Tax Flash 2020

1. TAX FLASH
“Not everyone can get
tested, since there are not
enough testing kits.”
~ Li Lanjuan, China’s Na-
tional Health Commis-
sion’s coronavirus commit-
tee ~ NY Post
In This Issue
• COVID-19 threats to
Global Economy
• Jakarta Flood-
affected Retailers
seek compensation
• Omnibus law & tax
planning
• Updates on VAT
Credit—SE-02/
PJ/2020
• Our Involvement
Source: Thomas Peter | REUTERS
“No body knows when things will
begin to return to normal.”
A decade and a half ago, when the severe acute respiratory syndrome outbreak
known as SARS ra led the world. China accounted for a rela vely small part of
the global economy. Today, it is responsible for almost a fi"h of global gross
domes c product when adjusted for incomes—more than the U.S.’s 15% by the
same measure, adding a morbid twist to the economic adage that when Ameri-
ca sneezes, the world catches a cold.
Source: The Wall Street Journal — Coronavirus Closes China To The World, Straining Glob-
al Economy
KIB E-newsletter Feb 2020
In picture: A mother and her son arrive from Hubei province,
where the coronavirus was first iden fied, at a checkpoint on
the Jiujiang Yangtze River Bridge.

2. COVID-19 Threats to the Global Economy
From carmakers to airlines and hotels, the impact of the outbreak is punishing
firms worldwide
“ The world is a book and those who do not travel read only one page.”
-St. Augustine
Supply Chain
About 17% of Chi-
nese exports are
considered as inter-
mediate goods to
the world.
Tourism
Accounts for 10.4% of
Global Gross Domes-
tic Product (GDP) and
10 % of Global em-
ployment.
International tourist arrivals (overnight visi-
tors) worldwide grew 4% in 2019 to reach
1.5 billion
2017 (+7%) ; 2018 (+6%); 2019 (+4%)
Increase in all regions : The Middle East
(+8%) , Asia Pacific (+5%). International
arrivals in Europe and Africa (+4%); USA
(+2%)
Based on current trends, economics pro-
spects and the UNWTO Confidence In-
dex, UNWTO forecast a 3—4% growth in
international tourists arrivals worldwide in
2020

3. Jakarta Floor-Affected Seek Compensa on
“I had seen people who had lost everything and everyone they loved to war, famine, and natural disasters.”
-Chelsea Clinton
Background:
Indonesian Retail Merchants Associa on (APRINDO) es mated that retailers in Greater Jakarta have incurred
losses amoun ng to more than one trillion rupiah (US$71.6 million). The total amount does not include losses
faced by ten shopping malls and several tradi onal markets in the affected areas.
The Na onal Development Planning Agency (Bappenas) es mates that losses due to the Greater Jakarta area
floods have reached around Rp 5.2 trillion
Consequently, several business owners have called on the Jakarta administra on to compensate them for the
losses they have suffered from the disaster.
Business owners expected the administra on to provide compensa on in the form of tax reduc ons, instead of
direct financial coverage of their losses.
Sources: IDN Financial | TTG Asia | The Jakarta Post
Sellers move a mannequin and clothing rack out of the Cipinang Indah shopping center in East Jakarta during
massive flooding that hit across the city on Jan. 1. Source: Antara/Galih Pradipta | The Jakarta Post.
Minister of Finance Regula on
No. 81/PMK.03/2017
Land & building tax reduc ons may be granted to taxpayers experiencing liquidity issues due to commercial loss-
es of up to 75% of unbound L&B tax; and if the taxpayer experiences natural disasters, fire, disease outbreaks,
riots or anarchist acts, the L&B tax reduc on of up to 100 % may be given
The DGT may also deduct a land & building tax administra ve fine of 25% from the taxable principal stated in the
Tax Assessment Le er of the land & building tax; or a 2% monthly administra ve fine set in the L&B Tax Collec-
on Le er; if the taxpayer forgets, has liquidity difficul es, is exposed to natural disasters or other causes which
are not the taxpayer's fault.

