HARMONIZATION OF TAX REGULATION

LAW

BUILDING FAIR, EFFECTIVE AND ACCOUNTABLE TAX SYSTEM

Jakarta, 7 October 2021

KEMENTERIAN KEUANGAN REPUBLIK 1

2 TAX REFORMATION
SUBSTANCE

KEMENTERIAN KEUANGAN
REPUBLIK INDONESIA
 RUU HARMONISASI PERATURAN PERPAJAKAN

Muatan Isi dan Pemberlakuan

a. Income Tax Law Changes  starting on 2022
b. VAT Law Changes  starting on 1 April 2022
c. General Provision and Tax Procedure  starting on release date
d. Voluntary Disclosure Program starting on 1 Januari till 30 Juni 2022
e. Carbon Tax  starting on 1 April 2022
f. Excise Tax  starting on release date
 1. Income Tax
1. Personal Tax Payers Income Tax Rate
Bracket and Tariff changes on personal tax payers are in order to give fairness
Lapisan UU PPh RUU HPP
Tarif Rentang Penghasilan Tarif Rentang Penghasilan Tarif

I 0 - Rp 50 million 5% 0 - Rp 60 million 5%
II >Rp 50 – 250 million 15% >Rp 60 – 250 million 15%
III >Rp 250-500 million 25% >Rp 250-500 million 25%
IV >Rp 500 million 30% >Rp 500 million - 5 billion 30%
V >Rp 5 billion 35%
Income Tax for personal Tax Payers will be applied based on amount exceed of non taxable income. In
Harmonization of Tax Regulation Law, the non taxable amount is still the same with previous regulation
– No changes.

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 1. Income Tax
Personal Tax payers Income Tax Calculation (In IDR)
Assumption for Personal Tax Payers Income Tax: Single (TK/0)
Income /
Month 5 million 10 million 10 million 15 million
Income/ Year 60 million 120 million 120 million 180 million
Non Taxable
Income(TK/0) 54 million 54 million 54 million 54 million
Taxable
Income(PKP) 6 million 66 million 66 million 126 million

Income Tax Income Tax Income Tax Income Tax

Law HTRL Law HTRL Law HTRL Law HTRL

Income Tax 5% x 6 million = 5% x 6 million = 5% x 50 million 5% x 54 million 5% x 50 million 5% x 60 million 5% x 50 million 5% x 60 =

payable 300.000 300.000 = 2,5 million = 2,7 million = 2,5 million = 3 million = 2,5 million 3 million

15% x 6 million 15% x 16 Juta = 15% x 6 million 15% x 76 15% x 66

-- -- -- million million
= 900.000 2,4 million = 900.000
= 11,4 million = 9,9 million
Total Income
300.000 300.000 3,4 million 2,7 million 4,9 million 3,9 million 13,9 million 12,9 million
Tax

 The new tariff will not give additional burden of Income Tax for personal tax payers with income till 5 billion per year
 Personal tax payers with income till 4.5 million per month, no tax should be paid
 From 2019 Yearly Tax Return, 11.5 millions tax payers reported yearly tax return, but only 4.9 millions paid tax 17
 Tax payers who have income more than 4.5 million per month, majority will pay lower tax
 1. Income Tax
2. Taxation of natura
If employer gives natura to employee, it will be deductable expense for employer and will be
income for employee. Certain natura will not be income for the recipient:
a. Food &/Drinks for all employees
b. Natura in certain area
c. Natura which is job requirements, examples: safety devices or uniform
d. Natura which the fund is from APBN/APBD
e. Natura with certail types or limitations

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 1. Income Tax
3. Exemption from Income Tax for Personal Tax Payers - Gross Income limitation
For personal tax payers with business who calculate using Final Income Tax 0.5% (PP 23/2018), with
gross income till 500 million per year, there will be no income tax.
Ilustration for Income Tax calculation of Mr A, grocery store businessman, for Book Year 2022:
Cumulative Gross Non Taxable Gross Taxable Gross Income Tax Income Tax
Gross Income
No Month Income Income (Million Income (Million Payable - HTRL Payable – Income
(Million IDR)
(Million IDR) IDR) IDR) (IDR) Tax Law (IDR)
1 January 100 100 0 0 500,000
2 February 100 200 0 0 500,000
3 March 100 300 0 0 500,000
4 April 100 400 0 0 500,000
5 May 100 500 0 0 500,000
6 June 100 600 500 100 500,000 500,000
7 July 100 700 100 500,000 500,000
8 August 100 800 100 500,000 500,000
9 September 100 900 100 500,000 500,000
10 October 100 1,000 100 500,000 500,000
11 November 100 1,100 100 500,000 500,000
12 December 100 1,200 100 500,000 500,000
Total     700 3,500,000 6,000,000 6,000,000

