TAX UPDATE
March
No.3 - 2020
Government Financial Policy and Financial System
Stability to Handle the Pandemic of Covid-19
and/or to Overcome the Threat that may Harmful
the National Economy and/or Stability of Financial
SystemGovernment Regulation in lieu of Law No. 1 Year 2020(“GR-1/2020”)
BACKGROUND OF GOVERNMENT REGULATION
The pandemic of Covid-19 will slow down the economic growth, reduce the State revenue, and increase theState expenditures. Therefore, the Government needs to set some policies to stabilize the financial system andnational economic, including to recover the economic condition, and business atmosphere.
The GR-1/2020 regulates several tax policies for the relaxation of tax obligations and new treatment of ecommerce as follows:
1.
2.
3.
4.

The reduction of Corporate Income Tax rate for Corporate Taxpayer and Permanent Establishment.
The tax treatment for the e-commerce transactions from offshore to Indonesia.
The extension of deadline for the fulfillment of taxation rights and obligations.
Customs facilities for the reduction or exemption of Customs Duty for import transactions.

The key features of GR-1/2020 for taxation issues can be summarized as follows:

REDUCTION OF CORPORATE INCOME TAX RATENo.

Key Features

1

Reduction of CIT
Rate for NON Public Listed
Company.

2

Reduction of CIT
Rate for Public
Listed Company

Notes
FY 2020 and 2021 - reduced to 22%
FY 2022 – reduced to 20%

3% lower from normal rate as above, as long as:a) The shares are 40% traded in the Indonesia Stock Exchangeb) Meet certain requirements (will be further regulated in a GovernmentRegulation)

TAX TREATMENTS FOR E-COMMERCE TRANSACTION FROM OFFSHORE TO
INDONESIANo.

Key Features

Notes

1

VAT for Utilizationof Service and/orIntangible Taxable
Goods

The Offshore Seller, Offshore Service Provider, Offshore Trade Organizer
conducted the trading through Digital System(Penyelenggara Perdagangan
Melalui Sistem Elektronik / PPMSE), and Domestic PPMSE as appointed by theMinistry of Finance should collect, pay and report the VAT. The PPMSE can bemarketplace or platform provider.

2Income Tax or Tax
on Electronic
Transaction

The Offshore Seller, Offshore Service Provider, and Offshore PPMSE shouldhave a Permanent Establishment in Indonesia if they have significant economic
presence in Indonesia. The significant economic presence can be:a) Consolidated gross income of group companies exceed certain limit;b) Sales in Indonesia exceed certain limit; and/orc) The active user of digital media in Indonesia exceed certain limit.
In case the Permanent Establishment could not be established in Indonesia due
to Tax Treaty limitation, the transaction will be subject to Tax on ElectronicTransaction.
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March
No.3 - 2020

TAX TREATMENTS FOR E-COMMERCE TRANSACTION FROM OFFSHORE TO
INDONESIA (continued)
No.

Key Features

Notes

3

The Appointment ofRepresentative inIndonesia

The Offshore Seller, Offshore Service Provider, and Offshore PPMSE canappoint a Representative in Indonesia to collect, pay, and report the VAT,
Income Tax and/or Tax on Electronic Transaction.
There will be a Government Regulation to regulate the Income Tax and Tax on
Electronic Regulation to cover:a) How much is the Tax Rateb) What is the Tax Basec) How to calculate the Income Tax and Tax on Electronic Regulation

4

Further
ImplementingRegulation

5

Penalty

Furthermore, there will be a Ministry of Finance Regulation to regulate:a) Procedures to appoint the PPMSE, the VAT collection, payment andreporting.
b) The criteria of significant economic presence, payment and reporting ofIncome Tax and the Tax on Electronic Transaction.
c) The appointment of Representative in Indonesia.
If the Offshore Seller, Offshore Service Provider, Offshore PPMSE, andDomestic PPMSE do not meet the above requirements, they will be subject toadministrative sanction based on the tax law, and the digital access termination.

THE EXTENSION OF DEADLINE FOR THE FULFILLMENT OF TAXATION RIGHTSAND OBLIGATIONSNo.

Key Features

Notes

1

Submission ofObjection Letter

If the deadline for submission of Objection Letter is in the force majeure periodof Covid-19, the deadline will be extended for 6 months.

2The Issuance of TaxRefund Letter

The Tax Office should issue the Tax Refund Letter (Surat Pengembalian
Kelebihan Pembayaran Pajak / SPKPP) within 1 month in relation to the issuanceof Overpayment Tax Assessment Letter, Tax Objection Decision, Tax AppealDecision, and other tax overpayment decision in accordance to the Art. 11
paragraph (2) of General Tax Law. This deadline will be extended for 1 month.

3The Issuance of Tax
Assessment Letter,Tax Objection
Decision andReduction/Elimination ofAdministrativeSanction

The Tax Office can extend the issuance of Overpayment Tax Assessment
Letter, Tax Objection Decision, and the Reduction/Elimination ofAdministrative Sanction Decision for 6 months, in case the deadline is within
the force majeure period of Covid-19.

The Force Majeure
Period of Covid-19

The force majeure period of Covid-19 should refer to the Decision from Headof National Disaster Management Authority (Badan Nasional Penanggulangan
Bencana / BNPB). As of 31 March 2020, BNPB has issued 2 Decisions which
determined the force majeure period of Covid-19 is 28 January 2020 – 29 May
2020.

4

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March
No.3 - 2020

CUSTOMS FACILITIES FOR THE REDUCTION OR EXEMPTION OF CUSTOMSDUTY FOR IMPORT TRANSACTIONSNo.

Key Features

Notes

1

Exemption orReduction ofCustoms Duty

The Ministry of Finance can issue the regulation to exempt or reduce theCustoms Duty for import transactions.

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TAX UPDATEUPDATE
No.4
March
No.3-- 20192020
No.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. 5
Jakarta Pusat 10250
www.ssjkconsulting.com

The information in this document is intended forgeneral information only based on ourunderstanding of the interpretation of those
provisions.
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.
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