Income Tax

Facilities and Incentives of Indonesian Income Tax
FOREWORD BY THE DIRECTOR GENERAL OF TAXES

2nd Edition - 2013
Assalamu’alaikum Wr. Wb.

Investment is a factor shaping the success of economic
development and distribution especially in the global context.
In line with this, to attract investors to Indonesia, Government
strives to create, maintain, and improve the investment
climate. It does this by facilitating licensing, providing legal
certainty, with better and comprehensive infrastructure and
fiscal policy.
Nowadays, to support investment in the field of fiscal
policy, Indonesia and many countries are making efforts to
create a conducive tax system that is not only simplified but
also provides tax incentives and competitive tax rates for
investors. One concrete step taken by The Directorate
General of Taxes is the development and implementation of a
set of policies that support ease of taxation through tax
facilities and incentives as stipulated in the Income Tax Law
and its implementing regulation.
Provision of facilities and incentives of income tax is
expected to increase investor interest and investment levels
which in turn, should provide a range of multiplier effects on
the national economy. This should also enhance confidence
levels of international trust to create stronger economic ties in
Indonesia. These conditions will be valuable catalysts
acknowledging that Indonesia has an inherent solid base for
the development of investment, namely comparative
advantages in the form of abundant natural resources and
availability of human resources significant in quantity and
quality.
i
The book in your hands is a revision of the previous

edition. It contains a number of additions, such as the
provision concerning Simplification of Calculation of Income
and the provision concerning Reduction of Income Tax
Instalment of Article 25. With these improvements, this book
provides a more complete guide to help tax officials in
carrying out their duties as well as for taxpayers, especially
investors and prospective investors to utilize and enjoy the
facilities and incentives of Indonesian Income Tax. Hopefully
this book, which is a commitment from Directorate General of
Taxation, will be beneficial in supporting the stability and
growth of investment in Indonesia.
Finally, I would like to express my gratitude to Almighty
God for providing this opportunity and my appreciation to all
parties who have contributed in the preparation of this book.
May the Almighty God continue to strengthen our spirit and
togetherness in our effort to build a better Indonesian
economy.
Jakarta,
Director General of Taxes
A. Fuad Rahmany
NIP 195411111981121001
ii
PREFACE BY THE DIRECTOR OF TAX REGULATIONS II

2nd Edition - 2013
Praise the Almighty God and by His grace Directorate

General of Taxes is finally be able to make available, this 2nd
edition of the book Facilities and Incentives of Indonesian
Income Tax.
With recent developments of economic and business
activity, there has been need to update the provisions
concerning incentives and facilities of Income Tax, so that
principles of equal treatment of taxpayers can be applied.
These changes are designed to create harmony and synergy
between administration of tax laws and developments in the
business world.
This Second Edition book provides updates of fiscal
policies presented in the first edition as well new policies
additions, such as Simplifications of Calculation of Income Tax
on Income from Business with Certain Gross Income and
Reduction of Income Tax Instalment of Article 25.
In our effort to improve stakeholders’ awareness of
Facilities and Incentives of Indonesia Income Tax, this book
continues in a format that we hope is simple, communicative,
and easy to understand without diminishing the substance of
the information. We expect this book to provide assistance as
concise guidance for the employees of the Directorate
General of Taxes in performing their duties, while also as a
reference for taxpayers, investors, and prospective investors
who are eager to invest in Indonesia, with all conveniences
this country provides.
Lastly, I would like to say thank you and convey my
sincere appreciation to all who have contributed in the
iii
preparation of this book, especially to the Director General of

Taxes, who is pleased to provide a Foreword and for my
beloved colleagues in the Directorate of Tax Regulation II, in
particular Sub-Directorate of Corporate Income Tax, who
have prepared and completed this book. Hopefully all of our
effort, hard work, and contribution will be beneficial in building
a better Indonesia.
Jakarta,
Director of Tax Regulations II
P.M. John L. Hutagaol

NIP 19651127 198910 1 001
iv
FOREWORD BY THE DIRECTOR GENERAL OF TAXES

1st Edition - 2012
There are various ways taken by a country to attract investment

that is necessarily needed to gear economic growth. Easiness of
business permit, legal certainty, infrastructure availability, and fiscal
policy are often considered as critical factors for investors to
decide their investment destination.
Fiscal policy transformed into a set of pro-investment tax laws and
regulations is regarded as a potential instrument to encourage
investors. It is because high tax rates may reduce economical
capability of investors and to some extent, it may cause
prospective investors to choose another country to invest, and
therefore, the expected multiplier of the investment might be
missed.
Relating to that, Indonesia as similar as any other countries, is
continuously improving her tax rate to be more attractive and
competitive. One of the examples of this consistent effort is the
reduction of Corporate Income Tax rate, which is now at 25% from
the previous rate at 28%. Such reduction is stipulated in Article 17
paragraph 2a of the Income Tax Law.
In addition to the corporate income tax rate reduction, Indonesia
also offers various tax facilities, namely Corporate Income Tax rate
reduction for listed companies, Tax Holiday, Investment Allowance,
and other facilities. These facilities are all stipulated in the Income
Tax Law and/or its implementing regulations.
It is our hope that the tax facilities and incentives offered will spur
the investment activities in Indonesia even further. This due to many
exciting facts such as the upgrades of Indonesian credit ratings,
outstanding performance of Indonesian Stock Exchange, and the
fact that Indonesia is one of few countries that was able to
maintain positive economic growth despite the massive global
economic crisis in 2008.
v
Apart from various tax facilities available and her excellent

performance aforementioned, Indonesia’s unique characteristics
also offer various advantages for sustainable investments.
Indonesia’s geographical situation as the greatest archipelago in
the world, surrounded by two oceans, blessed with abundant
natural resources, provides its own comparative advantages. The
potentials of natural gas, geothermal, and other renewable energy
resources, as well as fishery, tourism, are just few among many
sectors that may be chosen as investment destination.
From the competitive advantage perspectives, Indonesia as a
country with 240-million population and significant growth of
middle class is undoubtedly a promising market. Such socio-
demographical condition also provides sustained availability of
professional and skilled manpower for manufacturing or high-tech
industries.
This book in your hand attempts to provide information regarding
tax facilities and incentives in Indonesia, and it is our hope that it
may guide taxpayers, especially investors and prospective investors
who seek to invest in Indonesia with all the benefits she provides.
Finally, my sincere gratitude and appreciation are for all parties
who contribute to this book. Keep up the spirit and let us continue
the hard work for our beloved country. For taxpayers and investors,
I would like to thank you for your contribution for the development
of our nation and may your investment in Indonesia be prosperous
and sustained for a long time.
Jakarta, February 2012

Director General of Taxes
A. Fuad Rahmany
NIP 195411111981121001
vi
PREFACE BY THE DIRECTOR OF TAX REGULATIONS II

1st Edition - 2012
Tax Incentives and facilities are often considered as one of many

efforts opted by various countries in order to attract investors,
especially those who bring investments with significant multiplier
effect to the national economy. Such investments are expected to
deliver new technology, to gear undeveloped sectors, as well as
certain sectors and certain regions of national priority, to provide
jobs, and eventually, to contribute in increasing national income
and national self-reliance.
In principle, incentives and facilities are dynamic in nature,

because they should be hand in hand with development of
national economy, regional economy, and also the continuously
changing global economy. Nevertheless, one of the principles to
be upheld in formulizing and implementing incentives and facilities
of taxation is that of equality in treatment for all taxpayers or all
cases of taxation, which is the same as holding firmly to the valid
law. Therefore, each incentive must be guided by the above
principle and requires overseeing to ensure there is no divergence
in its application from the meaning and purpose for which the
incentives are granted.
Unfortunately, it becomes our concern that there are still many

investors uninformed of various facilities and incentives provided in
Indonesia, perhaps due to the dynamic and evolving nature of the
regulation on which the incentives and facilities based. Therefore,
this book is one of many synergic and comprehensive efforts taken
by Directorate General of Taxes to encourage taxpayers, investors,
and potential investors to comprehend and eventually to take the
advantage of the facilities and incentives provided in Indonesia.
vii
This book is designed with simple layout as our intention to make

this book to be your easy-to-read reference concerning incentives
and facilities of taxation in Indonesia. Each of facilities and
incentives is detailed further regarding the background, the form of
the incentives/facilities provided, the eligible Taxpayers, and also
the procedures to obtain the facilities or incentives.
Finally it is my honour to express my appreciation to everyone in

DGT, especially for Director General of Taxes who was willing to
deliver his foreword. In addition, I would like to express my very
sincere gratitude for all of my fellow-workers in Directorate Tax
Regulation II, particularly the Division of Corporate Income Tax who
have put their dedication to make this book possible. Hopefully
each and every effort we have made shall be beneficial for better
Indonesia.
Jakarta, February 2012

Director of Tax Regulations II
A. Sjarifuddin Alsah
NIP 060044664
viii
TABLE OF CONTENTS
NO TITLE PAGE
Preface By The Director General Of Taxes – 2nd Edition i
Preface By The Director Of Tax Regulations II – 2nd

iii
Edition
Preface By The Director General Of Taxes v
Preface By The Director Of Tax Regulations II vii
Table Of Contents ix
A. INCOME TAX
A-1 Tax Holiday 1
Tax Allowance for Investment in Certain Business Sectors

A-2 5
and/or Certain Regions
A-3 Special Economic Zone (SEZ) 9
Facilities for
A-4 10
Renewable Energy Resources Utilization
Simplification of Calculation of Income Tax on Income

A-5 13
from Business With Certain Gross Income
A-6 Income Tax Reduction for Public Listed Company 15
50% Income Tax Reduction for Resident

A-7 17
Corporate Taxpayers
A-8 Reduction of Income Tax Instalment of Article 25 19
Reduction of Income Tax Article 25 and/ or

A-9 Postponement of Income Tax Article 29 Payment for 21
Taxpayer in Certain Industries
Exemption from Income Tax Object on Aid , Gifts, And

A-10 24
Donation
Exemption from Taxable Object on Aid/Compensation

A-11 26
Paid by Social Security Agency
Exemption from Taxable Object on Zakat and other

A-12 28
Compulsory Religious Donationes
ix
NO TITLE PAGE
Exemption from Income Tax Object

A-13 30
on Surplus of Non-profit Organization
A-14 Exemption from Taxable Object on Scholarship 32
Exemption from Income Tax Object on Pension Fund

A-15 34
Income
Exemption from Income Tax Object on Gain Derived

A-16 37
From Discharged of Small Debtor Indebtedness
Deduction of Formation or Accumulation

A-17 39
of Reserves
A-18 Deduction of Uncollectible Debt as Tax Deductible 41
Zakat and other Compulsory Religious Donationes as Tax

A-19 43
Deductible
A-20 Deduction of Donation or Social Cost 46
A-21 Deduction of Benefit-In-Kinds for Employees 48
Deduction of Expenditures on Cellular Phone and

