12 September 2011
PMK About Tax Holiday Published

JAKARTA - The government has issued a Finance Ministry Regulation (PMK) 130/2011 on  Corporate Income (PPh) Tax Exemption (Tax Holiday), or Corporate Income Tax Reduction (Tax Allowance) which is valid start on August 15th, it is stated in an effort to support the development of domestic industries.

Counseling Services and Public Relations Director of Directorate General of Taxation (DJP) Ministry of Finance NE Fatima explained, the pioneer industry is a party which entitled to acquiring those tax facility. Its industry is a pioneer industry that have extensive linkages, value-added and high extemality, introduction new technologies, and have a strategic value for the national economy.

Corporate Tax Exemption can be granted for a maximum period of 10 years and a minimum of five years tax, commencing from the tax year on commencement of commercial production. After the end of Corporate Tax Exemption conferment of commercial production, the tax payer (WP) is granted an income tax reduction of 50% from income tax payable in two years,” said Fatima in a written statement on Friday (9/9).

According to Fatimah, WP must meet four criteria to be acquiring the facilities such exemption or reduction in income tax. First, it must be a pioneer industry, which are basic metal industries, petroleum refining and/or basic chemical industries which derived from petroleum and natural gas, machinery industries, fields of renewable resources industries, and telecommunications equipment industries.

Second, a new investment plan that has received legitimation from the competent authority for at least Rp 1 trillion. Third, placing the funds in the Indonesia banking for at least 10% of the total capital investment plan and should not be withdrawn before the commencement of investment realization. Fourth, has a status as an Indonesian legal entity which received the legalization for maximum of 12 months before the applicable provisions.

Five Company

Confirmed separately, the Special Staff Chairman of Indonesia’s Investment Coordinating Board (BKPM) Silmy Karim said, until now, there are still five companies that filed the petition to get the facility of tax exemption and reduction. The five companies are the Pohang Iron and Steel Company (Posco), Kuwait Petroleum Corporation (KPC), Indorama Synthetics Tbk, Hankook Tire Co. Ltd., and Caterpillar Inc.

“Companies who filed the petition are still the same, that are five companies,” Silmy said to Investor Daily yesterday.

Meanwhile, the taxation observers from Tax Center University of Indonesia (UI) Darussalam welcomes positively the application of stringent requirements to get facilities of tax holiday and tax allowance.

“It is common if the government sets strict rules, because the tax facilities provided are very temting. Stringent requirements are applied so that the rules are not misused,” he said.

 

Darussalam also supports the government regulations that require tax payers to place funds in national banks at least 10% of the total capital investment plan, and should not be withdrawn before the implementation of investment realization started.

“The issue of 10% fund, it is required as collateral. Tax holiday facility is expected to contribute a great investment for Indonesia. Because the sector which given tax holiday was classified as a large sector,” he said.

Source: Investor Daily, September 12th, 2011 Edition

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