Using harmonized of Tax Regulation Law, Income tax that must be paid by Mr A will decrease IDR 2.5 Million
 1. Income Tax
4. Corporate Income Tax Rate
Corporate Income Tax Rate for book year 2022, etc will be 22 %

Corporate Income Tax Rate Comparison of Corporate Income Tax Rate Average
Income Tax Description 2017 2018 2019 2020 2021
Book Year HTRL
Law OECD Average (%) 23.95 23.53 23.12 22.88 22.81
2020 - 2021 22% Amerika Average (%) 28.29 28.11 27.36 27.33 27.16
Tahun 2022, etc 20% 22% G-20 Average (%) 25.92 25.29 24.90 24.60 24.17
ASEAN Average(%) 22.67 22.67 22.67 22.17 22.17
Sumber: KPMG, diolah

For Indonesian SME Coporate Tax Payers, it will be given 50% incentive of Income Tax tariff decrease as
stated in Art 31 E of Income Tax Law.

For personal Tax Payers with certain gross income, there will be exemption of income tax until 500
million of gross income.

For optimizing government fund, Corporate Income Tax Rate for book year 2022 will still be 22 %

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 2. Value Added Tax
1. Exemption of VAT & VAT facilities objects
a. VAT free facilities are given to staple goods, health services, education services, social services and other
services.
b. Exemption and VAT Facilities are given to get fairness, achieving goals, and keep industries and public
interest.
c. Regulation goal is to extent VAT basis and at the same time retain fairness principle & optimization of
government fund.

2. VAT Tariff with simplicity

a. General Tariff
VAT Law HTRL
Tariff Period Tariff Period
10% till Maret 2022 11% Starting on 1 April 2022
12% Latest on 1 Januari 2025
b. Special Tariff
For VAT simplicity, for certain goods and services or specific industry, Final VAT Tariff will be applied e.g:
1%, 2% or 3% from gross income. It will be ruled through Ministry of Finance Regulation.
 3. General Provision and Tax Procedures
1. ID Number usage as Personal Tax Identification Number
• Resident database integration with tax administration system gives administration simplicity to personal tax payers in
tax obligation
• ID number usage as tax identification number is not a direct causative for every individual to pay tax. Tax payment
must be done if:
a. Yearly income is beyond non taxable income or
b. Gross is beyond 500 million per year for personal tax payers with business who pay 0.5% final income tax (PP-
23/2018).
2. Sanction during Tax Audit and Tax Litigation

a. Sanction during tax audit or tax payers do not have book b. Sanction during tax litigation
keeping and not reported tax return
GPTP
Decription HRTL Description GPTP Law HRTL
Law
Income Tax 50% Interest per month (benchmark interest Objection 50% 30%
Underpaid rate) + uplift factor 20% (max. 24 months)
Appeal 100% 60%
Income Tax less 100% Interest per month (benchmark interest
collected rate) + uplift factor 20% (max. 24 months)
Judicial Review 100% 60%
Income tax 100% 75%
collected but not
paid
VAT or Luxury Tax 100% 75%
goods underpaid
 3. General Provision and Tax Procedures
3. Authorized Representative of Tax Payers
For fairness and certainty of law, Authorized Representative of Tax Payers can be done by anyone, as long
as fulfilled taxation compentencies requirements. Exception can be given, if the authorized representative
is husband, wife or have bloody ties.
4. Tax Criminal Law
a. For fairness and certainty of law, until tax court stages, tax payers are allowed to pay underpaid
principal and sanction, as consideration of being sued without any imprisonment.
b. Changes in Sanction:

Conducts GPTP Law HTRL

Omission tax crime Principal + 3x Sanction
Underpaid Tax
Intentional tax crime Principal + 3x Sanction
Underpaid Tax
Fictitious Tax Invoice or certificate Principal + 3x Sanction
of withholding tax tax crime Underpaid Tax
Principal + 1x Sanction
Underpaid Tax
Principal + 3x Sanction
Underpaid Tax
Principal + 4x Sanction
Underpaid Tax

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 3. General Provision and Tax Procedures
5. Other policies in general provision and tax procedures changes:

• Appointment other parties as tax collector

Government can appoint other parties (e.g: application service companies for electronic transaction) as tax
collector. This can be solution for dynamic and massive digital economy development, so tax collection can be
done efficiently, simple and effective.