A-22 50
Company’s Vehicle
A-23 Facilities for Business Merger or Spin-Off 52
A-24 Facilities For Fixed Asset Revaluation 54
The Suspension of Depreciation

A-25 for The Acquisition Cost of Tangible Assets 57
of Certain Business Sectors
Facilities for Income from Transfer

A-26 of Property/Collateral in the form of Land 59
and/or Building for certain Taxpayers
Facilities for Interest Income from Non-Performing Loans

A-27 61
Received or Accrued by Banks
Facilities for Gains from Debt Discharge

A-28 63
Received or Accrued by Certain Debtors
x
NO TITLE PAGE
Exclusion from Income Tax Subject

A-29 65
for International Organization
A-30 Facilities for Foreign Grants and Loans 68
Facilities for Donation on

A-31 70
National Disaster Relief in NAD and North Sumatera
Incentives for Donation for Natural Disaster Relief in

A-32 73
NAD and Nias Island North Sumatera
Incentives for Donation for Earthquake Relief

A-33 in DIY and Central Java, and Tsunami in South Coast of 75
Java Island
A-34 Exclusion from Lodging Tax Return 77
A-35 The Increase of Personal Exemptions 79
B. ART 21 INCOME TAX
Income Tax Art 21 Borne By Government

B-1 for State Officials, Civil Servants, 81
Members of The Armed Forces, And Retirees
Lower Rate or Final of Withholding Tax on Certain

B-2 83
Income Received by Retirees or Dismissed Workers
Exemption form Withholding Tax on Certain Income

B-3 85
Received by Daily/Weekly/Temporary Wokers
Exclusion for International Organization

B-4 87
to Withhold Income Tax Article 21/26
C. ART 22/23/26 INCOME TAX
Exemption from Withholding Tax on Certain Import or

C-1 89
Business Activities In Other Sectors
Exemption from Withholding Tax

C-2 94
on Income after Tax of Permanent Establishment
Exemption from Withholding Tax on Deposits and Savings

C-3 96
Interest, and Central Bank Certificate Discount
xi
NO TITLE PAGE
Exemption from Withholding Tax on Interest and/or

C-4 98
Discount Received from Bond
C-5 Exemption from Withholding Tax by Third Party 100
Exemption from Withholding Tax for Taxpayers with

C-6 102
Certain Gross Income
TERMS AND ABBREVIATIONS 105
xii
A-1. Tax Holiday
Capital investment has an important role in gearing sustainable

national economic growth as well as increasing national
technological ability and capacity.
To stimulate capital investment in Indonesia, the Government of

the Republic of Indonesia through its fiscal policy provides tax
facilities in form of tax holiday for pioneer industry that is more
attractively offered than that of other countries.
Eligible Taxpayer
Corporate Taxpayer that is newly established or established in

Indonesia in a period of no more than 12 (twelve) months
before the August 15th 2011, with below prerequisites:
a. The Taxpayer conducts business that is included in the
scope of pioneer industries, i.e. : basic metal industries, oil
refinery and/or oil and gas sourced basic organic
chemical, machinery, renewable resources industries,
and/or communication equipment;
b. The Taxpayer has minimum investment of 1 trillion IDR;
c. The Taxpayer deposits a fund at minimum 10% of the
amount of investment plan in Indonesian Banks.
In consideration of national industry competitiveness and

strategic value of a certain industry, the Minister of
Finance (Mof) may provide the facility for other than
aforementioned pioneer industries;
1
Tax Facility
- Corporate Income Tax Exemption (tax holiday) for 5 up to

10 years, started from initial commercial production.
- 50% Corporate Income Tax reduction for 2 years after tax
holiday period ended.
- In consideration of national industry competitiveness and
strategic value of a certain industry, the MoF may grant
the facilities in an extended period.
Procedure
- Taxpayer’s application shall be submitted to the Minister of

Industry or The Head of the Investment Coordinating Board
(Badan Koordinasi Penanaman Modal/BKPM) to be
examined regarding:
a. availability of infrastructure in the investment location;
b. absorption of domestic manpower;
c. fulfilment of pioneer industry criteria;
d. a clear and concise plan of transfer of technology;
e. availability of tax-sparing provision in the domicile
country.
- Based on the examination, the application will be
forwarded to the Mof.
- Should the request be approved, the MoF will issue the MoF
Decree concerning approval of tax holiday facility.
2
Taxpayer’s Obligation
- The entitled Taxpayer is obliged to submit periodical reports

to the DGT and the Committee of Verification concerning:
a. quarterly report of fund usage attached with current
bank account; and
b. annual audited and quarterly unaudited report of
capital investment realization.
Facility Utilization
- The entitled Taxpayer may utilize tax holiday facility,

provided that:
a. the Taxpayer has fully realized the investment plan;
b. the Taxpayer has initiated commercial production.
- For the initial commercial production status to be

recognized, the entitled Taxpayer shall submit an
application to DGT with the following attachments:
a. copy of articles of establishment of the company;
b. copy of the MoF Decree concerning approval of tax
holiday facility;
c. recent three years audited financial statements;
d. a power of attorney if the applicant is represented by
another party; and
e. documents related to sold products (e.g.: commercial
and tax invoices, and proof of delivery of the sold
products).
3
Reference
- Government Regulation No. 94 of 2010

- MoF Regulation No. 130/PMK.011/2011
- DGT Regulation No. PER-44/PJ/2011
4
A-2. Tax Allowance for Investment in Certain Business

Sectors and/or Certain Regions
In order to increase direct investment for promoting the growth of

national economy, as well as equality and acceleration of
development, it is necessary to provide income tax incentives for
Taxpayers who are doing business in certain industries and/or
certain regions.
Eligible Taxpayer
- Corporate Taxpayer in form of corporation or cooperative

who invests in:
a. 52 business sectors as stipulated in Attachment I; or
b. 77 business sectors in certain regions as stipulated in
Attachment II
of Government Regulation No. 52 of 2011.
- Above mentioned Taxpayer also includes Taxpayer who
has obtained investment permit license before the
effective date of the Government Regulation (GR) No. 52
of 2011, provided that:
a. The Taxpayer has minimum investment plan of 1 trillion
IDR; and
b. The Taxpayer has not commercially operated before
the effective date of the Government Regulation No. 52
of 2011.
5
Tax Facility
- Investment allowance at 30% of the total investment,

charged for 6 years for 5% annually;
- Accelerated depreciation and amortization;
- Income tax for dividend paid to non-resident shall be 10%,
or as lower appliable tax treaty rate
- Loss compensation for 5 years up to 10 years, depending
on the following conditions:
a. the investment is conducted in industrial estate or
bonded zone;
b. it hires at least 500 Indonesian workers for 5 consecutive
years;
c. expense of economic and social infrastructure in the
investment location amounts at least 10 billion IDR;
d. domestic R&D expense amounts at least 5% of total
investment during 5 year period; and/or
e. it utilizes domestic raw materials/components at least
70% since the 4th year.
6
Procedure
- Taxpayer’s application shall be submitted to The Head of

BKPM, and it will be proposed by The Head of BKPM to the
MoF through DGT with the following attachments:
a. copy of Taxpayer Identification Number (TIN) (Nomor
Pokok Wajib Pajak / NPWP);
b. copy of Taxpayer’s proposal to The Head of BKPM;
c. permit/license of new investment or additional
investment issued by The Head of BKPM or other
authorized institution in accordance with applicable law;
d. details of type and value of investment; and
e. for Taxpayers who hold permit/license of new investment
or additional investment issued before Government
Regulation No. 52 of 2011 enter into force, shall attach
declaration letter from The Head of BKPM that states
Taxpayers not yet in commercial operation.
- The proposal received by the DGT from The Head of BKPM
will be further examined and the decree concerning the
facility entitlement/rejection will be published at most 10
days after the proposal completely received.
Utilization
The facility may be utilized after the Taxpayer realizing 80% of

the investment plan. This provision is not applied to the
Taxpayers who are already granted with the facility based on
the Government Regulation No. 1 of 2007 and Government
Regulation No. 62 of 2008.
7
Reference
- Article 31A of Income Tax Law

- Government Regulation No. 1 of 2007 a.l.a.w
Government Regulation No. 52 of 2011
- MoF Regulation No. 16/PMK.03/2007 a.l.a.w MoF
Regulation No. 144/PMK.11/2012
- DGT Regulation No. PER-67/PJ./2007 a.l.a.w DGT
Regulation No. PER-41/PJ./2013
- DGT Circulation Letter No. SE-16/PJ/2007
8
A-3. Special Economic Zone (SEZ)
In order to accelerate economic development in certain regions

that are strategically important in increasing overall national
economy growth, it is necessary to provide tax incentives to
support development in Special Economic Zone.
Eligible Taxpayer
Taxpayer whose business located in Special Economic Zone
Tax Facility
- Income tax facility;

- Additional income tax facilities can be given in regard to
special characteristics of the zone;
- Importing goods to SEZ may be granted a facility income
tax on which will not be withheld.
Reference
- Law No. 39 of 2009

-
9
A-4. Facilities for

Renewable Energy Resources Utilization
The depletion of fossil-based energy reserves requires innovation

to ensure sustainable energy supplies. Indonesia has real potential
to utilize renewable energy, such as geothermal, wind, bio-
energy, solar energy, water flow and other hydro powers.
Therefore, tax incentive is necessary to support utilization of
renewable energy resources that requires high-technology
investment and bears high risk.
Eligible Taxpayer
Taxpayer who conducts activities on renewable energy

resources utilization
10
Tax Facility
- Investment allowance at 30% of total investment, for

period of 6 years;
- Accelerated depreciation and amortization;
- Withholding tax rate on dividends paid to non-resident at
10%, or at lower applicable tax treaty rate.
- Extended carried forward loss period from 5 years up to 10
years, depending on the following conditions:
a. the investment is located in industrial or bonded zone;
b. employs at least 500 Indonesian manpower during 5
consecutive years;
c. expense of economic and social infrastructure in the
investment location amounts at least 10 billion IDR;
d. domestic R&D expense amounts at least 5% of total
investment during 5 year period; and/or
e. utilizes domestic raw materials/components at least
70% since the 4th year.
- Exemption of withholding income tax Article 22 for import
of machinery and equipment (assembled or not
assembled), but not including spare parts.
11
Procedure
- Taxpayer’s application shall be submitted The Head of

BKPM, and it will be proposed by The Head of BKPM to the
MoF through DGT with the following attachments:
a. Copy of Taxpayer Identification Number (TIN) (Nomor
Pokok Wajib Pajak/NPWP)
b. Permit license of new investment or additional
investment, including the details.
- The proposal received by the DGT will be further examined
and the decree concerning the facility entitlement/
rejection will be published at most 10 days after the
proposal received.
Utilization
- Facility of investment allowance may be utilized after the

