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Guidelines and Procedures for the Submission of Applications for Corporate Income Tax Exemption or Reduction (Tax Holiday) Facility

Press Release

 

Guidelines and Procedures for the Submission of Applications for

Corporate Income Tax Exemption or Reduction (Tax Holiday) Facility

 

 

 

Jakarta, December 8th 2011 – In order to enhance and accelerate the development of pioneer industries, pursuant to Article 18 of Law Number 25 Year 2007 concerning Investment, the Government may grant facilities in the form of income tax exemption or reduction in certain amount and period (tax holiday) to new investments. 

 

In line with that matter, Government Regulation Number 94 Year 2010 concerning the Calculation of Taxable Income in Current Year was issued in 2010, which stipulates that “Taxpayers making new investments which constitute pioneer industries may be granted the facility of Corporate Income Tax exemption or reduction”. Furthermore, in August 2011, the Minister of Finance issued Regulation of the Minister of Finance Number 130/PMK.011/2011 concerning the Granting of the Facility of Corporate Income Tax Exemption or Reduction.

 

Pioneer industries eligible for obtaining tax holiday include: basic metal industry, oil refinery industry and/or basic organic chemicals originating from oil and natural gas, machinery industry, renewable resources industry, and/or communication equipment industry. The aforementioned industries must have investments in the minimum amount of Rp 1 trillion. However, by taking the interest of the competitiveness of national industries and strategic value of certain business activities into considerations, the Minister of Finance may grant tax holiday facility to industries which are not classified as pioneer industries as mentioned above.

 

Article 4 of Regulation of the Minister of Finance Number 130/PMK.011/2011 provides that in order to obtain corporate income tax exemption or reduction facility, taxpayers shall submit application to the Minister of Industry or the Chairman of the Investment Coordinating Board (BKPM). Therefore, investors have options for submitting their applications for tax holiday facility, namely to the BKPM or to the Ministry of Industry. As a follow-up to that matter, on 30 November 2011 the Chairman of the BKPM signed Regulation of the Chairman of the Investment Coordinating Board Number 12 Year 2011 concerning Guidelines on and Procedures for the Submission of Applications for Corporate Income Tax Exemption or Reduction. Similarly, on the same date, the Minister of Industry signed Regulation of the Minister of Industry Number 93/M-IND/PER/11/2011 concerning the same matter.

 

The aforementioned Regulation of the Chairman of the BKPM Number 12 Year 2011 set forth a period of 14 (fourteen) work days as from the submission of applications by Applicants/Taxpayers up to the issuance of recommendations of the Chairman of the BKPM to the Minister of Finance concerning the granting of tax holiday facility. The stages are as follows:

 

1.

Application for the facility is received by PTSP BKPM and addressed to the Chairman of the BKPM.

:

1 work day

2.

If within 2 (two) days the Chairman of the BKPM is unable to attend, the Deputy Chairman for Investment Service of the BKPM shall take the initiative to initiate the review and verification.

:

2 work days

3.

The designated team shall carry out the initial review and verification of data, and shall ask the applicant to conduct a presentation.

:

1 work day

4.

The applicant shall conduct a presentation and the Team shall conduct review on the presentation.

:

5 work days

5.

The Team shall prepare description of its research and submit the results of its review and verification to the Deputy Chairman for Investment Service.

:

3 work days

6.

The Deputy Chairman for Investment Service shall provide the results of its review and verification to the Chairman of the BKPM. If it is approved, the Deputy Chairman for Investment Service shall prepare a recommendation to the Chairman of the BKPM to the Minister of Finance. If it is refused, the Deputy Chairman for Investment Service shall make a written refusal to the applicant.

:

2 work days

 

The Review and Verification Team as intended in point 3 comprises officials from the BKPM, the Ministry of Industry and relevant agencies.

 

Such period of 14 (fourteen) work days also applies for applications for tax holiday facility submitted through the Ministry of Industry.

 

It is expected that following the issuance of Regulation of the Chairman of the BKPM Number 12 Year 2011 and Regulation of the Minister of Industry Number 93/M-IND/PER/11/2011 investment companies engaging in business activities which are classified as “pioneer industries” and having met the requirements can immediately submit applications in order to obtain the aforementioned tax holiday facility through the BKPM or the Ministry of Industry.

 

The Chairman of the BKPM, Mr. Gita Wirjawan said that “Upon the granting of income tax exemption (tax holiday) facility for a period of 5 – 10 years, it is certainly expected that companies engaging in pioneer industries, such as oil refinery industry, steel industry, and renewable resources industry will grow and develop in Indonesia, as these business industries are is highly required in strengthening and supporting the in-depth study on Indonesia’s industrial and economic structures”.                              

 

                     

Jakarta, December 8th, 2011

 

 

Guidelines and Procedures Tax Holiday 

 

 

Informasi lebih lanjut hubungi:

Drs. Johny F. Djafar, MM

Kepala Biro Peraturan Perundang-undangan, Humas dan Tata Usaha Pimpinan

Badan Koordinasi Penanaman Modal (BKPM)

Jl. Jend. Gatot Subroto 44, Jakarta 12190, Indonesia

Telepon: +62 21 526 9874 (direct) / +62 21 5250008 Ext. 1333

Fax: +62 21 526 9874

Hp: 0811 842 336

Email: johny@bkpm.go.id

 


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