MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA COPY REGULATION OF THE MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA NUMBER 159/PMK.

Transcription

1 COPY REGULATION OF THE MINISTER OF FINANCE NUMBER 159/PMK.010/2015 REGARDING GRANTING OF CORPORATE INCOME TAX REDUCTION FACILITY BY THE GRACE OF GOD ALMIGHTY THE MINISTER OF FINANCE, Considering : a. whereas provision regarding the granting of Corporate Income Tax exemption and reduction facility is regulated under the Regulation of the Minister of Finance Number 130/PMK.011/2011 as amended by Regulation of the Minister of Finance Number 192/PMK.011/2014; b. whereas in order to increase direct investment activities, especially in Pioneer Industry in order to encourage economic growth, it is necessary to revise the provision regarding the granting of Corporate Income Tax facility as referred to in letter a; c. whereas based on considerations as referred to in letters a and b, and in order to implement the provision of Article 30 of Government Regulation Number 94 of 2010 regarding Calculation of Taxable Income and Payment of Income Tax in Current Year, it is necessary to stipulate the Regulation of the Minister of Finance regarding Granting of Corporate Income Tax Reduction Facility; In view of : 1. Law Number 7 of 1983 regarding Income Tax (Supplement Number 3263 to the State Gazette of the Republic of Indonesia Number 50 of 1983) as amended for several times and the latest by Law Number 36 of 2008 (Supplement Number 4993 to the State Gazette of the Republic of Indonesia Number 133 of 2008); 2. Law Number 25 of 2007 regarding Investment (Supplement Number 4724 to the State Gazette of the Republic of Indonesia Number 67 of 2007); 3. Government Regulation Number 94 of 2010 regarding Calculation of Taxable Income and Payment of Income Tax in Current Year (Supplement Number 5183 to the State Gazette of the Republic of Indonesia Number 161 of 2010);

2 -2- BE IT HEREBY RESOLVED: To stipulate : REGULATION OF THE MINISTER OF FINANCE REGARDING GRANTING OF CORPORATE INCOME TAX REDUCTION FACILITY. Article 1 As intended herein, the following terms shall have the corresponding meaning as referred to hereunder: 1. Income Tax Law shall mean Law Number 7 of 1983 regarding Income Tax as amended for several times and the latest by Law Number 36 of Investment Law shall mean Law Number 25 of 2007 regarding Investment. 3. Pioneer Industry shall mean industry having broad relevance, providing added value and high externality, introducing new technology, and having a strategic value for the national economy. Article 2 (1) Corporate Tax Payer performing new investment which constitutes Pioneer Industry may be granted Corporate Income Tax Reduction Facility as referred to in Article 18 paragraph (5) of Investment Law and Article 29 of Government Regulation Number 94 of 2010 regarding Calculation of Taxable Income and Payment of Income Tax in Current Year. (2) Corporate Income Tax Reduction Facility as referred to in paragraph (1) shall be granted to income received or accrued from main business activity which constitutes Pioneer Industry. (3) Main business activity as referred to in paragraph (2) shall mean main business activity as referred to in the Tax Payer s principal license and/or business license when submitting the request for Corporate Income Tax Reduction, including its amendment and expansion, including in the Pioneer Industry criteria.

3 -3- Article 3 (1) Corporate Income Tax Reduction as referred to in Article 2 shall be granted not exceeding 100% (one hundred percent) and not less than 10% (ten percent) of the total amount of payable Corporate Income Tax. (2) Corporate Income Tax Reduction as referred to in Article 2 may be granted for a period not exceeding 15 (fifteen) Tax Years and not less than 5 (five) Tax Years as of the Tax Year of the commencement of commercial production. (3) The amount of Corporate Income Tax Reduction as referred to in paragraph (1) shall be granted in the same percentage each year for the period as referred to in paragraph (2). (4) Taking into account the interests of maintaining the competitiveness of national industry and the strategic value of certain business activities, the Minister of Finance may grant Corporate Income Tax Reduction Facility for a period exceeding the period as referred to in paragraph (2) to be no later than 20 (twenty) years. Article 4 (1) Tax Payer that may be granted Corporate Income Tax Reduction Facility as referred to in Article 2 shall be Corporate Tax Payer meeting the following criteria: a. new Tax Payer; b. Pioneer Industry; c. having new investment plan which has been validated by an authorized institution of no less than Rpl,000,000,000, (one trillion rupiah); d. meeting the required ratio of debt and capital as referred to in the Regulation of the Minister of Finance which regulates the determination of ratio between corporate debt and capital for the purpose of Income Tax calculation;