Taxpayer realizes 80% of the investment plan. This provision
is not applied to the Taxpayers who are already granted
with the facility based on the Government Regulation No.
1 of 2007 and Government Regulation No. 62 of 2008.
- Facility of exemption from Income Tax Article 22 is utilized
automatically without requiring a certificate of exemption.
Reference
MoF Regulation No. 21/PMK.011/2010
12
A-5 Simplification of Calculation of Income Tax on

Income from Business With Certain Gross Income
In order to reduce compliance cost for Taxpayers in calculating,

paying, and reporting their income tax, it is considered necessary
to simplify withholding taxation. Therefore Taxpayers who receive
income from their business with certain gross income shall
calculate their income tax in simpler manner, that is 1% of their
gross income.
Eligible Taxpayer
- Individual Taxpayers or Corporate Taxpayers, excluding

permanent establishments.
 who receive income from their business.
 who derive gross income not more than 4.8 Billion IDR
within one fiscal year.
- This provision excludes Individual Taxpayers who in
conducting their business:
 use equipment/tools/infrastructure that can be
assembled and dismantled whether it is a permanent
or not permanent means; and
 use part of or whole public interest that is not
intended as a place of business or selling
- This provision excludes Corporate Taxpayers who have
following criteria:
a. Taxpayers who have not yet entered commercial
operation stage; or
b. Taxpayers who have received gross income more
than 4.8 Billion IDR within 1 year after entering
commercial operation stage
13
Tax Facility
A simplified formula to calculate income tax on business

income i.e. implementing final income tax that is 1% of
gross income.
Procedure
This facility is utilized by self-assessment. Therefore it is not

necessary to submit an application.
Referensi
a. Article 4 Paragraph (2) Letter e and Article 17

Paragraph (7) of Income Tax Law
b. Government Regulation No. 46 of 2013
c. MoF Regulation No. 107/PMK.011/2013
d. DGT Circulation Letter No. SE-42/PJ/2007
14
A-6. Income Tax Reduction for Public Listed Company
In order to improve the role of capital market as the source of

business financing and to increase the number of public listed
companies and their public ownership, it is necessary to grant
income tax facilities for public listed companies.
Eligible Taxpayer
Resident corporate Taxpayer in form of public listed

company, provided that:
- A minimum of 40% of all stocks are paid and traded in
stock exchange in Indonesia;
- The stocks are owned by at least 300 parties;
- Each party is only allowed to own less than 5% of all paid
stocks;
- Aforementioned requirements should be fulfilled in a
period of at least 6 months within one fiscal year.
Tax Facility
Corporate Income tax rate reduction 5% lower than the

highest rate of resident corporate income tax rate as
stipulated in Article 17 Paragraph (1) letter b of Income Tax
Law.
15
Procedure
This facility is utilized by self assessment when submitting annual

corporate income tax return, by enclosing:
a.Notification letter obtained from the Stock Administrative
Bureau (Biro Administrasi Efek) (form X.H.1-6), as stipulated in
the Capital Market and Financial Institution Supervisory
Agency (Badan Pengawas Pasar Modal dan Lembaga
Keuangan/Bapepam-LK) Regulation No X.H.1, for each
related taxable years;
b. The notification letter should disclose Taxpayer’s name, TIN,
fiscal year, also a declaration that aforementioned
requirements have been fulfilled in a period of at least 6
months within one fiscal year.
Reference
- Article 17 Paragraph (2b) of Income Tax Law

16
A-7. 50% Income Tax Reduction for Resident

Corporate Taxpayers
In order to accelerate national economy growth that is supported

by small and medium enterprises, it is necessary to grant tax
incentives in the form of 50 % Corporate Income Tax reduction for
enterprises with limited business scale.
Eligible Taxpayer
- Resident corporate Taxpayer with gross income up to 50

billion IDR per year.
- Gross income in this context means income received or
accrued from business activity before deducted with
expenses to earn, to collect, and to secure income that is
generated from Indonesia or outside Indonesia, including:
a. Income imposed by final income tax;
b. Income imposed by non-final income tax;
c. Income exempted from tax object.
Tax Facility
Rate reduction 50% of Resident Corporate Income Tax rate

imposed on taxable income from the part of the gross
revenue of 4.8 billion IDR.
17
Procedure
This facility is utilized by self-assessment when the eligible

Taxpayer is submitting annual Corporate Income Tax return.
Therefore, the eligible Taxpayer is not necessary to submit
application for this facility.
Reference
- Article 31E of Income Tax Law

18
A-8. Reduction of Income Tax Instalment of Article 25
Tax instalment during the current taxable year that must be paid
every month by Taxpayers, shall be equal to the tax payable
according to the tax return of the preceding year added by the
principle amount in the assessment notice of the preceding
taxable year less the Income Tax withheld as referred to in Article
21, 22, 23, and Article 24, divided by 12 or the number of months
of a fraction of the taxable year. Reduction can be applied to
the aforementioned tax instalments amount in certain
circumstances.
Eligible Taxpayer
Taxpayer who is able to demonstrate that after three months

or more of the current taxable year, its income tax will be less
than 75 percent of the income tax payable in the previous
years.
Tax Facility
Reduction of income tax instalment Article 25 in the current

taxable year
19
Procedure
- Submit a request for tax instalment reduction to The Head

of Tax Office where Taxpayer is registered in the event of
a change in Taxpayer’s business or activities
- Submit the calculation of income tax payable based on
estimated income to be received or obtained and the
amount of income tax article 25 for the remaining months
in the current tax year.
Reference
- Article 25 Income Tax Law

- DGT Decree No. KEP-537/PJ/2000
20
A-9. Reduction of Income Tax Article 25 and/ or

Postponement of Income Tax Article 29 Payment for
Taxpayer in Certain Industries
In order to sustain macroeconomic stability as well as to achieve

economic growth at realistic level amidst the dynamic change in
financial market and the fluctuation of rupiah exchange rate, to
improve the competitiveness of national industries both domestic
and export-oriented, and to support the government in the
creation and absorption employment, it is viewed necessary to
stipulate Income Tax Policy to relieve and to maintain liquidity of
Taxpayers in certain industry for fiscal year 2013.
Eligible Taxpayer
Taxpayer conducting business in:

a. Textile industry;
b. Apparel Industry;
c. Footwear industry;
d. Furniture industry and/or
e. Childerns’ toys industry
who received recomendation from the Minister of Industry
21
Tax Facility
- Reduction of Income Tax Article 25 for the taxable period

September 2013 to December 2013, a maximum of:
a. 25% of Income Tax Article 25 the tax period August 2013,
for non-export oriented Taxpayer
b. 50% of Income Tax Article 25 of the tax period August
2013, for export oriented Taxpayer
- Postponement of Income Tax Article 29 payment no later
than three months
Procedure
- Reduction on Income Tax Article 25

a. Taxpayer submits a written request to The Head of Tax
Office in which they are registered no later than the
end of taxable period on which the reduction of
Income Tax Article 25 is started
b. The request shall be attached with following
documents:
1) Copy of Letter of Recomendation from Minister of
Industry
2) Copy of Tax Identification Number
3) Copy of Decision Letter of Tax Income Reduction
based on DGT Decree No KEP-537/PJ/2000 for
Taxpayer who was already received
c. The Head of Tax Office shall issue letter of approval of
Reduction of Income Tax Instalment Article 25 no later
than 5 working days.
22
Procedure (cont’d)
- Postponement of Income Tax Article 29 Payment

a. Taxpayer submits a written request to Head of Tax Office
in which they are registered no later than 20 working
days prior the due date of income tax payment Article
29
b. The request shall be attached with following documents:
1) Copy of Letter of Recomendation from Minister of
Industry
2) Copy of Tax Identification Number
d. The Head of Tax Office shall issue Letter of Apporval of
The Postponement of Income Tax Article 29 no later
than 5 working days.
Reference

- Minister of Industry Regulation No 43/M-IND/PER/8/2013
- DGT Regulation No 30/PJ/2013
23
A-10. Exemption from Income Tax Object on Aid , Gifts,

And Donation
Generally, aid, charity, and grant are considered as income tax

object for the recipients. However in certain cases, for the purpose
of harmonizing with existing norms in the society, aid, charity, and
grant are exempted from taxable object.
Eligible Taxpayer
Parties as follows:
a. family member i.e. parents and children;
b. religious organizations;
c. educational organizations;
d. certain non-profit organizations; or
e. individuals conducting micro or small business with certain
criteria
who receive the aid, charity, and grant.
24
Tax Facility
Aid, charity, and grant received are exempted from

taxable object.
Procedure

Reference
- Article 4 Paragraph (1) Letter d Number 4 of Income Tax

Law
- Article 4 Paragraph (3) Letter a Number 2 of Income Tax
Law
- Article 8 of Government Regulation No. 94 of 2010
-
25
A-11. Exemption from Taxable Object on

Aid/Compensation Paid by Social Security Agency
In order to help Taxpayers living under poverty line or having

accident or experiencing natural disasters, it is necessary to
provide tax incentives in the form of exemption from taxable
object on aid or compensation that are paid by Social Security
Agency.
Eligible Taxpayer
Taxpayer receiving aid/compensation paid by:

- Social Security Workers (Persero Jaminan Sosial Tenaga Kerja
/JAMSOSTEK);
- Civil Servants Pension Fund (Persero Tabungan dan
Asuransi Pegawai Negeri / TASPEN);
- Social Insurances of the Armed Forces of the Republic of
Indonesia (Persero Asuransi Sosial Angkatan Bersenjata
Republik Indonesia / ASABRI);
- Health Insurance (Persero Asuransi Kesehatan Indonesia
/ASKES);
- Other social security agencies not mentioned above.
26
Tax Facility
Aid/compensation given to Taxpayers and/or society who

are:
a. living under poverty line according to data and criteria
supplied by National Statistic Agency (Biro Pusat Statistik
/BPS);
b. experiencing life threatening natural disaster;
c. having unpredictable and dangerous or life threatening
accident
are exempted from taxable object.
Procedure
This facility is utilized by self-assessment. Therefore, it is not

Reference
- Article 4 Paragraph (3) Letter n of Income Tax Law
27
A-12. Exemption from Taxable Object on Zakat and

other Compulsory Religious Donations
In principle any increase in economic capacity received by or

accrued by a Taxpayer from Indonesia as well as from offshore,
which may be utilized for consumption or increasing the
Taxpayer’s wealth, in whatever name and from is taxable object.
However, to increase faith and piety of Indonesian people as well

as to provide equal treatment for every religion in Indonesia, zakat
(Islamic charity) and religious donations that are compulsory for
recognized religions in Indonesia, are excluded as income tax
object.
Eligible Taxpayer
a. amil zakat board (Badan Amil Zakat/BAZ) or other amil

zakat institutions (Lembaga Amil Zakat/LAZ) or religious
institutions established or approved by the Government
and approved by the Government; and
b. eligible zakat recipients or compulsory religious donation
provided that the aforementioned parties have no business.
employment, ownership nor control relationship
Tax Facility
Zakat and other Compulsory Religious Donations are

excluded as income tax object
28
Procedure

necessary to submit application for this facility.
Reference
- Article 4 Paragraph (3) Letter a number 1 of Income Tax

