With consideration to encourage investment in labour-intensive industries, support employment creation programs and the absorption of Indonesian workers, encourage the involvement of the business community and the industrial world in preparing quality human resources, increase competitiveness, and encourage the role of the business world and the industrial world in conducting research and development activities, the government deems it necessary to amend Government Regulation No. 94 of 2010 concerning Calculation of Taxable Income and Repayment of Income Taxes in the Current Year.
Based on these considerations, on June 25, 2019, President Joko Widodo has signed Government Regulation (PP) Number 45 of 2019 concerning Amendment to Government Regulation Number 94 of 2010 concerning Calculation of Taxable Income and Repayment of Income Tax in the Current Year (link: PP Number 45 2019).
With this change, Article 29 of the PP is changed to:
- Taxpayers who make new investments, which are pioneering industries, who do not get the facilities referred to in Article 31A of the Income Tax Act may be given a facility of exemption or reduction of corporate income tax as referred to in Article 18 paragraph (5) of the Law Number 25 of 2007 concerning Investment.
- Pioneer industry as referred to is an industry that has broad links, provides added value and high externalities, introduces new technologies, and has strategic value for the national economy.
Article 29A of this PP states, to domestic corporate taxpayers who make new investments or expand businesses in certain business fields that: a. is a labour-intensive industry and b. do not get the facilities referred to in Article 31A of the Income Tax Act or the facilities referred to in Article 29 paragraph (1), income tax facilities can be provided in the form of a reduction in net income by 60% (sixty percent) of the total investment in the form of tangible fixed assets including land used for main business activities, which is charged within a certain period.
While Article 29B of this PP states, domestic taxpayers who carry out work practices, apprenticeship, and / or learning activities in the framework of developing and developing competency-based human resources can be given a maximum gross income reduction of 200% (two hundred percent) of the total costs incurred for work practices, apprenticeship, and / or learning activities.
"Certain competencies as referred to are competencies to improve the quality of workforce through work practices, apprenticeship programs and / or strategic learning to achieve effectiveness and efficiency of labour as part of human resource investment, and meet the structure of the workforce needs needed by the world business and / or industry, " said Article 29B paragraph (2) of this PP.
To taxpayers of domestic bodies conducting certain research and development activities in Indonesia, according to this PP, a reduction in gross income can be given at a maximum of 300% (three hundred percent) of the total costs incurred for certain research and development activities in Indonesia which are charged in certain period of time.
"Certain research and development activities as referred to are research and development activities carried out in Indonesia to produce inventions, produce innovations, master new technologies, and / or transfer technology for industrial development to increase the competitiveness of national industries," said Article 29C paragraph (2) This PP.
According to this PP, the exemption or reduction of corporate income tax facilities as referred to, the net income reduction facility for new investments or business expansion in certain business fields which are labour-intensive industries as intended, the reduction in gross income from the implementation of work practices, apprenticeship activities, and / or learning in the context of fostering and developing certain competency-based human resources as intended and D. reduction of gross income from certain research and development activities in Indonesia as referred to is regulated by Minister of Finance Regulation.
"This Government Regulation comes into force on the date of promulgation," reads Article II of Government Regulation Number 45 of 2019, which was promulgated by Minister of Justice and Human Rights Yasonna H. Laoly on June 26, 2019. (source :MOI -Pusdatin / ES)