Companies in the form of Limited Companies (PT), whose shares are traded on the stock exchange or go public will be subject to Income Tax (PPh) rates lower than 3% of the general. As for the Corporate Income Tax rates, as stated in Law number 1 of 2020, concerning the stipulation of Government Regulations in lieu of Law (Perppu) Number 1 of 2020, are of 23% in 2020-2021 and 20% for 2022 etc.
This facility is provided as a form of government support for strengthening the capital market sector. With the incentive, the government hopes that more and more companies will be interested in trading on the stock exchange.
Nevertheless, not all go public companies are entitled to this corporate income tax rate facility. In Government Regulation (PP) number 30 of 2020 which was set on 18 June and came into force on this 19 June, there are several criterias for companies listed on the stock exchange that are entitled to lower income tax rate of 3%.
The referred criterias include, companies must be a Limited Company (PT) with a minimum number of shares traded on the stock exchange as much as 40% and owned by a minimum of 300 parties. Each party has a maximum share of 5% in the minimum period of 183 calendar days.
Meanwhile, despite listing their shares on the stock exchange, the following companies are not entitled to a tax reduction. Among them are companies that do not meet all the requirements above and companies conducting buy back.
The provision regarding this buyback get an exception for companies that do buy back in order to mitigate the impact of the Corona Virus Disease (Covid-19) pandemic in the economic sector.
For example, when the share price is fluctuating and the company is forced to do buyback so that the stock price is stable, as contained in government Regulation (PP) Number 29 year 2020.
The other party, who is not entitled to a reduction in Income Tax is a go public company that is wholly owned by affiliated party or has special relationship, such as the controlling party.
To ensure that a company has the right to the reduction of Corporate Income Tax, the Directorate General of Taxes (DGT) requests the Financial Services Authority (OJK) to submit company data that is included in the criteria for receiving facilities.