Law
29
A-13. Exemption from Income Tax Object

on Surplus of Non-profit Organization
Adequate facilities and infrastructures in education, research and

development are important elements to improve human
resources quality. The Government supports the program by
providing tax facility in the form of exemption of the surplus of non-
profit organization from taxable object.
Eligible Taxpayer
Non-profit organization in education and/or R&D registered

at the authorized institutions that reinvest their surplus in form
of infrastructure, as follows:
a. buildings and education, R&D infrastructures, including
land acquisition;
b. office, laboratory, and library infrastructure;
c. student dormitory, official residence for teacher, lecturer
or staff and sport facilities which are located in the
complex of formal education institution.
The surplus in this context shall mean all taxable objects
other than income already separately taxed (final or
deemed profit), subtracted by operational and daily
expenses incurred by non-profit organization.
30
Tax Facility
Reinvested surplus in form of infrastructures is exempted from

taxable object for 4 years since the surplus is accrued.
Procedure
- Taxpayer should submit notification letter to The Head of

Tax Service Office where the Taxpayer is registered
concerning:
a. physical development plan, and
b. cost of infrastructure or development procurement
plan.
- The notice shall be submitted with the Annual Income Tax
Return for taxable year in which the surplus is accrued or at
the latest before the development is started, no later than
4 years since the surplus is accrued;
- The copy of the notice is also to be submitted to authorized
institution.
Reference
- Article 4 Paragraph (3) Letter m of Income Tax Law

31
A-14. Exemption from Taxable Object on Scholarship
To optimize the benefit of scholarship received by Indonesian

citizens to have formal and/or non-formal education in domestic
or abroad, it is necessary to grant fiscal incentive to support
capacity building of Indonesian people by exempting certain
scholarship from taxable object.
Eligible Taxpayer
Indonesian citizen who receives scholarship provided that:

- the scholarship is for formal and/or non-formal education in
domestic or abroad;
- the recipient is not related to the owner, shareholder,
director, or management board of the scholarship provider;
- the scholarship components in this context comprise of
tuition fee, examination fee, research allowance, book
allowance and/or living cost.
Tax Facility
Scholarship is exempted from taxable object.
32
Procedure

necessary to submit application for this facility.
Reference
- Article 4 Paragraph (3) Letter l of Income Tax Law

- MoF Regulation No. 246/PMK.03/2008 a.l.a.w
33
A-15. Exemption from Income Tax Object

on Pension Fund Income
Capital investment conducted by pension fund is aimed for

expansion and repayment to pension recipients in the future.
Therefore, the investment is necessary to be directed to non-
speculative and/or non-high risk investment. Based on that,
income of pension fund invested in certain sectors are exempted
from taxable object.
Eligible Taxpayer
Pension fund incorporated under MoF approval.
Tax Facility
Exemption from taxable object of certain income received

or accrued by pension fund, as follows:
a. interest, discount, revenue from deposit, certificate of
deposit, and saving in bank in Indonesia, and Bank
Indonesia Certificate (Sertifikat Bank Indonesia/SBI);
b. interest, discount, revenue from bonds, sharia bonds
(sukuk), Government Sharia Bonds, Government Bonds
listed on stock exchange in Indonesia; or
c. dividend received from companies listed on stock
exchange in Indonesia.
34
Procedure
- To be exempted from income tax withholding on deposit,

savings, and Bank Indonesia Certificate, Taxpayer should
submit an application for Certificate of Exemption (Surat
Keterangan Bebas/SKB) to The Head of Tax Office in which
the Taxpayer is registered with following attachments:
a. Copy of Minister of Finance Decree (KMK) concerning
Establishment of Pension Fund
b. Copy of Balance Sheet
c. Copy of Income Statement Report
d. Copy of Cash Flow Report
e. Copy of Investment report
f. List of certificate/slips/deposits, savings, and Certificate
of Bank Indonesia
- Head of Tax Office shall respond the application at the
latest 7 business days after receiving the application.
Otherwise, the application is granted and Head of Tax
Office has to issue SKB in the next 3 business days;
- Effective period of SKB starts from Jannuari 1st to December
31st. Should the request of SKB be received after January
1st, the SKB shall be effective since the date of the
complete request is received to December 31st.
- Pension Fund granted with SKB is obliged to submit its
investment report every semester at the latest on July 31st
for the first semester and January 31st for the second
semester.
35
Reference
- Article 4 Paragraph (3) Letter h of Income Tax Law

- MoF Decree No. 51/KMK.04/2001
36
A-16. Exemption from Income Tax Object on Gain

Derived From Discharged of Small Debtor Indebtedness
In principle, discharge of indebtedness is classified as income for

the debtor and as expense for the creditor. However, the
Government regulates that the discharged of small debtor
indebtedness such as loan for low income family, farmer business
loan, loan for very small housing, loan for debtors of small
enterprise, and other small loans with certain limit are exempted
from taxable object.
Eligible Taxpayer
Loan of small debtors is business debt in the amount less

than 350.000.000 IDR (three hundred and fifty million
rupiah), including:
a. Loan for low income family (Kredit Usaha Keluarga
Prasejahtera/Kukesra);
b. Farmer Business Loan (Kredit Usaha Tani/KUT);
c. Loan for very small housing (Kredit Pemilikan Rumah
Sangat Sederhana/KPRSS);
d. Loan for debtors of small enterprise (Kredit Usaha
Kecil/KUK);
e. Other small loans according to the Bank Indonesia
credit policy related to support the small enterprise and
cooperative.
37
Tax Facility
Gain derived from indebtedness discharge of small debtor is

exempted from taxable object.
Procedure

Reference
- Article 4 Paragraph (1) of Income Tax Law

38
A-17. Deduction of Formation or Accumulation

of Reserves
Generally, formation or accumulation of reserve funds may not be

deducted from gross income. Nevertheless, Taxpayers with certain
business activities are allowed to set up a reserve fund. The terms
and condition shall be further stipulated based on the Ministry of
Finance Regulation.
Eligible Taxpayer
- Bank and other business, which conduct business as a

creditor, financial lease company, consumer finance
company and factoring company;
- Other business entities which channel credit / act as
lending agency, which consist:
a. Credit union
b. PT Permodalan Nasional Madani (Persero)
c. Indonesian Exim Bank (Lembaga Pembiayaan Ekspor
Indonesia/LPEI)
d. Infrastructure financing company which provides fund
for projects on infrastructures.
e. Asset Managament Company PT Perusahaan
Pengelola Aset (PT Perusahaan Pengelola Aset / PT
PPA)
- Insurance company and Social Security Agency;
- Deposit Guarantor Institutions (Lembaga Penjamin
Simpanan / LPS);
- Mining company;
- Forestry business company; and
- Industrial waste processing business company.
39
Tax Facility
Formation or accumulation of reserves that can be charged as

tax deductible are:
a. reserve for bad debt of a bank and other business which
conduct business as a creditor, financial lease company,
consumer finance company, and factoring company;
b. reserves in an insurance business including reserve for social
aid made by Social Security Agency;
c. guarantee reserve for Deposit Guarantor Institutions.
d. reserves for cost of reclamation in general mining,
e. reserve for cost of reforestation in forestry business;
f. reserve for closing and maintaining industrial waste site
conducted by industrial waste processing business.
Procedur

Reference
- Article 9 Paragraph (1) Letter c of Income Tax Law

- MoF Regulation No. 81/PMK.03/2009 a.l.a.w MoF
Regulation No 219/PMK.011/2012
-
40
A-18. Deduction of Uncollectible Debt as Tax Deductible
Generally, tax deductible expenses comprise expenditures to

earn, collect, and to secure income (mendapatkan, menagih,
memelihara/3M). Nevertheless, bad debt write-off is also tax
deductible expense, provided that the write-off meets certain
requirements.
Eligible Taxpayer
Taxpayer who writes-off bad debt provided that the write-off

meets following requirements:
a. The bad debt has been reported as expense in
commercial income statement;
b. list of the bad debts is submitted to DGT; and
c. One or some of the conditions below are performed:
- the bad debt has already been taken over by the
state court or institution authorized for government’s
receivable; or
- there is a covenant of debt relief; or
- the bad debt has been published in general or
special publisher; or
- there is a statement from debtor about the amount of
debt being relieved.
41
Tax Facility
Bad debt write-off is tax deductible expense provided that the

write-off meets the requirements.
Procedure
When submitting annual income tax return, the Taxpayer shall

enclose:
- list of the bad debt (hard copy/soft copy) containing the
identity of the debtor i.e: name, Taxpayer Identity Number,
address, and the amount of the bad debt, and
- copy of the proof of bad debt take over by the state court
or institution authorized for government’s receivable; or
- copy of covenant of debt relief; or
- copy of publication proof from a general or special
publisher; or
- a statement from debtor about the amount of debt
relieved.
Reference
- Article 6 Paragraph (1) Letter h of Income Tax Law

42
A-19. Zakat and other Compulsory Religious Donationes

as Tax Deductible
To encourage people to fulfil their religious obligations such as

paying zakat or religious donations that are compulsory for
recognized religions in Indonesia as well as to further improve the
accountability and transparency of its use, therefore the Taxpayer
who pays zakat or religious donations through the Amil Zakat
Board or Amil Zakat Institutions or religious institution established or
approved by the Government may treat the expenses as
deductible expenses.
Eligible Taxpayer
Individual or Corporate Taxpayer who pays zakat or

compulsory religious donations to amil zakat board (Badan
Amil Zakat/BAZ) or other amil zakat institutions (Lembaga
Amil Zakat/LAZ) or religious institutions established or
approved by the Government and approved by the
Government
Tax Facility
Zakat or compulsory religious donations can be deducted

from gross income.
43
Procedure
- Taxpayer reports in annual tax return in the taxable

year in which the zakat or compulsory donation are
paid, attached with copy of payment, e.g
a. Copy of direct payment or payment slip from bank.
b. Payment from Automatic Teller Machine
- The copy of payment shall at least contains:
a. Full name of the Taxpayer and TIN
b. The amount of the payment
c. The name of Amil Zakat Board (BAZ) or other Amil
Zakat Institutions (LAZ) or religious institutions
established or approved by the Government and
approved by the Government
d. Signature of BAZ, LAZ, or the religious institutions
officer, if the zakat or religious donation is paid
directly to the aforementioned institutions.
e. Validation of bank officers on the bank slip, if the
zakat or religious donation is paid through bank
account transfer.
44
References
- Article 9 paragraph (1) letter g Income Tax Law

