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These 6 are Taxation Omnibus Law Clusters Discussed in Prolegnas

Jakarta, 17/12/2019 MoF - Minister of Finance Sri Mulyani Indrawati discusses the Draft of National Priority Legislation Program (Prolegnas) 2020 related to the Ministry of Finance and the Development of Fiscal Macro and State Finance in the Special Committee Meeting Room C, Nusantara building II DPR on Monday (16/12).
 
Specifically for the Ministry of Finance, the President requested to run an omnibus law in the field of taxation consisting of 6 clusters.
 
"This omnibus law in the field of taxation is only 28 articles but amending 7 Laws namely the Income Tax Law, the VAT Law, the General Provisions and Tax Procedures Law, the Customs Law, the Excise Law, the Regional Tax and Retribution Law and the Regional Government Law. 28 articles are expected to be consists of 6 clusters of issues discussed," said the Minister.
 
The first cluster is about increasing investment by reducing the Corporate Income Tax (PPh) and interest income tax rates.
 
The second cluster, the territorial system, is how foreign dividend income will be tax free, as long as it is invested in Indonesia. For Foreign Citizens (foreigners) who are subject to domestic taxes, the tax obligations are specific to their domestic income.
 
The third cluster deals with the subject of personal tax (OP). This distinguishes foreigners, Indonesian citizens (WNI). Indonesians who live abroad 183 days, they can turn into foreign tax subjects, so they don't pay their taxes in Indonesia. For foreigners who have lived in Indonesia for more than 183 days, they are subject to domestic taxes and pay their taxes in Indonesia from their income from Indonesia.
 
The fourth cluster, on how to improve tax compliance, is to rearrange sanctions and interest rewards. Tax sanctions so far, if late, underpaid, or they violate the sanctions is the interest is quite high 2% to 24 months so that interest rates can reach 48%. Now, using interest rates that apply in the market, plus a little administrative sanctions. Hopefully, taxpayers (WP) be more compliant with the law as well as crediting input taxes, especially for agricultural goods.
 
The fifth cluster, for the digital economy, is the taxation of electronic transactions that are made the same as ordinary taxes. This includes the appointment of a digital platform for collecting VAT and those who do not have a Permanent Establishment (BUT) in Indonesia will still be taxed. This is mainly to respond to digital companies that do not exist in Indonesia but they get income from Indonesia such as Netflix, Amazon. They can still be taxed by submitting tax on foreign tax subjects not in Indonesia.
 
The sixth cluster, are tax incentives such as tax holidays, super deduction, tax allowance, Special Economic Zones (KEK), income tax (PPh) for securities, and local tax incentives from local governments. (ip/hpy/nr)