• Cross border tax collection

In global tax scheme, it can be done mutual tax agreement in active tax collection or tax collection by request
with other countries in a reciprocal agreement.

• Mutual Agreement Procedures/MAP

For fairness and certainty of law, MAP can be proposed at the same time with objection or appeal:
a. MAP can be progressed, if material in objection and appeal is not the same with in MAP,
b. MAP can be hold, if material in objection and appeal is the same with in MAP.
c. MAP result can be based for restitution or tax bill

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 4. Voluntary Disclosure Program (VDP)

1. Voluntary disclosure program that has goal to increase tax payers voluntary compliance and will be held based on
simplicity, certainty and benefit.
2. This program gives berupa opportunity to tax payers to report and disclose tax obligation voluntarily through:
1) Income Tax payment based on asset disclosure which has not been reported yet or partially reported in previous Tax
Amnesty (TA) and
2) Income Tax payment based on asset disclosure which has not been reported yet in 2020 yearly personal tax return.
3. Program will be conducted for 6 months (1 January 2022 till 30 June 2022)
4. Consist of 2 policies:

Description Policy I Policy II

Subject Personal & corporate Tax Payers who joined
previous Tax Amnesty (TA)
Asset Basis Period of Asset as per 31 December 2015
Not yet reported during TA
Final Income • 11% for abroad declaration
Tax • 8% for abroad asset repatration and domestic
asset
• 6% for abroad asset repatration and domestic,
which invested in state securities
/downstream/renewable energy
Personal tax payers
Period of Asset 2016-2020
Not yet reported in 2020 yearly tax return
• 18% for abroad declaration
• 14% for abroad asset repatration and domestic
asset
• 12% for abroad asset repatration and domestic,
which invested in state securities
/downstream/renewable energy
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 4. Voluntary Disclosure Program (VDP)

Illustration
Policy I
Mr A has already joined Tax Amnesty Program in 2015, but there is a house in Indonesia that has not been
disclosured yet during Tax Amnesty as of 31 Desember 2015 amount IDR 2 Billion. To avoid any
sanction, Mr A decided to join voluntary disclosure program. Mr A wants to declare domestic asset without
any investment on SBN/downstream/renewable energy industry, so Mr A will have to pay 8% final Income
Tax = IDR 160 Million (8% x IDR 2 Billion)

Policy II
Mr B has 2 houses and a bank account in Indonesia from book year 2016 till 2020. 2 houses have already
been reported in 2020 yearly tax return amount 3 billion, but 1 bank account amount 1 billion has not
been reported yet in 2020 yearly tax return.
Mr B will join voluntary disclosure program and invest his money to state securities, so Mr B will have to
pay 12% Final Income Tax = IDR 120 Million (12% x IDR 1 Billion).

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 5. CARBON TAX

1. Background
a. Need controlling on greenhouse gas emission on atmosfer which caused increase in the earth's surface
temperature so it will dcrease climate change risk and disaster in Indonesia.
b. Indonesian government commitment to reduce greenhouse gas emission 29% (with own efforts) or 41%
(with international support) in 2030 in line with agreed climate change convention.
c. Climate change mitigation in Indonesia will need fund.
d. Change in economic activity behaviour that can potentially produce greenhouse gas emission.

2. Regulation
a. Carbon tax will be applied gradually according to road map with considerations on carbon market
development, NDC target achievement, sector readiness, and economic condition.
b. Carbon tax implementation will use just principle and affordable with consideration on level playing field
and public interest.
c. Carbon tax will be applied higher or the same with carbon price at carbon market – minimum tariff of
IDR 30 per kilogram equivalent carbon dioxide (CO2e).
d. First implementation will be on 1 April 2022 in coal PLTU with cap and tax schema, in line with carbon
market implementation.
 6. Excise Tax
6. Changes in Excise Tax Law
a. Mechanism of goods subject to excise tax: addition or reduction of goods which subject to excise tax explained by the
government to parliament for discussion and approved in RAPBN arrangement
b. Addition or reduction of goods which subject to excise tax, government will consider:
• Actual condition during covid 19 pandemi
• Economic recovery steps
• Policies in health, environment, and other sustainable policies
c. Implememntation of administrative sanction as the last resort (ultimum remedium) in criminal violation in excise tax.
d. Ultimum remedium administrative sanction changes for criminal violation in excise tax:

Description Excise Tax HTRL

During audit Not regulate yet Sanction 3x of Excise Tax
During investigation Principal + Sanction 4x of Excise Tax Sanction 4x of Excise Tax

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INDONESIA
THANK YOU

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