4. Director General of Tax Decision (KEP 537/PJ./2000)
Calcula ng tax installment (tax income art. 25) in certain condi ons
“Of all the hardships of a person had to face, none was more punishing than the simple act of waiting”
-Khaled Hosseini
In respond to the flood repercussion that has been affected businesses’ operational, substan-
tial cost surge, and diminishing profit, while anticipating the on-going COVID-19 impact
throughout the year 2020 to businesses, it is only wise for businesses to start projecting their
losses and apply for tax installment (pph 25) reduction.
About PPh 25.
Monthly tax instalments (article 25 income tax) constitute the first part of tax payments to be
made by residents taxpayers and Indonesian Pes as a prepayment of their current year Cor-
porate Income Tax liability. A monthly tax instalment is generally calculated using the most
recent Corporate Income Tax Return.
KEP-537/PJ/2000 art 1 point 6 says: “Occurring changes that happen to taxpayers’ busi-
nesses and operational” and art. 7 point 1. suggesting that taxpayers who have undergone
situational changes on their businesses and if the amount of income tax is less than 75% of
the income tax payable in three months or over in a tax year are permitted to submit an appli-
cation for reducing the amount of income tax pph. 25
What’s next ?
Submit your Annual Corporate Income Tax Return 2019 as soon as possible
Do your own business projection (potential losses)
Write a letter of application for pph. 25 reduction to the DGT office (KPP)
where your business is registered

5. Omnibus Law & Tax Planning
“Real lobbying reform must end the practice of corporate lobbyist writing our laws”
- Marty Meehan
Background:
On Wed, Feb 5, 2020, The government submi ed the controversial omnibus bill on job crea on to the House of
Representa ves. The bill is expected to start delibera ons on law reforms that are intended to accelerate busi-
ness, a ract investors, boost economic growth and create jobs.
One of the key points worth considering is the reduction in corporate income
tax, which requires a proper Tax Planning.
More details regarding the draft of Omnibus Law can be referred on the previous issue of KIB Tax
Flash– December 2019.
Tax planning helps you to plan ahead in alloca ng your company’s taxable income as prescribed
by the Omnibus Law

6. Tax Planning
“ “The avoidance of taxes is the only intellectual pursuit that carries any reward.”
-John Maynard Keynes
Defini on: Tax Planning is minimizing your tax liability by making the best use of all available deduc ons,
allowances, rebates, thresholds, etc as permi ed by income tax laws, rules s pulated by the government
of a country.
Benefits:
• The main core of tax planning is to reduce the amount of tax you pay by taking full benefit of all availa-
ble deduc ons.
• It helps in saving some extra bucks out of your monthly earnings which you can use to invest in other
lucra ve investment opportuni es and generate a handsome amount of returns over that surplus
money.
• Eliminate unnecessary stress and uncertainty by knowing just what your tax liability will be and make
informed decisions, ul mately obtaining peace of mind.
• The earlier in your professional/business journey you start tax planning, the more strategies you can
explore to maximize the effects of tax planning.
• They help in learning about the ps and tricks of tax laws, different tax minimiza on techniques which
ul mately helps in tax compliance and effec ve adherence to tax laws as s pulated by the govern-
ment.
• Tax planning when clearly dis nguished with tax avoidance/tax evasion leads to lesser interac on with
tax authori es and unnecessary li ga ons as well.
• Help you to plan submi:ng your corporate annual tax return to be in line with your overall compa-
ny’s performance —— saving tax payment through tax installment (pph. Art. 25)
Start to implement a strategy
to minimize your tax burden

7. Omnibus Law
“A law is valuable, not because it is a law, but because there Is right in it .”
-Henry Ward Beecher
Main Provisions of Omnibus Tax Bill,” by Suryo Utomo, DGT , 26 February 2020
National Economic
Development
Strengthening The
Economy
Investment
Funding
1.Gradual re-
duction in Cor-
porate Income
Tax rates by
22% (2021 &
2022) and 20%
(2023 etc.)
2.Reduction of
Income tax rates
for Go Public
Companies
(general
rates—3%)
3.Elimination of
Income Tax on
Domestic Divi-
dends
4.Adjustment of
Income Tax Arti-
cle 26 Rate on
Interest
Territorial
Tax System
for Offshore
Income
Subject De-
termination
for Personal
Income Tax
Encourage
Tax
Compliance
Promote
Equal Treat-
ment for
Business
Tax Incen-
tive Provi-
sions in Tax-
ation Law
5. Offshore in-
come (including
dividends) is not
subject to in-
come tax as
long as it is
invested in In-
donesia
6. Resident ex-
patriates are
only taxed on
income derived
from Indonesia
7. Indonesian
citizens living for
less than 183
days in Indone-
sia may become
Non-resident
Taxpayers.
8. Expatriates
living for more
than 183 days
in Indonesia
become Resi-
dent Taxpayers
11.Taxation on
Electronic Trans-
actions:
• digital plat-
forms are as-
signed to col-
lect VAT.
• Non-resident
companies
deriving profits
from electronic
transactions in
Indonesia may
be taxed.
12. Rationalization
of Local Taxes:
• Determination
of regional tax
rates that ap-
ply nationally
• Evaluation of
Regional Reg-
ulations on
Local Tax
towards na-
tional fiscal
policy.
13. Relaxed deter-
mination of types
of excisable goods
9. Relaxation of
Input Tax Cred-
iting Rights for
Taxable Entre-
preneurs
10. Re-setting
of:
• Tax, Cus-
toms, and
Excise Ad-
ministrative
Sanctions
• Interest
compensa-
tion
14. Tax Incen-
tives:
• Tax holiday
• Super de-
duction
• Income Tax
Facilities for
Special Eco-
nomic Zones
• Income tax
for govern-
ment securi-
ties
• Regional Tax
Relief/ ex-
emption by
the Heads of
Local Gov-
ernments
Affected Laws: Income Tax, VAT, GPTP, Custom & Excise, PDRD, Local Government

