The Government Still Intends to Complete Omnibus Law on Taxation

Wednesday, 24 June 2020

The Government Still Intends to Complete Omnibus Law on Taxation

JAKARTA. The government hopes that the Draft Omnibus Law on Taxation can be discussed and set to become an act next year.

The Omnibus Bill on Taxation is a legislation program initiated by the government as part of a taxation reform program. However, the regulation draft which is expected to make Indonesia ogled by investors is not yet clear.

Quoting, the Omnibus Law Bill is one of the government's ways to encourage tax revenue in 2021. With this rule, the government wants regulations related to taxation that have made it difficult for taxpayers to be revised.

Read: Indonesia Cuts Tariff on Corporate Income Tax and Officially Applies Digital Tax

The plan to finalize the Omnibus Bill on Taxation becomes an interesting thing, because some of the points included in this Act are actually included in Law Number 2 of 2020 concerning the Stipulation of Government Regulations in Lieu of Law (Perppu) number 1 of 2020.

For instance, cutting Corporate Income Tax (PPh) rate from 25% to 20% gradually, as well as taxation mechanism for e-commerce (PMSE).

Double Digit Growth

Meanwhile, in 2021 the government is targeting an indicative ceiling for tax revenues to be in the range of IDR 1,232.3 trillion - IDR 1,331.8 trillion or growing 2.8% - 11.1% of the 2020 state budget target.

This statement was delivered by the government in a joint meeting of the Budget Committee (Badan Anggaran) of the House of Representatives (DPR), which discussed The Macroeconomic Framework and the Principles of Fiscal Policy (KEM-PPKF) in 2021.

The target is set based on the macro assumption baseline in 2021. Previously, quoting the Ministry of Finance, the government and Budget Committee had addressed basic macroeconomic assumptions for 2021, such as the target of economic growth to be set at 4.5% -5.5%  and inflation of 2% -4%, the rupiah exchange rate of Rp13,700 - Rp14,900, and the interest rate of 10-year SBN is in the range of 6.29% - 8.29%.

In addition to encourage the completion of the discussion of the Omnibus Law Bill, the government will also take a number of steps to achieve this target. First, to boost economic recovery and transformation, which this year has been under pressure due to the 2019 Corona Virus Disease (Covid-19) pandemic.

Then, the government will also be more selective in providing tax incentives, prioritizing sectors that can drive economic recovery
Another step is to optimize taxes from e-commerce. 

With the Regulation of the Minister of Finance (PMK) number 48 / PMK.03 / 2020, starting on 1July, 2020, electronic transactions of both goods and services will be subject to Value Added Tax (VAT). This policy targets digital economic activities which have been difficult to tax.



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