4 -4- e. submitting statement of ability to place fund in Indonesian banking of not less than 10% (ten percent) of the total investment plan as referred to in letter c, and such fund shall not be withdrawn before the commencement of investment realization implementation; and f. having the status of Indonesian legal entity of which validation is stipulated as of or after August 15, (2) In the event that Tax Payer as referred to in paragraph (1) is directly owned by domestic Tax Payer and/or foreign Tax Payer in the form of permanent business, in addition to meeting the criteria as referred to in paragraph (1) the said domestic Tax Payer and/or foreign Tax Payer in the form of permanent business shall have fiscal certificate issued by the Directorate General of Taxes in compliance with provisions which regulate the procedure for issuing fiscal certificate. (3) Provisions as referred to in paragraph (2) shall not apply in the event that: a. Corporate Tax Payer is directly owned by Central Government or Regional Government; b. Corporate Tax Payer s ownership consists of shares listed in the stock exchange in Indonesia. (4) Pioneer Industry as referred to in paragraph (1) letter b shall include: a. Upstream metal industry; b. Oil refining industry; c. Industry of organic basic chemicals derived from oil and natural gas; d. Industry of machinery that produces industrial machinery; e. Processing industry of agricultural, forestry, and fishery products; f. Industry of telecommunications, information and communication; g. Marine transportation industry; h. Processing industry which is a major industry in the Special Economic Zone (KEK); and/or

5 -5- i. Economic infrastructure in addition to the use of Government and Business Entity (KPBU) scheme. (5) Limit value of new investment plan which has been validated by an authorized institution as referred to in paragraph (1) letter c may be reduced to not less than Rp500,000,000, (five hundred billion rupiah) for Pioneer Industry as referred to in paragraph (4) letter f, and meeting the requirement of introducing high tech. (6) Amount of Corporate Income Tax Reduction as referred to in Article 3 paragraph (1) shall be granted not exceeding 50% (fifty percent) for Pioneer Industry as referred to in paragraph (5) with new investment plan value of less than Rpl,000,000,000, (one trillion rupiah) and not less than Rp500,000,000, (five hundered billion rupiah). (7) Corporate Income Tax reduction Facility as referred to in Article 3 may be utilized by Tax Payer as referred to in paragraph (1), provided that the following conditions are met: a. commercial production has commenced; b. when commencing commercial production, Tax Payer has realized investment value of not less than the amount of investment plan; and c. investment business field shall be in accordance with investment business field plan and included in the scope of Pioneer Industry as referred to in paragraph (4). (8) Director General of Taxes shall stipulate Tax Payer which can utilize Corporate Income Tax reduction facility as referred to in paragraph (7), and such stipulation shall at least contain the following: a. Date when commercial production is commenced as the basis to determine the Tax Year the utilization of Corporate Income Tax Reduction Facility is commenced;

6 -6- b. Determination of the amount of investment realization at the commencement of commercial production; and c. Conformity of investment business field with investment business field plan and included in the scope of Pioneer Industry. (9) Procedure for stipulating the utilization of Corporate Income Tax reduction facility as referred to in paragraph (8) shall be regulated under the Regulation of the Director General of Taxes. (10) Commencement of commercial production as referred to in paragraph (7) shall be the first time the result of production is sold in the market and/or is used personally to further process of production of the main business activity which is granted Corporate Income Tax Reduction Facility. Article 5 (1) In order to receive Corporate Income Tax reduction facility, Tax Payer shall submit an application to the Chairman of Indonesia Investment Coordinating Board. (2) Application as referred to in paragraph (1) shall be enclosed with: a. copy of Tax Payer Identification Number; b. copy of new investment principal license, completed with its details; c. original copy of statement of ability to place fund in Indonesian banking as referred to in Article 4 paragraph (1) letter e; and d. fiscal certificate for Tax Payer meeting the provision of Article 4 paragraph (2). (3) Upon the application as referred to in paragraph (1), Chairman of Indonesia Investment Coordinating Board shall examine the completeness of document as referred to in paragraph (2) and compliance with the coverage of Pioneer Industry as referred to in Article 4 paragraph (4).