- DGT Regulation No. PER-6/PJ./2011
- DGT Regulation No. PER-33/PJ./2011 a.l.a.w DGT
Regulation No. PER-15/PJ./2012
45
A-20. Deduction of Donation or Social Cost
To endorse Taxpayers’ participation in contributing relief of

national disasters and the development of science, technology,
education, and sports, as well as to support the government in
financing social infrastructure development in Indonesia,
Taxpayers’ expenditure for such charity may be deducted from
gross income.
Eligible Taxpayer
Taxpayers who contribute:

a. charity for national disaster relief;
b. charity for R&D in Indonesia;
c. charity for educational facility;
d. charity for sports development; and
e. expenditure for social infrastructure development,
provided that:
a. The Taxpayers generated profit based on their annual
income tax of the previous fiscal year.
b. The charity/expenditure does not cause loss in the fiscal
year in which charity/expenditure contribution is
conducted.
46
Tax Facility
Following charities/expenditures are tax deductible:

a. Charity for national disaster relief, to the disaster
management agency or authorized institutions;
b. Charity for R&D in Indonesia, to R&D institute;
c. Charity for educational facility, to educational institutions;
d. Charity for sports development, to sports development
agency;
e. Expenditure for social infrastructure development, by
building infrastructure that is intended for non-profit and
public interest,
provided that the total amount of such charity/expenditure
should not be more than 5% from previous year fiscal net
income.
Procedure
Taxpayer should enclose receipt of charity/expenditure as

stipulated in MoF Regulation No. 76/PMK.03/2011 when
submitting annual tax return.
References

47
A-21. Deduction of Benefit-In-Kinds for Employees
In general, providing consideration or compensation in the form of

benefits in kinds may not be considered as tax deductible for the
employers. Therefore, benefits in kinds received are not taxable
income for the employees. However, in order to accelerate
development in remote areas, to create safety working
environment, and to support daily works of the employees,
providing certain benefits-in-kinds may be deducted from gross
income for the employers.
Eligible Taxpayer
Taxpayer who provides certain benefits-in-kinds for the

employees.
Tax Facility
Providing certain benefits-in-kinds as follows:

a. Food and/or beverages for employees
b. Infrastructures related to work implementation, which
are not yet available in certain areas
c. necessities or equipment for the implementation of
work as means for safety work
may be deducted from the gross income of the
employers and is not taxable object for the employees
48
Procedure
- Tax deduction of benefits-in-kinds in form of:

a. Food and beverages for the employees; and
b. necessities or equipment for the implementation of work
as means for safety work
may be utilized by self-assessment when submitting annual
income tax returns. Therefore, it is not necessary to submit
an application.
- Tax deduction of benefits-in-kinds in form of infrastructures

aforementioned, may be utilized by submitting request to
The Head of the Regional Tax Office which covers Tax
Office where the Taxpayer is registered.
Taxpayers shall fill out and enclose the forms as follow:
a. Copy of investment permit license from BKPM;
b. Copy of location map;
c. Copy of the latest financial statements prior to the year
in which Taxpayer submits request;
d. Statements concerning the condition of economic
infrastructure and public transportations using the form
provided.
Reference
- Article 9 Paragraph (1) Letter e of Income Tax Law

49
A-22. Deduction of Expenditures

on Cellular Phone and Company’s Vehicle
Generally, expenses other than to earn, to collect, and to secure

income (mendapatkan, menagih, memelihara/3M) are not tax
deductible. Such expenses include expenditures for personal uses
unrelated to 3M. Nevertheless, in certain cases it is difficult to
separate such expenditures, whether they are related or not
related to 3M. Therefore, it is necessary to provide regulation
concerning expenditures on cellular phone and company’s
vehicle as tax deduction.
Eligible Taxpayer
Taxpayer who deducts expenditures on cellular phone and

company’s vehicles.
Tax Facility
- Expenditures on cellular phone for certain employees:

a. Purchasing units may be deducted 50% through
depreciation of fixed assets of Group I.
b. Subscription fee and mobile phone’s repairing fee may
be deducted 50% in the related fiscal year.
50
Tax Facility
- Expenditures on company vehicles include:

a. bus, minibus/similar type used for employee’s shuttle:
 acquisition and overhaul cost may be deducted
entirely through depreciation of fixed assets of Group II;
 maintenance and repairing cost may be deducted
entirely in the related fiscal year.
b. sedan/similar type for certain employee:
 acquisition and overhaul cost may be deducted 50%
through depreciation of fixed assests of Group II;
 maintenance and repairing cost may be deducted
50% in the related fiscal year.
Procedure

necessary to submit an application
References

- DGT Decree No. KEP-220/PJ./2002
- DGT Circulation Letter No. SE-09/PJ.42/2002
51
A-23. Facilities for Business Merger or Spin-Off
In order to harmonize taxation policy with other policies such as

social, economy, investment, monetary, and other policies, the
Government allows Taxpayer to use book value for the transfer of
asset during business merger or spin-off with certain conditions.
Eligible Taxpayer
- Taxpayer who transfers assets during business merger or

spin-off.
- The merger in this context means:
a. a merger of two or more corporate Taxpayers provided
that the surviving one is the company that has no loss or
lesser loss than the other companies;
b. a merger of two or more corporate Taxpayers by
establishing a new corporate Taxpayer.
- The spin-off in this context means spin-off by:
a. Non-public-listed Taxpayer that will conduct Initial Public
Offering; or
b. Public listed Taxpayer, provided that all companies
established from the spin-off also conduct Initial Public
Offering.
52
Tax Facility
Taxpayer exercising such business merger or spin-off is

allowed to use book value for transferring the assets
Procedure
- Submit application to the DGT and enclose the

background and intention of conducting merger and spin-
off business at no later than six months after the effective
date of merger or spin-off
- Pay all tax dues of each relevant corporate Taxpayer; and
- Fulfil the business purpose test requirements.
- Enclose the audited Financial Statements from both
Taxpayers who transfers assets and Taxpayer who receives
the transferred assets.
Reference

53
A-24. Facilities For Fixed Asset Revaluation
Rapid price increase or changes in monetary policy may lead to

disharmony between costs and income, which could result in an
unreasonable tax burden. In such circumstances, certain
domestic corporate Taxpayers and permanent establishments
(PEs) may perform Fixed Asset Revaluation for tax purposes. The
income tax from the revaluation can be paid by instalments not
more than 12-month period.
Eligible Taxpayer
Domestic corporate Taxpayers or permanent

establishments, not included Taxpayers which are granted
the license to perform bookkeeping in English and U.S.
Dollars, who have fullfilled all of their tax obligations up to
last tax period prior the tax revaluation period.
Tax Facility
Gain from Fixed Asset Revaluation above fiscal book value is

subject to 10% Final Income Tax which can be paid by
instalments not more than 12-month period.
54
Procedure
- To perform Fixed Asset Revaluation, Taxpayer has to apply

to the DGT through The Head of Regional Office by filling out
form and attaching:
a. Photocopy of legalized business license for appraisal
service or expert appraiser;
b. Valuation Report by Appraisal Service Company;
c. List of Fixed Asset Revaluation for tax purposes;
d. Financial Statements for book year before Fixed Asset

Revaluation.
- Provisions for Fixed Asset Revaluation for tax purposes are as
follows:
a. Revaluation is performed to all tangible assets including
land or other than land;
b. Revaluation cannot be re-performed before the end of 5
years starting the last revaluation;
c. Revaluation is based on market value or fair value of
fixed assets with valuation (appraisal) by appraisal
service or expert appraiser who obtained license from
government;
d. Revaluation is performed at the latest 1 year after
appraisal.
55
Procedure (contd):
- To be approved for instalment of 10% final income tax on

gains from Fixed Asset Revaluation, Taxpayer must submit
request for instalment and the request for Fixed Asset
Revaluation to The Head of Regional Office of DGT.
- Application for instalment is submitted using the form
provided in the DGT Regulation and by attaching cash flow
projection, which shows financial condition that causes
Taxpayer is unable to pay 10% final income tax at once.
Reference
- Article 19 of Income Tax Law

- SE-56/PJ./2009
56
A-25. The Suspension of Depreciation

for The Acquisition Cost of Tangible Assets
of Certain Business Sectors
In order to accommodate the specific characteristics of certain

business sectors, such as hardwood plantations, forestry, and
animal husbandry, it is viewed necessary to provide certain policy
regarding the depreciation of tangible assets used by such
businesses.
Eligible Taxpayer
Taxpayer who conducts business in certain business sectors

as follow:
a. hardwood plantations,
b. forestry, and
c. animal husbandry,
which the crop/livestock can be produced many times
and they must be planted or raised more than a year to be
ready to harvest/gather.
Tax Facility
- Suspension of depreciation for the acquisition cost of

tangible asset.
- The depreciation of tangible asset is started from the month
of commercial production (a month in which Taxpayer starts
to sell their products);
- Tangible asset which the depreciation is suspended is the
fixed asset owned and used as well as the main comodity in
certain business sectors aforementioned;
57
Tax Facility
- Acquisition cost which the depreciation time is suspended

shall include the cost of the purchase of seeds, the cost of
raising and nurturing seedlings, but not the cost of labor;
- Group of depreciation of tangible assets of certain business
sectors are:
a. hardwood plantations, Group 4 (20 years);
b. forestry, Group 4 (20 Years);
c. animal husbandry, Group 2 (8 Years).
Procedures
This facility is utilized by self-assessment system. Therefore it is

not necessary to submit an application.
References

58
A-26. Facilities for Income from Transfer

of Property/Collateral in the form of Land
and/or Building for certain Taxpayers
In order to support the continuity of corporate restructuring

process as well as settlement of bank credit as an impact from
financial crisis, tax facilities should be given in the form of deferral
for revenue recognition on transfer of collateral such as land or
buildings owned by certain Taxpayers and it is conducted by
commercial banks which carry out appropriate government
restructuring program until commercial banks transfer such
collateral to the real buyer.
Eligibility and Terms of Conditions
- Restructured Bank in IBRA;

- Bank-affiliated companies in Restructuring;
- Debtor who has a direct or indirect payment obligations to
the Bank Restructuring, IBRA, and the Company or the
Affiliated Bank Restructuring or IBRA, including Banks which
have obligation to Bank Indonesia in connection with Bank
Indonesia’s Facility;
- Stockholders, Director or Restructured Bank Commissioner;
- Debtor/Collateral owner to General Bank; where its
property/collateral is taken over in order to conduct
restructuring of the company.
59
Eligibility (Cont’d)
Certain Taxpayers are stipulated in Government Regulation

No. 17 of 1999 concerning Restructuring Agency and Law
No. 10 of 1998 concerning Banking.
Tax Facility
Postponement of income recognition on transfer of:

