Summary of Tax Regulation (January 2009)

Summary of Tax Regulation

Circular of Director General of Taxes,
Number SE-7/PJ/2008

Dissemination of Finance Minister Regulation Number 210/PMK.03/2008 concerning Fifth Amendment to Finance Minister Regulation Number 254/KMK.03/2001 Appointment of Withholder of Income Tax Article 22, Nature and Amount Including Payment and Reporting Procedure

Since the validation of Finance Minister Regulation No. 210/PMK.03/2008 on 1 January 2009, the cigarette industry is no longer appointed as Income Tax Article 22 withholder on local cigarette sales. Thus, the taxpayers of cigarette distributor which had previously been withheld by cigarette industry, starting from 1 January 2009, are no longer subject to Final Income Tax but Income Tax under the tariff under Article 17 of Income Tax Law (Law No.7 Year 1983 as lastly amended with Law No.36 Year 2008) and should make installment of Income Tax Article 25.

Regulation of Director General of Taxes, Number PER-52/PJ/2008

Income Tax Treatment on Income of Cigarette Distributor

Income received or acquired by cigarette distributors is subject to Income Tax Article17 of Income Tax Law (Law of Income Tax No.7 Year 1983 as lastly amended with Law No. 36 Year 2008). Further, they should make payment of Income Tax Article 25 (tax installment). The tax installment amount for year 2009 is equal to Income Tax calculated based on general tariff on net income for a month which is annualized, divided by 12 (twelve). Under the validity of this regulation, the Decree of Director General of Taxes No. KEP-529/PJ./2001 has come into ineffective since 1 January 2009.

Circular of Director General of Taxes, Number SE-68/PJ/2008

Form of Certificate of Domicile (Form No. 6166) United States of America.

IRS has issued Certificate of Domicile (CoD) form (FORM No. 6166) to be used for the residents of the United States of America. This form will state that the related individual/entity is a resident of the United States of America and allowed to use the Tax Treaty of Indonesia and United States of America. The form should be signed by IVY S. McChesney, Field Director, Philadelphia Accounts Management Center and will come into effective since 24 April 2009. The Certificate of Domicile issued by the competent authority of United State of America/the official representative prior to 24 April 2008 will still be applicable so long as it is in conformity with Circular of Director General of Taxes No. SE-03/PJ.101/1996 and effective within one year since the date of issuance, unless for bank taxpayers.

Circular of Director General of Taxes, Number SE-80/PJ/2008

Determination of Taxpayer Registration Date in Relation to the End of Sunset Policy and the Validity of Law No. 36 Year 2008

Upon any application of Taxpayer Identification Number (NWPW) received up to 31 January 2009 which NPWP card has not been issued until last 31 January 2009, the receipt note of the application can be treated as evidence that the related person has obtained NPWP. This receipt note can be used for the purpose of Income Tax withholding/collection and valid until the issuance of NPWP card. The registration date for either self registration or registration by employer is the date of receipt note when the application is received completely. The handling of NPWP registration application is based on the Circular No. SE-70/PJ./2008. In relation to that, head of Tax Offices is requested to conduct socialization of this provision such as by placing an announcement based on the attachment of this Circular.

Regulation of Director General of Taxes, Number PER-47/PJ/2008

Procedure for Filing of Tax Return and Notification of Extension of Annual Tax Return by e-Filing Through Application Service Provider (APS) Company

Taxpayers can file tax return and notification of Annual Tax Return extension by electronic filling (e-Filing) through one/several Application Service Provider (APS) companies appointed by the Director General of Taxes. However, prior to conducting e-filing, the related taxpayers should firstly own Electronic Filing Identification Number (e-FIN) and obtain Digital Certificate (DC) from the Directorate General of Taxes. The e-FIN is issued by the Tax Office where the related taxpayer is registered based on the application letter of the taxpayer as referred to in the Attachment I of this regulation. The application can be approved if the address stated in the application is similar with the address in the taxpayer database in the Directorate General of Taxes and the decision on the application should be given at the latest on 2 working days since it is received completely and correctly. Taxpayers who have already obtained e-FIN should register through the website of one/several ASP companies appointed by the Director General of Taxes. After that, the taxpayers will receive DC from the Directorate General of Taxes through ASP companies where they are registered. DC will later be used as a means for taxpayers’ data security in every filing process of tax return and notification of extension of annual tax returns by e-Filing. A set of complete e-SPT according to the regulations along with the electronic/digital signature is filed electronically to the Directorate General of Taxes through an ASP company. If it shows any payment obligation, the related taxpayer should state the State Revenue Transaction Number in the e-SPT and the e-SPTy as payment evidence already validated. If e-SPT or e-SPTy is considered complete by the Directorate General of Taxes, the related taxpayer will receive Electronic Receipt Note. This e-filing can be used for e-SPT and e-SPT purpose for 24 hours a day and 7 days a week based on Indonesian West Region Time (WIB). For any data and/or document to be enclosed that cannot be filed electronically to the Tax Office at which the related taxpayer is registered, they should be submitted directly/through post with delivery note/expedition or courier service provider with delivery note, except for Tax Payment Slip (SSP) Sheet No.3, at the latest on a) 14 days since the time limit of filing ends, in the event that the tax return or the notification of tax return extension is filed before the time limit elapses; b)14 days since the filing date of the tax return or the notification of tax return extension in the event that it is filed after the time limit elapses. If the taxpayer has filed data and/or other documents within the set time limit, the tax return or the notification of tax return extension will be considered having already been received according to the date sated in the Electronic Receipt Note. If the data and/or other documents are delivered via post with delivery note/expedition or courier service provider with delivery note, the date of receipt will be the date as stated in the delivery note. If the data and/or other documents are not submitted timely, the related taxpayer will be considered not submitting the tax return or the notification of tax return extension. The ASP company should guarantee the confidentiality of the tax return or the notification of tax return extension, including the attachments, delivered electronically and the receiving at the Directorate general of Taxes completely and in real time as well as its confirmation by both the taxpayer and the Directorate General of Taxes. Upon the validation of this regulation on 1 March 2009, KEP-05/PJ/2005 and KEP-88/PJ/2004 become ineffective.

Regulation of Finance Minister, Number 251/PMK.03/2008

Income on Financial Services Conducted by Business Entities as Lending and/or Financing Institution Not Subject to Income Tax Article 23 Withholding

Upon income in relation to financial services paid/owed to business entities acting as lending/financing institutions, Income Tax Article 23 is not withheld. The income may in form of interest/other remuneration given related to the loan distribution/financing, including those under syariah basis. There are business entities exempted are limited to: 1) Financing companies which are business entities other than banks and non bank financial institution specifically established to carry out activities included as business field of financing institution and have obtained business license from the Finance Minister; 2) State-own companies/Regional State-own companies specifically established for providing financing facilities for micro business, small business, middle business and cooperatives, including PT (Persero) Permodalan Nasional Madani.

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