TAX UPDATE
December
No.1 - 20202019

Omnibus Tax Law Draft
Taxation Provisions and Facilities for Economic
Strengthening
Source: Directorate General of Tax’s presentation material titled“Ketentuan dan Fasilitas Perpajakan untuk Penguatan
Perekonomian”

BACKGROUND OF OMNIBUS TAX LAW DRAFT (“OMNIBUS LAW”):
The global economic slowdown, potential Indonesian economic stagnation, and the unoptimized
Indonesia’s Investment Competitive Index.
SCHEME OF OMNIBUS LAW:
The set of Omnibus Law is legislated; then the comprehensive revision of General Tax Law, Income
Tax Law and Value Added Tax Law shall continue accordingly.
OBJECTIVES OF OMNIBUS LAW:
1. To improve conducive and attractive business environment for investor
2. To increase Indonesian economic growth
3. To enhance certainty of law and attract foreign residents to work in Indonesia, in order totransfer their expertise and knowledge for enrichment of Indonesian human resources quality
4. To encourage taxpayers' voluntary compliance
5. To create fairness for domestic and foreign companies in doing business
SUBSTANCE OF OMNIBUS LAW:
1. To Improve Investment Fundinga. Reduction of Corporate Income Tax (“CIT”) Rate
NoRegulation

Current

Proposed in the Omnibus Law

1Reduction of CIT
Rate for NonPublic Listed
Company.

Corporate Income Tax rate of25%

FY 2021and 2022 - reduced to 22%
FY 2023 –reduced to 20%

2

Reduction of CIT
Rate for (NewlyRegistered) Public
Listed Company

5% lower than normal rate••

3% lower rate from normal rate; andApplicable for 5 years.

b. Tax Exemption on Dividend received by Domestic Tax Payers
NoRegulation

Current

1Onshore DividendTax

1. Non Taxable for CorporateTax Payers with ownershipof ≥ 25%
2. Normal Tax Rate for
Corporate Tax Payers withthe ownership of < 25%
3. Final Tax Rate at 10% forIndividual Tax Payers

1. Same with current (non-taxable)

Normal Tax Rate for Corporateand Individual Tax Payers

Non-taxable if the dividend is reinvested
back to Indonesia in a certain period

2Offshore Dividend
Tax

The Boulevard Office, UG D-2
Jl. Fachrudin Raya No. 5 Jakarta Pusat 10250

Phone : +62 21 2239 0777
Fax: +62 21 2239 0707

Proposed in the Omnibus Law

2. Non-taxable if the dividend is reinvested
back to Indonesia in certain period.
3. Non-taxable if the dividend is reinvested
back to Indonesia in certain period.

www.ssjkconsulting.com

TAX UPDATE
December
No.1 - 20202019

2. To Implement the Tax SystemNo

Regulation

Current

Proposed in the Omnibus Law

1Indonesian Citizen
or Foreign Citizen
as Domestic Tax
ResidentIndonesia citizen is treated as
Domestic Tax Resident (SPDN) due tohis/her citizenship.
Foreign citizen living more than 183
days is treated as Domestic Tax
Resident (SPDN)

Indonesia Citizen or Foreign Citizen
treated as a Domestic Tax Resident(SPDN) based on their physicalpresence in Indonesia:> 183 days = Domestic Tax Resident(SPDN)≤ 183 days = Foreign Tax Resident(SPLN)

2Taxing Principle ofIncome Tax

Worldwide System (Tax Residents aretaxed on their worldwide income
regardless of where the income wasgenerated – with consideration toeligible foreign tax credit.)

Territorial System (Tax Residents aretaxed only on Indonesian-sourcedincome)3. To Encourage Voluntary Compliance from Taxpayers
1. Relaxation on The Creditability of Input VATNoRegulation

Current

Proposed in the Omnibus Law

1

Input VAT on the acquisition of
taxable goods/services prior to
VAT-able Entrepreneur (PKP)
registration

Not creditable

Creditable – based on the Tax
Invoice2

Input VAT is not reported in VAT
Return and becomes the finding in
the tax audit

Not creditable

Creditable – based on the Tax
Invoice3

Input VAT which is collected in thetax assessment

Not creditable

Creditable – only the VAT portion

4

Input VAT for the acquisition of
taxable goods/services prior to
VAT-able Entrepreneur (PKP)
carries taxable delivery

Creditable (only capitalgoods)

Creditable –any overpayment can berequested for VAT refund at the endof financial year.