- assets in the form of land and/or buildings owned by certain
Taxpayers, conducted by IBRA until IBRA transfers the assets
to the real buyer.
- collateral in the form of land or buildings owned by certain
Taxpayers, conducted by general bank until the general
bank transfer the collateral to the real buyer.
Procedures
This facility is utilized by self-assessment system. Therefore it is

not necessary to submit an application
References

60
A-27. Facilities for Interest Income from Non-Performing

Loans Received or Accrued by Banks
Tax treatment of interest income received or accrued by banks

from non-performing loan is specifically regulated in order to
support the acceleration of bank restructuring process in
accordance with Government policy and with the change of
SFAS / PSAK No. 31 concerning Banking Accounting (revised in
2000). Accordingly, DGT determines the time to recognize income
for Taxpayers (Banks) in the form of interest income from non-
performing loans at the time the interest income is received.
Eligible Taxpayer
Banks
Tax Facility
- Interest income from non-performing loans is recognized at

the time the interest income is received by the bank (cash
basis).
- If bank recorded interest income from non-performing loan
as a reduction of principal, the time to recognize interest
income is postponed until interest income is received after
repayment of loan principal.
61
Procedure
This facility is operated in a self-assessment system. At the

time of submitting Income Tax Return, Taxpayers need to
attach the list of debtors who has credits classified as
substandard, doubtful, and default, which contains:
a. Serial number;
b. Debtors’ name;
c. Tax Identification Number;
d. The number of non-performing loans classified as
substandard, doubtful, and default;
e. The amount of interest accrued, which has not been
recognized as income in the financial statement.
Reference

62
A-28 Facilities for Gains from Debt Discharge

Received or Accrued by Certain Debtors
In order to harmonize economic policy and tax policy as a result

from monetary crisis of 2008, the Government provides facilities
related to the allocation of income recognition on gains from
business debt exemption for domestic debtor Taxpayers who
conduct business debt restructuring agreement with Indonesian
Bank Restructuring Agency (IBRA) in accordance with
government policy within a maximum period of 5 years.
Eligible Taxpayer
- Domestic debtor Taxpayers who conduct business debt

restructuring agreement with IBRA in accordance with
Government policy.
Tax Facility
Revenue recognition on gains from debt exemption can be

allocated in a period of 5 years, in the same portion every
year and starting from taxable year at the time the debt
exemption is derived.
63
Procedure
- Propose a written application to The Head of Tax Office

where debtor is registered as a Taxpayer;
- The application must be submitted no later than the
deadline of submission of income tax return, with a
photocopy of the business debt restructuring agreement
legalized by IBRA.
Reference
DGT Decree No. KEP -563/PJ./2001
64
A-29. Exclusion from Income Tax Subject

for International Organization
The role of international organizations in helping the Government

to create sustainable development in many sectors is becoming
more important, especially in today’s era of globalization. To
facilitate the positive role of such international organizations and
to harmonize with international norms, Article 3 paragraph (1)
letter c, Indonesian Income Tax Law stipulates that international
organizations and officials representatives of international
organizations are excluded from Income Tax Subjects.
Eligible Taxpayer
- International organization, provided that:

a. Indonesia is the member of the organization; and
b. It does not conduct business or other activities to earn
income from Indonesia other than lending to the
Government with funds derived from dues of
members.
- International organization in the form of technical and/or
cultural cooperation, provided that:
a. The technical cooperation is beneficent to Indonesian
Government;
b. The International organization does not conduct other
business or other activities to earn income from
Indonesia.
65
Eligible Taxpayer (cont’d)
Official representatives of international organizations,

provided that:
a. They are not Indonesian citizens; and
b. Not conducting other business or activity to earn income
from Indonesia.
International organizations that meet the criteria
aforementioned shall be stipulated in Minister of Finance
Regulation
Tax Facility
International orgnizations that meet requirements

aforementioned are not subject of income tax.
Procedure
To be enacted as international organization excluded as

subject of income tax, the international organization shall
receive recommendation from State Secretary of The
Republic of Indonesia and fulfill the registration procedures
of international organization in Indonesia as stipulated in
current and valid provisions (e.g.: Law No 37 Year 1999
concerning Foreign Relations)
66
Reference
- Article 3 Paragraph (1) Letter c Income Tax Law

- Law No 37 Year 1999
-
67
A-30. Facilities for Foreign Grants and Loans
In order to achieve sustainable national development and to

recover economic activities, as well as to ensure the continuity of
certain projects that may not be fully financed from domestic
revenues, the foreign aid in the form of foreign loans and grants
are still viewed necessary. Therefore, the government provides
facilities such as income tax borne by the government for foreign
grants or loans. However, such facilities are only temporary and
will be reconsidered in accordance with the financing capacity of
domestic sources and national economic and social
development.
Eligibility and Terms of Conditions
- contractors, consultants, and suppliers stated on contract

to carry out government projects, which are funded by
grants or foreign loans, including experts and trainers which
are financed with foreign grants.
68
Tax Facility
Income Tax from income received or accrued by

aforementioned contractors, consultants, and suppliers shall
be borne by the Government.
Procedures
This facility is utilized by self-assessment when submitting

annual income tax returns. Therefore, it is not necessary to
submit an application
References
- Government Regulation No. 42 of 1995 a.la.w

- MoF Decree No. 239/KMK.01/1996 a.l.a.w
MoF Decree No. 486/KMK.04/2000
- DGT Decree No. PER-526/PJ./2000
69
A-31. Facilities for Donation on

National Disaster Relief in NAD and North Sumatera
One among other Government’s efforts to relieving the natural

disaster in Aceh Province and North Sumatera occurred in
December 2004 was by endorsement of Taxpayers’ participation
through fiscal incentives in the form of tax borne by the
government and fiscal deductibility on aid and charity given to
the disasters victims. The incentive is intended to encourage
Taxpayers to become donator that would ease the burden of
those affected by the disasters.
Eligible Taxpayer
Taxpayers who give charity related to the disasters

aforementioned, which consist:
- Corporate Taxpayers, not including corporate
Taxpayers which are imposed by final tax; and
- Individual Taxpayers, not including individual Taxpayers
which are imposed by final tax or using deemed profit.
70
Tax Facility
Charity for the natural disaster in Aceh Province and North

Sumatera given by Taxpayer is tax deductible and the
income tax accrued from the charity shall be borne by the
Government.
Procedure
- The donations are deducted as expense and reported

in tax return in which it is incurred;
- Donation shall be in form of money and/or goods. If it is
in form of goods, the amount that can be charged as
expense is based on its fiscal carrying value;
- The donations are recorded under account ”natural
disaster donation for Aceh Province and North
Sumatera”;
- The donation should be saved, distributed, and/or
managed by;
a. governmental agency, such as Vice President
Office, Coordinating Ministry of welfare, Ministry of
social affair, Ministry of Finance, or
b. other parties that can be accounted for its
existence; including Indonesian Red Cross (PMI), print
and electronic mass media, and social and/or
religious organizations;
- The donation must be supported by legal documents.
- Government institution or other parties as collector,
distributor and/or manager of donation are required to
register to Head Office of DGT and submit quarterly
report to DGT about the collection and distribution of
the donation.
-
71
Reference

72
A-32. Incentives for Donation for Natural Disaster

Relief in NAD and Nias Island North Sumatera
Government of Indonesia offers tax facilities in the framework of

Natural Disaster Relief to accelerate the recovery of social
economic condition in the disaster area of Aceh Province and
Nias Island North Sumatera Province
Eligible Taxpayer
- Taxpayers who give charity related to the disasters

aforementioned:
a. Corporate Taxpayers, not including corporate
Taxpayers which are imposed by final tax; and
b. Individual Taxpayers, not including individual
Taxpayer which are imposed by final tax or using
deemed profit
- Victims of Aceh Province and Nias Islands natural disasters
and their inheritors who receive the charity.
73
Tax Facility
- Charity distributed for natural disaster relief in Aceh

Province and Nias Islands are tax deductible.
- Exempted as Taxable income for:
a. Aid or charity that are collected, distributed, and/or
managed by Government bodies and parties as
stipulated by or based on MoF Decree, in the form of
money and/or goods, land, and/or building with its
document/certificate received by the victims of natural
disaster in Aceh Province and Nias Islands
b. Inheritance including saving and/or deposit received
by inheritors of the victims of natural disaster in Aceh
Province and Nias Islands.
References

*Note:
This regulation was valid from 1 January 2005
until 1 May 2009.
74
A-33. Incentives for Donation for Earthquake Relief

in DIY and Central Java,
and Tsunami in South Coast of Java Island
Basically, Resident Taxpayers and permanent establishments are

entitled to claim the deductions in the form of expenses to earn
collect and secure income from their gross income. Thus, any
expenses that have no correlation with income generation are
not allowed to be deducted from gross income However, as
enormous earthquake struck Yogyakarta province and part of
Central Java Province on May 27 2006, and also tsunami hit south
coast of Java island on July 17 2006, Government of Indonesia
offers tax incentives in the form of aid allowed as tax deductible. It
is intended to increase the participation of Taxpayers to give aid
and to accelerate the recovery of the struck area.
Eligible Taxpayer
All Taxpayers who make aid for:

- earthquake relief in DIY and some part of Central Java on
May 27 2006 and
- earthquake and tsunami relief in south cost of Java Island
on July 17 2006.
75
Tax Facilities
Aid made by Taxpayers for relief of aforementioned

disasters is allowed as tax deductible expense.
Procedur
This facility is utilized by self-assessment; therefore, it is not

necessary to submit an application
Reference
76
A-34. Exclusion from Lodging Tax Return
In order to provide simplicity to Taxpayers to submit monthly

and/or annual tax return, the government gives facility in the form
of exclusion for Taxpayers with certain income tax from the
obligation to submit tax return which is mandated under Article 3
Paragraph (8) law number 6 of 1983 concerning General
Provisions and Tax Procedures as lastly amended by the law
number 16 of 2009.
Eligible Taxpayer
Taxpayers with certain income tax, i.e.:

a. Individual Taxpayers below personal exemption i.e.
individual Taxpayers who receive or derive taxable
income in a fiscal year not exceed personal
exemption; or
b. Individual Taxpayers who do not carrying on a business
or do not perform independent services.
Tax Facility
1. Individual Taxpayers below personal exemption do not

have the obligation to submit monthly tax return Article
25 and personal annual income tax return.
2. Personal Taxpayers who do not carrying on a business /
do not perform independent services, are excluded
from the obligation to submit Monthly tax return Article
25.
` 77
Procedure
Taxpayers with certain income tax which are eligible to

these facilities do not have to make any request.
Reference

- MoF Regulation No.183/PMK.03/2007
78
A-35. The Increase of Personal Exemptions
The amount of personal exemption (PTKP) should be adjusted

accordingly with economic and monetary development as well
as the increase of basic necessities prices. Therefore, the
amendments of Income Tax Law No. 36 Year 2008 stipulate the
amount of personal exemptions is increased for individual resident
Taxpayer himself and also for every extended of dependent.
Eligible Taxpayer
Individual resident Taxpayer
Tax facility
The amount of personal exemptions per year is as

follows:
a. 15.840.000 IDR for an individual Taxpayer;
b. additional 1.320.000 IDR for a married Taxpayer;
c. additional 15.840.000 IDR for married Taxpayers’
spouse, provided that they file a joint tax return;
and
d. additional 1.320.000 IDR for each dependent family
member related by blood and by marriage in a
direct lineage, and an adopted child with
maximum of three dependents.
` 79
Procedure

