Reduction of ITA 25 Installment is Added to 50%

The government increased the amount of Income Tax (PPh) Article (ITA) 25 installment reduction from 30% to 50%, from the tax period of July 2020 to December 2020.  

This is stated in the Minister of Finance Regulation (PMK) number 110 / PMK.03 / 2020 which is an amendment to PMK number 86 / PMK.03 / 2020. The regulation stipulates the provision of tax facilities for taxpayers affected by Corona Virus Disease 2019 (Covid-19).

In general, there are four tax facilities offered by the government, namely Income Tax (PPh) borne by the government (DTP), exemption of ITA 22 on Import, reduction of ITA 25 installment, ease of acceleration of Value Added Tax (PPN) restitution.  

An additional income tax installment amount to 50% will be given to taxpayers who meet the criteria. The criteria for taxpayers who can take advantage of this facility are the same as the previous provision.

First, companies with the code of Business Classification (KLU) which are included in the 1,013 KLUs receiving the facilities. The list of KLU recipients of the facility can be seen in the regulation appendix.

The next criteria, companies that have been designated as recipients of Import Facility for Export Purpose (KITE) or companies that are located in Bonded Zone.

Meanwhile, the mechanism for using the facilities has also not changed. The company only needs to submit a notification to the Head of the Tax Office (KPP) or through the DJP online (page www.pajak.go.id)

Government-Borne Income Tax for Construction Services

In addition to changing the amount of ITA 25 installments, the latest regulation also expands the provision of incentives in the form of Government-borne  Income Tax (PPh DTP). Previously, this facility was only provided for ITA 21 and the final Income Tax for MSMEs, now it is added to the final Income Tax on income from the construction service business.

Usually, the final income tax on construction services can be paid in two ways.  First, it is deducted directly by the service user or it can be paid by the service provider itself.

With this provision, from now on service users do not need to deduct the final income tax.  As for the income tax that is not deducted, it does not become taxable income.

As a consequence of not deducting the final PPh, construction service users are obliged to make a final income tax borne by the government realization report to the Directorate General of Taxes, via the www.pajak.go.id page. The report is submitted no later than the 20th of the following month.

In addition, the collector must also make a tax payment slip (Surat Setoran Pajak/SSP) or billing code printed with the statement "Government- Borne Final Income Tax for Construction Services" (PPh Final jasa Konstruksi Ditanggung Pemerintah).