2. Rearrangement of Tax Administration Sanction
NoRegulation

Current

Proposed in the Omnibus Law

1

Interest sanction on underpayment
due to revision of annual andmonthly Tax Return

2% per month ofunderpaid tax

Monthly sanction =(Reference interest rate*+5%)/12

Interest sanction on underpayment
tax assessment letter

2% per month ofunderpaid tax

2*Amount of monthly interest and sanction shallbe determined by the Minister of FinanceMonthly sanction =(Reference interest rate*+10%)/12*Amount of monthly interest and sanction shallbe determined by the Minister of Finance3

Fine on Taxable Entrepreneurs
who did not prepare tax invoice, orprepares tax invoice but not ontime

2% of tax base

4

Fine on entrepreneurs who did notregister its business as a Taxable
Entrepreneur

No administrative
sanction

1% of tax base

1% of tax base(in order to retain equality with
Taxable Entrepreneurs who did notprepare tax invoice or late preparestax invoice)
Page 2TAX UPDATE
DecemberNo.1 - 20202019

4. To Create Equality between Domestic and Foreign Companies in Doing Business – Taxation on
Electronic Trading
NoRegulation

1Collection andpayment of VAT on
the import ofintangible goods andservices

The Resident taxpayer(“WPDN”) to pay VAT via
the tax payment slip (i.e.
Self-assessed/Offshore
VAT).

Taxing SPLN without
physical presence inIndonesia on theincome arising fromtheir electronicbusinesses

Not Regulated

2Current

Proposed in the Omnibus Law

The non-resident taxpayer (“SPLN”) (e.g.
foreign trader, foreign service provider,foreign platform) to collect, pay andreport VAT.
SPLN may appoint an agent in Indonesia
to collect, pay and report VAT on behalfof the SPLN.
Re-define the definition of permanentestablishment (“BUT”) based on both
physical presence and significant
economic presence.
Rate and Tax Base is based on theIncome Tax Law

5. To Stipulate the Tax Facilities in the Tax Law
No12Regulation

Current

Proposed in the Omnibus Law

Reduction/
Exemption ofCorporate IncomeTax (Tax Holiday)

Entitled for corporate
taxpayers in pioneer industry.

1. Entitled for corporate taxpayers inpioneer industry.
2. For the main activities in special
economic zone.
3. Development of specific industrial area.

Reduction in Gross
Income (SuperDeduction)

Entitled for corporate
taxpayers who:
a. Performs vocational
and R&D activities.
b. Invests in labor-intensiveindustries.

(Regulated under Capital
Investment Law No.1/2019
and Ministry of FinanceRegulation
No.150/PMK.010/2018)

The current facilities will be further
regulated in the new Tax Law.

(Regulated under Government
Regulation No. 45/2019)3Special Economic
Zone Facility (“KEK”)

1.
2.
3.
4.

Reduction of net income
at maximum of 30%.
Accelerated depreciation
and amortization.
Additional tax loss
carried forward period.
Tax on dividend at10%

The current facilities will be further
regulated in the new Tax Law.

(Regulated under Special
Economic Zone Law No.
96/2015)
4

Income Tax on
Global Sovereign
Bonds (“SBN”)

Lower rate or exempt fromincome tax imposed oninterest payments on SBN,
mutually beneficial.

Lower rate or exempt from income tax
imposed on interest payments on SBN.

(Regulated under Government
Regulation No. 16/2009)
Page 3TAX
TAX UPDATEUPDATE
No.4 - 2019No.1 - 2020

For additional information, please contact us:

PT Sakura Mitra Perdana
Nishihara Kenta Director nishihara@sakura-id.com
Mihara Azusa Director mihara@sakura-id.com
Menara Rajawali Lt. 8,Jl. Dr. Ide Anak Agung Gde Agung,Kuningan Timur, Jakarta Selatan 12950
Phone: +62 21 2902 3417 / 18 / 19
Fax : +62 21 2902 3410
https://sakura-id.com/
This Tax Update was created by our partner SSJK.

SSJK Consulting
The Boulevard Office, UG D-2
Jl. Fachrudin Raya No. 5Jakarta Pusat 10250
www.ssjkconsulting.com

The information in this document is intended forgeneral information only based on ourunderstanding of the interpretation of thoseprovisions.
There is no guarantee the Tax Office will havethe same view from those expressed in thisdocument.
When specific problems occur in practice, it issuggested to obtain appropriate advice from thetax advisor.
Page 4