Reference
Article 7 of Income Tax Law
80
B-1. Income Tax Art 21 Borne By Government

for State Officials, Civil Servants,
Members of The Armed Forces, And Retirees
Government realizes that income or pensions received by state

officials, civil servants, members of the armed forces, and retirees
are viewed inadequate. Therefore, the government bears the
taxes imposed on the aforementioned income which are
received regularly and the fund is disbursed from state budget or
regional budget.
Eligible Taxpayer
a. State Official, for:

1) salary and other allowance, which are fixed and
received monthly; or
2) other fixed remuneration
b. Civil servants, member of armed forces, and member
of National Police (POLRI), for salary and other
allowances which are fixed and received monthly;
and
c. Retirees, for pension and other allowances, which are
fixed and received monthly.
` 81
Tax Facility
Article 21 Income tax on fixed and regular income received

monthly which source is derived from state budget and
regional budget that is borne by government
Procedure

Referenc
e
82
B-2. Lower Rate or Final of Withholding Tax on Certain

Income Received by Retirees or Dismissed Workers
In order to ease the burden on retirees or workers whose contracts

are terminated (PHK), to them are imposed a lower income tax
rates facility and final in nature. Lower progressive tax rate which is
also final may offer greater monetary benefit for the workers or the
retirees as well as simplicity and certainty in legal aspects.
Eligible Taxpayer
Employee who receives or derives income in the form of

Severance Payment, Pension Cash Benefit, Annuity, or
Warranty Annuity which is paid at once
Tax facility
Final Article 21 Income Tax rate on income in the form of

Severance Payment is determined as follows:
- 0% for gross income up to 50 millions IDR;
- 5% for gross income more than 50 millions IDR up to 100
millions IDR;
- 15% for gross income above 100 millions IDR up to 500
millions IDR;
- 25% for gross income more than 500 millions IDR.
` 83
Tax Facility (cont)
Final Article 21 Income Tax rate on income in the form of

pension cash benefit, annuity, warranty annuity is
determined as much as
- 0% for gross income up to 50 millions IDR;
- 5% for gross income above 50 millions IDR.
Procedure
This facility is utilized by self-assessment; therefore it is not

Reference

84
B-3. Exemption form Withholding Tax on Certain Income

Received by Daily/Weekly/Temporary Workers
In accordance with regulation concerning personal exemption,

income received or accrued by daily employees, weekly
employees, and other temporary employees is not imposed by
withholding Article 21 Income Tax for certain level of income.
Eligible Taxpayer
Daily employees, weekly employees, and other temporary

employees who receive income up to 150 thousand IDR a
day.
Tax Facility
Income received or derived by daily employee, weekly

employee, and other temporary employee up to 150
thousand IDR a day is not imposed by withholding Article
21 Income Tax
However, this condition is not applicable if the gross
income mentioned exceeds 1.32 million IDR a month or if it
is paid monthly
` 85
Procedure

Reference
86
B-4. Exclusion for International Organization

to Withhold Income Tax Article 21/26
In order to provide legal certainty, representative offices of foreign

countries and international organizations, which are excluded as
subjects of income tax as stipulated in the Minister of Finance
Regulation, are also excluded from the obligation to withhold
Article 21/26 Income Tax article 21/26 for income received or
accrued by officials/employees working in the international
organizations.
Eligible Taxpayer
Representative office of foreign countries and international

organizations as stipulated in the Minister of Finance
Regulation
Tax Facility
The exclusion to withhold Article 21/26 Income Tax on

income received or accrued by officials/employees
working in the international organizations
` 87
Procedure

Reference

- MoF Regulation No. 215/PMK.03/2008 a.la.w
88
C-1. Exemption from Withholding Tax on Certain Import

or Business Activities In Other Sectors
Based on Article 22 of the Income Tax Law, payment of delivery of

goods and activities on import or business activities in other sectors
is subject to withholding Income Tax. However, due to the national
economic interests, some of the aforementioned activities are
exempted from the provision.
Eligible Taxpayer
Taxpayers who conduct certain activities exempted from

the collection of Income Tax of Article 22
Tax Facility
Except for collection of Income Tax Article 22:

a. Imported goods and/or delivery of goods exempted
from Income Tax based on the provisions in the statutory
regulation;
b. Imported goods exempted from collection of Import
Duty and/or Value Added Tax:
- goods belonging to foreign country's representative
and its officials assigned on duty in Indonesia based
on mutual principle
` 89
Tax Facility
- goods for the need of international agency and its

officials assigned on duty in Indonesia and not
holding Indonesian passport
- goods in the form of gift parcel for general need for
religious matter, charity, social, culture or for control
of disaster;
- goods for the need of museum, zoo, natural
conservation and other places of the same kind that
are open to public;
- goods for the purpose of research and development
of science;
- goods for special need of the blinds and other
incapables;
- case or other packages containing corpse or urn for
corpse ash;
- removal goods;
- goods belonging to passengers, transporting facility
crew, border crosser, and shipment up to a certain
limit based on the provisions in the statutory
regulation;
- goods imported by the Central Government or
Regional Government for the purpose of public
interest;
- weapons, ammunition, and military equipment,
including spare parts allocated for States defense
and security;
- goods and material used to produce goods for
defense and security of the country;
90
Tax Facility
- Polio vaccine in the context of implementing Week of

National Immunization program (Pekan Imunisasi
Nasional/PIN);
- public text books; holy books and religious text books;
- ship, river transporting boat, lake transporting boat,
ferry, piloting boat, towing boat, fishing boat, tug boat,
and spare parts and navigation safety equipment or
human safety equipment imported and used by
National Commercial Navigation Company or national
fishing company;
- aircraft and spare parts and flight safety equipment or
human safety equipment, equipment for repair or
maintenance imported and used by National
Commercial Air Transporting Company;
- railway and spare parts and equipment for repair or
maintenance and infrastructure imported and used by
PT Kereta Api Indonesia;
- equipment used to provide data on borders and air
photo of the territory of the State by the Indonesian
National Army; and/or
- goods for Natural Oil and Gas upstream activities
imported by Cooperation Contract Contractors.
` 91
Tax Facility
Procedure
c. Temporary import, if during the import is clearly declared
for re-export;
d. Re-import, covering goods that have been re-exported
and later re-imported in the same quality or the goods
that have been exported for repair, work and test, that
have complied with the terms stipulated by the
Directorate General of Customs and Excise;
e. Payment made by the tax collector, which are
Government Treasurer and Budget User Proxy (Kuasa
Pengguna Anggaran/KPA), treasurer for expenditure for
payment made using mechanism on stock money
(Uang Persediaan/UP); Budget User Authority (Kuasa
Pengguna Anggaran/KPA) or Pay Instruction Letter
Issuing Official as delegated by the KPA, pertaining to:
1. payment which amount is maximum 2,000,000 IDR
(two million Rupiahs) but not constituting undivided
payments;
2. Payment for purchase of oil fuel, electricity, gas,
lubrication, potable water/PDAM and postal items.
f. Payment for purchase of paddy and/or rice by Public
Logistic Company (Perusahaan Badan Usaha
Logistik/BULOG);
g. Gold ingot to be processed to produce jewellery for
export;
h. payment for purchase of goods to the use of fund for
School Operational Assistance (Bantuan Operasional
Sekolah/BOS).
92
This facilitiy can be utilized:

 without using Certificates of Exemption, for:
a. import that is not Liable of Customs and Value Added
Tax; and
b. Temporary importation,
Which the provision is carried out at Directorate General
of Customs and Excise and the procedure is regulated
by Directorate General of Customs and Excise and or
Directorate General of Taxes
 using Certificate of Exemption, for:
a. import that is not liable of income Tax; and
b. import of gold bullion.
Referenc
e
- MoF Regulation No. PMK-154/PMK.03/2010
- DGT Regulation No. PER-57/PJ/2010 a.l.a.w
DGT Regulation No. PER-15/PJ/2011
` 93
C-2. Exemption from Withholding Tax

on Income after Tax of Permanent Establishment
Taxable Income after deducted from income tax of a permanent

establishment in Indonesia is subject to be taxed of 20% (twenty
percent), unless the profit is re-invested in Indonesia. The further
regulation is stipulated by or based on the Minister of Finance
Regulation. The provision is intended to encourage permanent
establishment to do re-investment in Indonesia and to support the
growth of national economy.
Eligible Taxpayer
Permanent Establishments that conduct re-investment in

Indonesia, in the form of:
a. equity participation in new companies in Indonesia as
a founder;
b. equity participation in new companies in Indonesia as
a shareholder;
c. fixed asset acquisition/purchasing; or
d. investment on intangible asset,
The re-investment shall be conducted no later than the
end of the next tax year, after obtaining income.
Tax Facility
Exemption from Article 26 Paragraph (4) of Income Tax Law
94
Procedure
Submit a written notice regarding:

a. The form of re-investment. The writing notice is attached
to Income Tax Return of the fiscal year in which income is
received.
b. The realization of investment and/or the time of
commercial production started. The writing notice is
attached to Income Tax Return of the next fiscal year
after income is received.
Note:
This notice shall be submitted at least for 3 year
consecutively.
Reference

` 95
C-3. Exemption from Withholding Tax on Deposits and

Savings Interest, and Central Bank Certificate Discount
Interest from deposits and savings, and the discount from the
central bank’s certificate are income subjected by 20% of final
tax, for resident Taxpayers and permanent establishments.
However, it’s viewed necessary that the provision to exclude small
savings and deposits from the exemption, in order to protect
people with low-income who are usually the ones who own such
savings/deposits.
Aside from that, the tax exemption is also applied for a pension
fund, which its establishment is approved by the Minister of
Finance, as incentives to steer the pension fund to invest in low-risk
and non-speculative financial instruments.
Eligible Taxpayer
- An individual who is resident Taxpayer, whose income for

one fiscal year including interest and discount does not
exceed his/her personal exemption.
- a pension fund which its establishment is approved by the
Minister of Finance
Tax Facility
Exemption from withholding tax for certain income

derived from interest of deposit/savings, and the
discount of central bank’s certificate.
96
Procedure
 The exemption from withholding tax for certain income

can be utilized without request, for:
- interest of deposit/savings, and the discount of central
bank’s certificate provided that the amount of
deposit/savings, and the of central bank’s certificate
are less than 7,5million IDR
- the interest and discount, which are received or
accrued by banks incorporated in Indonesia or
branch of foreign bank in Indonesia ;
- the interest from savings in banks, which are
appointed by the Government in context of
purchasing simple and very simple houses, lots to build
simple and very simple houses, or simple flats.
 The exemption from withholding tax for interest of
deposit/savings, and the discount of central bank’s
certificate received by a pension fund, can be utilized
using a Certificate of Exemption (SKB). The SKB can be
obtained by submitting a request to the tax office in
which the pension fund is registered.
Reference