8. SE-02/PJ/2020 Credi ng Value-Added Tax Input on Different Tax Period
“ Taxes are paid in the sweat of every man who labors.”
- Franklin D. Roosevelt
Purposes
a. to give uniformity in understanding VAT credit
mechanism (input VAT) as regulated on UU no. 8/
1983 ar cle 9 regarding Value Added Tax on Goods
and services and VAT on luxurious goods, which was
last updated in 2009 by UU no. 42/ (UU PPN); and
b. to give a sense of fairness to VAT registered Entre-
preneurs in exercising rights of VAT input credit on
taxable goods and service.
Objec ve
to reaffirm discrepancies of VAT input credit against
its periodical tax (Masa Pajak) as regulated on UU
PPN ar cle 9 (9)
Subjects Defini on
VAT—registered businesses
Must charge VAT on their goods or services and may reclaim any VAT
they have paid on business-related goods or services.
VAT Output VAT charged on sales
VAT Input VAT charged on purchases
VAT tax return Monthly (Masa)
No. Affirmations
1 VAT input recorded in a certain Masa must be credited with VAT Output in the same Masa
2
VAT input which has not been credited with VAT output on the same Masa, then can be credited in
the next Masa within 3 (three) months a"er the presiding Masa ends.
Pending credit on VAT input is possible due to late Tax invoice receipt.
3
In the event when the 3 (three) months period passes (no. 2) then VAT input credit can then be
proceeded through the SPT Masa PPN amendments.
4
The VAT Input credit as s pulated on no. 1 and 2 will also comply to VAT input as stated on certain
documents which equivalent with Tax Invoice - as regulated on UU PPN art. 13 (6)
5
The VAT Input as s pulated on no. 1, 2, and 4 is only applicable in :
A. the event of VAT Input has not been posted as expenses or it is not being capitalized into the
Taxable Goods & Services
B. There has not been any audit on the VAT-registered Entrepreneur

9. InTalk #1 on reforming the insurance industry - Jiwasraya case
Our Involvement
The Deputy Permanent Commi ee (Komtap) for the Asia-Pacific Chambers of Commerce and Indus-
try (Kadin), Bambang B. Suwarso said to Akurat.co Thursday night (02/07/2020): “It is necessary to
proceed reforma on in the Indonesian insurance industry”. Nevertheless, Bambang emphasized
that the stem problem in the insurance industry did not just emerged recently, instead it has been
lingered for a while. In response to the troubled state-owned insurer PT Asuransi Jiwasraya, and the
newest PT Asabri (Persero), Bambang reiterates President Widodo’s recommenda on to OJK that
significant reforma on and changes are crucial to be implemented in the non-banking financial in-
s tu ons i.e. insurance, and pension funds. We also need to transform fit-and-proper test within
the ins tu ons, embrace changes in human resources, and technology and most importantly that
the law and regula on must be upheld while transparency should not be compromised at all me.

10. At a meeting forum with Indonesian Steel Industry Association and PT. PLN (Persero)
Our Involvement

11. As a member of Indonesian delegation team at the CYBERTECH GLOBAL
TLV 2020 | Tel Aviv, Israel | Jan 28-30, 2020.
Contact Us
Phone:
(62-21) 2929 5870-73
Bambang B. Suwarso
bambang.suwarso@kib-
consulting.com
Rachmat Kurniawan
rachmat@kib-
consulting.com
Yosefine Amelia
yosefine@kib-
consulting.com
Raden Roro Ratna
Indah Wulandari
wulan@kib-
consulting.com
Addresses:
North Jakarta —144550 Indonesia
The Koppel Building Suite IB.
Jalan Pluit Selatan Raya no. 10
Gold Coast Tower Eiffel Unit N
Pantai Indah Kapuk
www.kib-consulting.com
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Promoting Singapore—Indonesia Investment Cooperation (KADIN)
Our Involvement