final Income Tax at the tariff of: a) 20% for Resident Taxpayers and Permanent Establishments; and b) 20% or based on the applicable Tax Treaty, from the discount. Taxation is conducted by: 1) State Treasury Bill issuer/custodian appointed as paying agent, on discount received by the State Treasury holder at the maturity date; 2) Securities company/bank as dealer, on discount received or acquired by State Treasury Bill seller on the transaction at a Secondary Market; and 3) Securities company, bank, pension fund and mutual fund as State Treasury Bill buyer without any dealer, on discount received or acquired by State Treasury Bill seller on the transaction at a Secondary Market. Tax withholding shall not be imposed on discount on State Treasury Bill received/acquired by: a) Bank incorporated in Indonesia or branch of foreign bank in Indonesia; b) Pension Fund which establishment/ incorporation under the approval of the Finance Minister; c) Mutual Fund registered in the Capital Market Supervisory Agency and Financial Institution, for the first five year period since its establishment/ business license issuance. The State Treasury Bill seller is obliged to inform the tax withholder regarding the actual acquisition price of State Treasury Bill. If the actual information is not delivered, the discount on State Treasury Bill which is not or under informed shall be subject to tax as accordingly within the year in which the untruth is known plus administrative sanction in form of interest.

PER – 22/PJ/2008, Procedure of Income Tax Article 25 Payment and Reporting

Income Tax Article 25 should be paid at the latest on the 15th of the subsequent month after the related period ends. For taxpayers with certain criteria who report several tax periods in one Periodical Tax Return, Income Tax Article 25 should be paid at a maximum at the end of the latest tax period. If the due date is on holidays (Saturday/national holiday: including the Public Election day and national leave), payment shall be made on the following workday through a designated bank, exchange bank, and post office using online payment system. Payment is made using a Tax Payment Slip/other means similarly treated as Tax Payment Slip already validated with State Revenue Transaction Number (Nomor Transaksi Penerimaan Negara:NTPN). The taxpayers who make payment of Income Tax Article 25 at the designated places and the Tax Payment Slips used have already been validated, shall be considered having filed their Periodical Tax Return of Income Tax Article 25 according to the validation date. For taxpayers having Income Tax Article 25 to be paid in nil amount/in foreign currency, or having paid Income Tax Article 25 not using online payment system and without NTPN, shall still file their Periodical Tax Return of Income Tax Article 25. Income Tax Article 25 paid after the due date but not yet exceeding the time limit of filing, shall be subject to interest sanction under Article 9 paragraph (2a) of the General Tax Provisions and Procedure Law. For those exceeding the time limit of payment and reporting, interest sanction and penalty shall be charged under Article 9 paragraph (2a) and Article 7 paragraph (1) of the General Tax Provisions and Procedure Law.

80/PMK.03/2008, Amendment to Regulation of Finance Minister No.36/PMK.03/2007 on Definition of Simple House, Simplest House, Simple Flat, Lodging, Boarding House for College Students and School Students as well as Other Housing Which Transfer is Exempted from Value Added Tax Imposition.

This regulation amends the definitions of Simple House(Rumah Sederhana:RS) and Simplest House (Rumah Sangat Sederhana:RSS) which is exempted from Value Added Tax (VAT) imposition. The definitions are changed into: Sanitary Simple House (Rumah Sederhana Sehat:Rs Sehat/RSH) and Growing Main House (Rumah Inti Tumbuh:RIT) which is acquired in cash/under a subsidized or unsubsidized loan facility/under funding based on syariah principle, which meets the following requirements: a) sales price is not more than IDR55,000,000; and b) it is the first house owned, for self use as residence and is not transferred to another party within 5 (year) years since the acquisition year. The RS and RSS exempted from VAT imposition is Rs Sehat/RSH and RIT transferred to Bank in relation to funding program under syariah principle where: a). the sales price is not more than IDR55,000,000; b). it is bought by the bank for resale purpose to the persons having low income under a funding program based on syariah principle; and c). the house shall be resold to the persons having low income within 6 (six) months after the purchasing. As a comparison, the limit of sales price was IDR49,000,000.

18/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).

13/PJ/2008, Format and Procedure for Template Use in Annual Income Tax Return of Corporate and Individual Taxpayer for year 2007.

To assist taxpayers who do not understand Bahasa Indonesia in completing their Annual Income Tax Return, the Director General of Taxes stipulate the use of template. The template is in form of: a) translation of Annual Income Tax Return form into English where a hole is placed for part to be filled in by the said taxpayers, either in form of figures or any other information, onto the Annual Income Tax Return in Bahasa Indonesia; or b) software application program in Microsoft Excel with the window of Annual Income Tax Return in English that may produce printed Annual Income Tax Return in Bahasa Indonesia and English already filled in. The procedure of template use is as follows: a. the template of translated from is placed onto the Annual Income Tax Return in Bahasa Indonesia as a tool for filling in; or b. the said taxpayers may open software application program in Microsoft Excel and fill in the form of Annual Income Tax Return in English in the computer screen. Further, the taxpayers print the form of Annual Income Tax Return both in Bahasa Indonesia and in English .

Revaluation of a company’s fixed asset shall be conducted to the followings:

  1. All fixed tangible assets, including land with ownership right or land-use title; or
  2. All tangible assets excluding land, which is located or domiciled in Indonesia, owned by and used for earning, collecting, and maintaining taxable income.

Article 3 Paragraph (1) Minister of Finance Regulation No: 79/PMK.03/2008, dated 23 May 2008

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