- DGT Regulation No. PER-160/PJ/2005 a.l.a.w
DGT Regulation No. PER-39/PJ/2010
` 97
C-4. Exemption from Withholding Tax on Interest and/or

Discount Received from Bond
Interest and discount of bond is subject to final tax, as governed

by the Government Regulation Number 16 year 2009.
Nonetheless, there is exemption of the liability for interest and
discount earned by certain Taxpayer.
Eligible Taxpayer
a. Pension fund, which its establishment is approved by the

Minister of Finance (as governed by Article 4 Paragraph
3 letter h of Income Tax Law) ; and
b. Bank that is established in Indonesia or branch of a
foreign bank in Indonesia.
Tax Facility
- Interest and discount from bond that are received or

earned by Pension Fund and Bank in Indonesia are not
subjected to final tax.
- Interest and discount earned by Pension fund from
bond that is traded or reported at stock exchange in
Indonesia are not subject to income tax.
98
Procedure

Reference
- Article 4 Paragraph (2) Letter a and

Article 17 Paragraph (7) of Income Tax Law
` 99
C-5. Exemption from Withholding Tax by Third Party
Withholding tax is one of tax collection system applied in

Indonesia, which has purpose of immediate tax collection and
increasing public participation in the collection of fund through
tax collection system. By this system, there is a possibility that
income tax withheld will be bigger than income tax accrued at
the end of the tax year (over income tax paid). To deter the
condition, it is viewed necessary that a special provision should be
governed to give exemption from withholding tax in certain
conditions.
Eligible Taxpayer
All Taxpayers, provided that:

a. They are able to provide evidence that there would
be no income tax accrued in the end of tax year,
because of: experiencing fiscal loss; fiscal loss carry
forward that can be accounted; tax that had been
paid and would have been paid are bigger than
income tax accrued in the end of tax period; or
b. Their income is solely levied by final tax.
c. They have already submitted tax return of last fiscal
year (except for new Taxpayer).
Note:
Taxpayers experiencing fiscal loss aforementioned may be
granted with the facilities, provided that:
a. They are newly established and still in the progress of
investment;
b. They have not accomplished the phase of
commercially production; or
c. They experience force major condition.
100
Tax Facility
Exemption from Withholding Tax by Third Party.
Procedure
- Taxpayers must submit a written application to Tax

Office in which they are administered.
- The application shall be submitted for each of
withholding tax exemption of Article 21, Article 22,
Article 22 import, and/or Article 23 of Income Tax
Law, by using prearranged form.
- The application must be attached with predicted
accrued income tax for the year (except for
Taxpayers whose income is solely levied by final tax).
- If the application is approved, Tax Office shall issue
an certificate of exemption (SKB).
Reference

` 101
C-6. Exemption from Withholding Tax for Taxpayers

with Certain Gross Income
Income generated from business conducted by Taxpayers whose

gross income meets certain threshold and criteria, shall be
imposed with final income tax which will not be recalculated in
determining the tax payable at the end of the taxable year.
However, based on current provisions, withholding taxation is
applied on certain type of income. Therefore, to minimize
Taxpayer’s burden from a condition in which tax withheld exceeds
tax payable at the end of the year, certain provisions should be
applied regarding the exemption for certain Taxpayers from
withholding tax.
Eligible Taxpayer
Taxpayer who’s eligible for Final Income Tax based on

Government Regulation No 46 Year 2013 concerning
Income Tax of Taxpayers with Certain Gross Income
Tax Facility
Exemption from Withholding Tax by Third Party.
102
Procedure
- Request of Certificate of Exemption:

a. Taxpayer must submit request to The Head of Tax
Office in which they are administered, with following
prerequisites:
1) For Taxpayer registered in previous taxable year,
they should have already submitted annual tax
report
2) For new Taxpayer, they must submit a statement
which states that the Taxpayer is eligible for final
income tax based on Government Regulation No
46 Year 2013.
3) Taxpayer shall enclose supporting document of the
transtactions
4) The request should be signed by the Taxpayer or
the authorized representative attached by the
power of attorney
b. Request is submitted respectively for Income Tax
Article 21, Income Tax Article 22, Income Tax Article
22 Import, and/or Income Tax Article 23.
c. The Head of Tax Office shall issue Certificate of
Exemption or letter of refusal no later than 5 working
days.
` 103
Procedure (cont’d)
- Request of copy of Certificate of Exemption

legalization:
a. The exemption of withholding tax may be
conducted after the Taxpayer provides the copy of
Certificate of Exemption which has been legalized
by the tax office;
b. Taxpayer submit a request for legalization to The
Head of Tax Office with following prerequisites:
1) Show the certificate of exemption
2) Provide the receipt of payment of Final Income tax
based on Government Regulation No 46 Year of
2013
3) Write the name of tax withholder and the amount
of transaction in the column provided in the
certificate of exemption
4) The copy of Certificate of Exemption should be
signed by the Taxpayer or the authorized
representative attached by the power of attorney.
c. Legalization shall be processed in 1 (one) working
day
Reference
104
Terms & Abbreviations
Terms Definition
Undang-Undang Ketentuan General Provisions and Tax Procedures

Umum Perpajakan (UU KUP) Law
Undang-Undang Pajak Income Tax Law

Penghasilan (UU PPh)
Peraturan Pemerintah (PP) Government Regulation (GR)
Peraturan Menteri Keuangan Minister of Finance Regulation (MoF

(PMK) Regulation)
Keputusan Menteri Minister of Finance Decree (MoF Decree)

Keuangan (KMK)
Peraturan Dirjen Pajak Director General of Taxes Regulation

(Perdirjen) (DGT Regulation)
Keputusan Dirjen Pajak Director General of Taxes Decree (DGT

(Kepdirjen) Decree)
Surat Edaran (SE) Circulation Letter
` 105
Abbreviation Definition
3M to earn, collect, and to secure income

(mendapatkan, menagih, memelihara)
a.l.a.w as lastly amended with
BKPM Investment Coordinating Board (Badan Koordinasi

Penanaman Modal)
BPS National Statistic Agency (Biro Pusat Statistik)
DGT Director General of Taxes
MoF Minister of Finance
PT Limited Liability Company (Perseroan Terbuka)
R&D Research and Development
SEZ Special Economic Zone (Kawasan Ekonomi

Khusus/KEK)
SKB Certificate of Exemption (Surat Keterangan Bebas

Pajak)
TIN Taxpayer Identification Number (Nomor Pokok

Wajib Pajak / NPWP)
106
COMPILING TEAM
“FACILITIES AND INCENTIVES OF INDONESIAN INCOME TAX”
Director
A. FUAD RAHMANY
JOHN L. HUTAGAOL
A. SJARIFUDDIN ALSAH
Advisor
RADEN SETYADI ARIS HANDONO
YUNIRWANSYAH
Coordinator:
FERY CORLY
KUNTO LAKSITO
IMAM ISWAHYUDI
Technical Team
ADRIAN MUNANDAR
ARIEF SANTOSO
BAYU WIDI CAHYANTO
DENNY LUQMAN ALHAMZAH
ENY SETYOWATI
HENDRA MEDIANTO
MALATIKA SEPTIASARI
MAYDA NURBAETI
OKFEL DJERMOR
OKI OEPOYO SANTOSO
PETRUS HARJONO
RENI ILMIYAH
RIENAL YAFFID
RIO FERNANDO
RIVA RIFIANTI
ROBERT
RONDANG FRISCA LUNARIS
RUDI HENDRIAWAN
SAMUDERA PUTRA
SIMON P. H. HUTABARAT
SONY MURAYA
SYARIF IBRAHIM BUSONO ADI
WAHYUDIANTO
YUDIT SUPRIADI
` 107

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Facilities and Incentives of Indonesian Income Tax

FOREWORD BY THE DIRECTOR GENERAL OF TAXES

Assalamu’alaikum Wr. Wb.

The book in your hands is a revision of the previous

PREFACE BY THE DIRECTOR OF TAX REGULATIONS II

Praise the Almighty God and by His grace Directorate

preparation of this book, especially to the Director General of

P.M. John L. Hutagaol

FOREWORD BY THE DIRECTOR GENERAL OF TAXES

There are various ways taken by a country to attract investment

Apart from various tax facilities available and her excellent

Jakarta, February 2012

PREFACE BY THE DIRECTOR OF TAX REGULATIONS II

Tax Incentives and facilities are often considered as one of many

In principle, incentives and facilities are dynamic in nature,

Unfortunately, it becomes our concern that there are still many

This book is designed with simple layout as our intention to make

Finally it is my honour to express my appreciation to everyone in

Jakarta, February 2012

Preface By The Director General Of Taxes – 2nd Edition i

Preface By The Director Of Tax Regulations II – 2nd

Preface By The Director General Of Taxes v

Preface By The Director Of Tax Regulations II vii

A-1 Tax Holiday 1

Tax Allowance for Investment in Certain Business Sectors

A-3 Special Economic Zone (SEZ) 9

Simplification of Calculation of Income Tax on Income

A-6 Income Tax Reduction for Public Listed Company 15

50% Income Tax Reduction for Resident

A-8 Reduction of Income Tax Instalment of Article 25 19

Reduction of Income Tax Article 25 and/ or

Exemption from Income Tax Object on Aid , Gifts, And

Exemption from Taxable Object on Aid/Compensation

Exemption from Taxable Object on Zakat and other

Exemption from Income Tax Object

A-14 Exemption from Taxable Object on Scholarship 32

Exemption from Income Tax Object on Pension Fund

Exemption from Income Tax Object on Gain Derived

Deduction of Formation or Accumulation

A-18 Deduction of Uncollectible Debt as Tax Deductible 41

Zakat and other Compulsory Religious Donationes as Tax

A-20 Deduction of Donation or Social Cost 46

A-21 Deduction of Benefit-In-Kinds for Employees 48

Deduction of Expenditures on Cellular Phone and

A-23 Facilities for Business Merger or Spin-Off 52

A-24 Facilities For Fixed Asset Revaluation 54

The Suspension of Depreciation

Facilities for Income from Transfer

Facilities for Interest Income from Non-Performing Loans

Facilities for Gains from Debt Discharge

Exclusion from Income Tax Subject

A-30 Facilities for Foreign Grants and Loans 68

Facilities for Donation on

Incentives for Donation for Natural Disaster Relief in

Incentives for Donation for Earthquake Relief

A-34 Exclusion from Lodging Tax Return 77

A-35 The Increase of Personal Exemptions 79

B. ART 21 INCOME TAX

Income Tax Art 21 Borne By Government

Lower Rate or Final of Withholding Tax on Certain

Exemption form Withholding Tax on Certain Income

Exclusion for International Organization

C. ART 22/23/26 INCOME TAX

Exemption from Withholding Tax on Certain Import or