Tax Guideline for Foreign Companies in Dealing with Covid-19 in Indonesia

Tax Guideline for Foreign Companies in Dealing with Covid-19 in Indonesia

1. Work Permits and Stay Visas of Foreign Employee

On 10 July 2020 the Directorate General of Immigration has issued a Circular Letter No.IMIGR.01.01-1102 Year 2020 (CL-1102) concerning Stay Permit Rules and Services which has come into force on 13 July 2020, and updates the emergency measures previously enacted with regards to stay permits for foreign employees as follows:

  • Expired Stay Permit (ITAS/ITAP) holders who are in Indonesia

    Immigration is now open for the stay permit (ITAS/ITAP) extension process for foreigners who are currently in Indonesia (note there is a limited quota each day).

    Holders of expired stay permits (ITAS/ITAP) who have been under an Emergency Stay Permit and have fulfilled all the requirements for an extension must process the extension within 30 days from the CL-1102 coming into force (i.e. 30 days from 13 July).

    Holders of expired ITAS/ITAP who have been under an Emergency Stay Permit and cannot extend their permits must leave Indonesia within 30 days from the CL-1102 coming into force (i.e. 30 days from by 13 July).

  • Expired Stay Permit (Izin Tinggal Terbatas (ITAS)/Izin Tinggal Tetap (ITAP)) holders who are outside Indonesia and require permit extension

    Stay Permit (ITAS/ITAP) holders who are currently outside Indonesia and have an expired Stay Permit but have obtained a work permit notification from the Ministry of Manpower or a recommendation letter from the Indonesia Investment Coordinating Board (or those seeking to re-enter under family reunification rules) must re-enter Indonesia to process their permit extensions within 60 days of CL-1102 coming into force (i.e. 60 days from 13 July). The same applies for family members with Stay Permits (ITAS/ITAP). Failure to enter Indonesia within the deadline requires the permit holder to apply for a new visa prior to entering Indonesia.

  • Stay Permit (ITAS/ITAP) and Visit Permit (Visa on Arrival/VoA, Single Entry, Multiple Entry) holders who are in Indonesia and have a new Telex Visa/Notification

    Stay Permit (ITAS/ITAP) and Visit Permit (VoA, Single Entry, Multiple Entry) holders who have obtained a new Telex Visa are allowed to apply for a Visit Permit or a Stay Permit to the local Immigration office without having to leave Indonesia and process visa at an Indonesia Embassy abroad.

  • Visit Visa (VoA, Single Entry, Multiple Entry) holders who are in Indonesia

    Visit Visa (Voa, Single Entry, Multiple Entry) permit holders who have been under an Emergency Stay Permit are allowed to extend their permits at the local Immigration Office within 30 days of CL-1102 coming into force (i.e. 30 days from 13 July), in accordance with prevailing regulations provided that the COVID-19 pandemic is not declared over and in the absence of carrier/transportation to depart Indonesia.

  • Foreigners in Indonesia with Free Visas/Visa Exemptions

    Foreigners who entered with Free Visas/Visa Exemptions and have been under Emergency Stay Permits must leave Indonesia within 30 days of CL1102 coming into force (i.e. 30 days from 13 July).

2. Expansion of Tax Incentives

On 16 July 2020, the Ministry of Finance (MoF) issued Regulation No.86/PMK.03/2020 (PMK-86) which expands on the tax incentives from previous
MoF Regulation No.44/PMK.03/2020. The summary of tax incentive in relation to Covid-19 as follows:

  1. For eligible taxpayers, Article 21 Employee Income Tax for employees earning annual regular income not exceeding Rp 200 million will be borne by the Government. Total eligible sector are  1,189 KLUs including life insurance, law and accounting services, certain outsourcing services, etc.
  2. Article 22 Income Tax on imports by eligible taxpayers will be exempted. Total eligible sector are 721 KLUs including certain food and beverage industries, certain tobacco industries, certain textile industries, etc.
  3. Article 25 monthly Income Tax instalment of eligible taxpayers will be reduced by 30%. Total eligible sector are 1,013 KLUs including life insurance, law and accounting services, certain food and beverage industries, certain textile industries, etc.
  4. The 0.5% final tax regime under Government Regulation No.23 Year 2018 will be borne by the Government.
  5. Preliminary Value Added Tax (VAT) refund will be available for eligible taxpayers requesting a refund for a maximum IDR 5 billion. Total eligible sector are 716 KLUs including certain retail industry (non-automotive), certain sports industry, etc.

The incentive period, which was previously until September 2020, is now extended until December 2020.

3. Tax Rate Reduction for Public Companies

The Corporate Income Tax (CIT) rate for publicly listed companies with at least 40% of their paid-in shares listed on the Indonesia Stock Exchange will be reduced by an additional 3% (i.e. the CIT rate will become 19% for fiscal year 2020-2021 and 17% starting in fiscal year 2022).

The requirements must meet the following criterias:

  1. The minimum 40% of required listed shares must be owned by a minimum of 300 shareholders;
  2. Each of those shareholders may only own less than 5% of the entire issued and fully paid-up shares;
  3. The provisions as intended above must be met for at least 183 calendar days within one fiscal year; and
  4. The fulfilment of these requirements is to be confirmed by submitting a report to the Directorate General of Taxes (DGT).

4. Value Added Tax on Foreign E-commerce

On 25 June 2020, the Directorate General of Taxes (DGT) issued Regulation No.PER-12/PJ/2020 (PER-12) that sets transaction thresholds and other detailed rules concerning Value Added Tax (VAT) on foreign e-commerce players which has entered into effect on 1 July 2020.

Indonesian VAT will be imposed on the utilisation of certain intangible goods and services provided from overseas to Indonesian customers through an electronic system.

Foreign sellers, foreign service providers, or foreign e-commerce marketplaces (collectively referred to as “foreign e-commerce players”) and domestic e-commerce marketplace will be appointed as VAT Collectors if their activity in the Indonesian market meets either of the following thresholds:

  1. transaction value with customers in Indonesia exceeding IDR 600 million in a year or IDR 50 million in a month; or
  2. access to their e-commerce platform from Indonesia exceeds 12 thousand users in 12 months, or one thousand users in one month.

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