Government Pledged to Cover ITA 21 for Manufacturing Industry

Thursday, 12 March 2020

Government Pledged to Cover ITA 21 for Manufacturing Industry

JAKARTA. The government has already held a coordination meeting related to the plan to provide economic stimulus, as the mitigation of the widespread outbreak of the Corona virus or Covid-19, on Wednesday (11/3). One of the decisions made is the government will bear Income Tax Article (ITA/Pajak Penghasilan/PPh) 21 and 25 for the manufacturing industries in six months. 

The policy will be applied, if the regulation has been officially issued. As quoted from, this policy was made to reduce the burden of manufacturing industries which is facing pressures due to the impact of corona virus, so that the industry will survive. 

In addition to covering ITA 21 and 25, the government will also suspend ITA 22 on import and provide relaxation for taxpayers who apply for preliminary restitution. 

Quoting, the regulation will only be issued after the government holds a Limited Meeting (rapat terbatas/ratas) led by President Joko Widodo. However, the government hopes that this policy can be issued in early April.

The Impact of APBN 2020

These various relaxation will have an impact on the condition of the State Budget (Anggaran Pendapatan dan Belanja Negara /APBN), especially the realization of tax revenues. Based on preliminary 2019 State Budget realization data, ITA 21 contributed 11.16% to the total 2019 tax revenue of IDR 1,332.06 trillion.

While ITA 22 of import contributed 4.03% with a value of IDR 53.66 trillion, and ITA 25 contributed 19.27%.

Meanwhile, if viewed based on the type of industry, the biggest contribution of tax revenue comes from the manufacturing industry, which is 29.4% or valued at IDR 365.39 trillion. So, if this policy applied to the manufacturing industry, tax revenue from this industry will again experience pressure, as in 2019 which grew negative by -1.8% from the previous year. (ASP/Ken)


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