7 -7- (4) In the submission of application for granting of Corporate Income Tax Reduction Facility to the Minister of Finance, the Chairman of Indonesia Investment Coordinating Board shall coordinate with relevant minister to carry out: a. examination of compliance with the scope of Pioneer Industry as referred to in paragraph (3). b. preparation of examination description regarding the following matters: 1. availability and contribution of infrastructure construction plan at the investment location; 2. absorption of domestic workers; 3. study regarding fulfillment of Pioneer Industry coverage; and 4. clear and concrete technology stage plan. (5) Based on the result of examination which complies with the scope of Pioneer Industry as referred to in paragraph (4) letter a and the examination description as referred to in paragraph (4) letter b, Chairman of Indonesia Investment Coordinating Board may submit a suggestion for Granting of Corporate Income Tax Reduction Facility enclosed with the document as referred to in paragraph (2) and document of examination description in question. Article 6 (1) Upon the suggestion for Granting of Corporate Income Tax Reduction Facility as referred to in Article 5 paragraph (5), the Minister of Finance shall assign a verification committee of granting of Corporate Income Tax Reduction to assist in carrying out examination and verification of the suggestion in question. (2) Verification Committee of granting of Corporate Income Tax Reduction as referred to in paragraph (1) shall be established by the Minister of Finance. (3) Verification Committee of granting of Corporate Income Tax Reduction shall submit the result of examination and verification as referred to in paragraph (1) to the Minister of Finance accompanied with considerations and recommendation, including recommendation regarding the amount of Corporate Income Tax Reduction as referred to in Article 3 paragraph (1)

8 -8- and granting period of facility as referred to in Article 3 paragraph (2). (4) Recommendation regarding the amount of Corporate Income Tax Reduction as referred to in Pasal 3 paragraph (1) and granting period of facility as referred to in Article 3 paragraph (2) shall be based on the examination result of examination description cotaining matters as referred to in Article 5 paragraph (3). (5) Granting of Corporate Income Tax reduction facility shall be decided by the Minister of Finance based on the consideration and recommendation from the verification committee of granting of Corporate Income Tax reduction as referred to in paragraph (4). (6) Granting of Corporate Income Tax reduction facility by the Minister of Finance with period as referred to in Article 3 paragraph (4) shall be carried out under the following conditions: a. The Minister of Finance may request for consideration and recommendation from the verification committee of Corporate Income Tax reduction; or b. The Minister of Finance shall grant the facility without requesting for consideration and recommendation from the verification committee of Corporate Income Tax reduction. (7) In the event that the Minister of Finance approves the suggestion for granting of Corporate Income Tax reduction facility as referred to in Article 5 paragraph (2): a. The Minister of Finance shall issue a decree regarding the granting of Corporate Income Tax reduction facility; and b. Tax Payer shall place fund in Indonesian banking of not less than 10% (ten percent) of the total investment plan as referred to in Article 4 paragraph (1) letter e. (8) Placement of fund in Indonesian banking as referred to in paragraph (7) letter b shall be carried out no later than 7 (seven) days as of the stipulation of the decree regarding the granting of Corporate Income Tax reduction facility, and such fund shall not be withdrawn before the commencement of investment realization implementation.

9 -9- (9) In the event that the Minister of Finance rejects the suggestion for granting of Corporate Income Tax reduction facility, a written notification shall be delivered regarding such rejection to the Tax Payer with a copy to the Chairman of Indonesia Investment Coordinating Board. Article 7 (1) To Tax Payer whose suggestion for granting of Corporate Income Tax reduction facility is rejected by the Minister of Finance and to whom a written notification is issued regarding the said rejection shall be granted Income Tax facility for investment in certain business fields and/or in certain regions provided that it complies with the provisions under the Government Regulation Number 18 of 2015 regarding Income Tax Facility for Investment di Certain Business Fields and/or in Certain Regions and its implementation regulation. (2) Procedure for granting of Income Tax facility for investment in certain business fields and/or in certain regions for Tax Payers whose suggestion for granting of Corporate Income Tax reduction facility is rejected by the Minister of Finance as referred to in paragraph (1) shall be in compliance with the Regulation of the Minister of Finance which regulates the procedure for granting of Income Tax facility for investment in certain business fields and/or in certain regions. Article 8 (1) Tax Payer having received the Decree of the Minister of Finance regarding the granting of Corporate Income Tax reduction facility is required to submit periodic report to the Director General of Taxes and the Head of Verification Committee for granting of Corporate Income Tax reduction facility regarding the following matters:

10 -10- a. report of the use of fund placed in Indonesian banking as referred to in Article 4 paragraph (1) letter e; b. report of audited investment realization; and c. report of product realization during facilitation period. (2) Reporting procedure as referred to in paragraph (1) shall be governed under the Regulation of the Director General of Taxes. (3) In addition to reporting liabilities as referred to in paragraph (1), Tax Payer granted Corporate Income Tax reduction facility is also required to comply with the request of the Director General of Taxes to provide transaction data of special party company as regulated in Article 18 paragraph (4) of Law Income Tax. Article 9 (1) Corporate Tax Payer granted Corporate Income Tax reduction facility shall be prohibited from: a. importing or purchasing used capital goods which is relocated from another country or company for the purpose of realization of investment which is granted Corporate Income Tax reduction facility; b. carrying out main business activity that is not in accordance with investment business field plan and not included in the scope of Pioneer Industry during the utilization period of Corporate Income Tax reduction facility; c. transferring assets and/or ownership of Corporate Tax Payer granted Corporate Income Tax reduction facility during the utilization period of Corporate Income Tax reduction facility; d. relocating the investment to another province in Indonesia or to overseas since the Tax Year of commencement and up to 5 (five) Tax Years since the expiration of utilization period of Corporate Income Tax reduction facility; and/atau

11 -11- e. modifying the method of bookkeeping in order to shift gain or loss from the utilization period of Corporate Income Tax reduction facility to the period afterwards, and vice versa, including the method of income and/or expense recognition, and method of calculation of depreciation and/or inventory, since the Tax Year of commencement and up to 5 (five) Tax Years since the expiration of utilization period of Corporate Income Tax reduction facility. (2) Shall be excluded from the prohibition as referred to in paragraph (1) letter c, in the event that Tax Payer: a. carries out asset transfer and replaces it with a more productive asset; b. carries out ownership diversion to Tax Payer who has obtained fiscal certificate; c. carries out ownership diversion through listing mechanism at the stock exchange (go public). Article 10 (1) Corporate Income Tax reduction facility as referred to in Article 2 shall be revoked, in the event that Tax Payer: a. upon commencement of commercial production, investment realization value is less than the investment plan; b. fails to place fund in Indonesian banking as referred to in Article 6 paragraph (7) letter b and/or such fund is withdrawn prior to commencement of investment realization implementation; c. fails to comply with provisions of report submission as referred to in Article 8 paragraph (1) and provision of compliance with the requirement of the Director General of Taxes to provide data as referred to in Article 8 paragraph (3); d. commits violatin to provisions as referred to in Article 9;

12 -12- e. fails to submit an application for Advance Pricing Agreement for export oriented Tax Payer which enters into transactions with related parties as referred to in the Regulation of the Minister of Finance regulating procedure for establishment and implementation of Advance Pricing Agreement; and/or f. based on the result of audit, misuses the Corporate Income Tax reduction facility in order to avoid or evade tax, among others, by performing transfer pricing practices that do not comply with norms of fairness. (2) Revocation of facility as referred to in paragraph (1) shall be stipulated by the Minister of Finance: a. upon receipt of recommendation from verification committee of ranting of Corporate Income Tax reduction facility; or b. based on suggestion from the Director General of Taxes to verification committee of granting of Corporate Income Tax reduction facility. (3) To Tax Payer whose Corporate Income Tax reduction facility is revoked under this Ministerial Regulation, sanction shall be imposed in compliance with legislations in taxation, and no longer granted Corporate Income Tax reduction facility. Article 11 (1) Upon income received or accrued by Tax Payer granted Corporate Income Tax reduction facility as referred to in Article 2, the following provisions shall apply: a. the bookkeeping shall be maintained separately from bookkeeping for other income not granted Corporate Income Tax reduction facility; and

