In 2020, the government disbursed a total of IDR 579.8 trillion (about 3.8 percent of GDP) as part of a national economic recovery program (PEN). Besides tax reliefs, the PEN comprises (1) support to the health care sector to boost testing and treatment capacity for COVID-19 cases; (2) increased benefits and broader coverage of existing social assistance schemes to low-income households such as food aid, conditional cash transfers, and electricity subsidies; (3) expanded unemployment benefits, including for workers in the informal sector.

 

The PEN also includes capital injections into state-owned enterprises and interest subsidies, credit guarantees, and loan restructuring funds for micro, small, and medium enterprises. To support credit creation, the government has placed state funds in selected commercial banks in an effort to enable banks to increase leverage and guaranteed working capital loans for labor-intensive corporations. In 2021, the government has budgeted a total of IDR 699.4 trillion for the PEN.

 

 

The Government issued a Regulation In Lieu of Laws on 31 March 2020 and is in effect immediately, which includes the following changes of tax policies: 

Reduced CIT rate: CIT rate reduction from 25% to 22% for tax years 2020 and 2021 and to 20% for tax year 2022 and onwards. Additional reduction of 3% of CIT rate applies for certain qualified listed companies on IDX.

Implementation of taxes on the digital economy.

Extended timeline on time limit or deadline for tax refund process, tax objection letter submission, tax objection process, administrative penalty relief that falls within the “force majeure” period. 

MOF was authorized to determine policy related to import tax duty exemption.

 

On 27 April 2020, the Minister of Finance (MOF) issued update on the tax stimulus package due to the COVID-19 pandemic. The following stimulus programs had been updated and extended to December 2020:

Employee Income Tax borne by the Government: Employee income tax was borne by the Government for the tax period of April to December 2020.

Import tax exemptions. 

50% reduction of CIT instalments:50% reduction of CIT instalments (deferral) and/or income tax exemption on importation (which serves as CIT prepayment) were available for the qualified companies for the tax period of April until December 2020.

Advance VAT refund claims: Advance VAT refunds of up to IDR5billion (US$330,000) (without automatic tax audit) for the tax period from April to December 2020 for qualified companies.

Small-Medium Enterprise Tax borne by the Government. 

 

The Government also provides additional stimulus on qualified deductible expenses as follow:

30% bonus deduction on net income for producers of medical equipment and health supplies incurred for period until 30 September 2020. 

Certain qualified donation related to COVID-19 pandemic control was deductible for tax purpose.

 

 

In Indonesia, taxpayers can request electronic tax residence certificates online. A residence certificate is issued in under five days if the taxpayer has filed an annual tax return for the preceding two fiscal years and meets certain administrative requirements. Treaty partners and withholding tax agents can verify a tax residence certificate’s validity by scanning a barcode included on the certificate.