13 -13- b. no tax deduction and collection shall be made during the period of granting of Corporate Income Tax reduction facility in accordance with the period as referred to in Article 3 paragraph (2) or Article 3 paragraph (4). (2) Upon income received or accrued by Tax Payer excluding from main business activity as referred to in paragraph (1), tax deduction and collection shall be made in compliance with provisions under legislations in taxation. (3) Other income not granted Corporate Income Tax reduction facility shall include: a. proceeds from selling or transferring capital gain excluding the products manufactured by Tax Payer from its main business activity as stipulated in the Tax Payer principal license and/or business license; b. recovery of tax payment charged as expenses and additional payment of tax returns; c. interests including premiums, discounts, and fee for loan repayment guarantees; d. dividen, in any name and any form, including dividen from insurance company to policy holders, and distribution of cooperatives net income; e. royalty or reward for use of rights; f. rent and other income in connection with the use of property; g. proceeds from debt exemption, except up to a certain amount as stipulated by the Government Regulation; h. surplus due to revaluation of assets; i. additional net worth derived from income not yet subjected to tax; j. interest compensation as referred to in Law regulating general provisions and tax procedures;

14 -14- (4) Joint costs that cannot be separated for the purpose of calculation of Taxable Income amount arising from: a. income received or accrued by Tax Payer granted Corporate Income Tax reduction facility; and b. income income received or accrued by Tax Payer not granted Corporate Income Tax reduction facility, shall be charged with proportional allocation. (5) Tax Payer granted Corporate Income Tax reduction facility as referred to in Article 2 shall continue to carry out tax deduction and collection liability to other parties in compliance with legislations in taxation. Article 12 (1) Corporate Tax Payer granted Income Tax facility under Article 3lA of Income Tax Law shall not be granted Corporate Income Tax reduction facility hereunder. (2) Corporate Tax Payer granted Corporate Income Tax reduction facility hereunder shall not be granted Income Tax facility under Article 3lA of Income Tax Law. Article 13 Suggestion to grant Corporate Income Tax reduction facility hereunder shall be proposed by the Chairman of Indonesia Investment Coordinating Board in accordance with provision as referred to in Article 5, within the period of 3 (three) years as of the enactment of this Ministerial Regulation.

15 -15- Article 14 Upon the enactment of this Ministrial Regulation, the following shall apply: 1. Suggestion for the granting of Corporate Income Tax reduction or exemption facility by the Minister of Industry or the Chairman of Indonesia Investment Coordinating Board to the Minister of Finance as of August 15, 2011 up to the date prior to the enactment of this Ministerial Regulation, of which the Decree of Minister of Finance has not been issued regarding the granting of Corporate Income Tax reduction or exemption facility, notification regarding the rejection shall be delivered in writing, process shall be carried out under the Regulation of the Minister of Finance Number 130/PMK.011/2011 as amended by the Regulation of the Minister of Finance Number 192/PMK.011/ Corporate Tax Payer which has been granted and/or utilized the Corporate Income Tax reduction or exemption facility under the Regulation of the Minister of Finance Number 130/PMK.011/2011 as amended by the Regulation of the Minister of Finance Number 192/PMK.011/2014 shall continue to be granted such facility up to the expiration of the utilization period of the said Corporate Income Tax reduction or exemption facility. Article 15 Upon the enactment of this Ministrial Regulation, the Regulation of the Minister of Finance Number 130/PMK.011/2011 regarding Granting of Corporate Income Tax reduction or Exemption Facility as amended by the Regulation of the Minister of Finance Number 192/PMK.011/ 2014, shall be revoked and declared as not valid. Article 16 This Ministerial Regulation shall come into effect as of August 16, 2015.

16 -16- For public cognizance, this Ministerial Regulation shall be announced by publishing it in the State Gazette of the Republic of Indonesia. Enacted in Jakarta on August 14, 2015 MINISTER OF FINANCE, Signed. BAMBANG P. S. BRODJONEGORO Promulgated in Jakarta On August 18, 2015 MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA, Signed. YASONNA H. LAOLY STATE GAZETTE NUMBER 1218 OF 2015 Certified true copy Head of General Bureau on his behalf Head of Administration Dept. of the Ministry Signed and sealed GIARTO NIP