The government has extended the period of providing incentives for Income Tax Article (ITA) 22 on Import, ITA 25, and final income tax borne by the government for construction services, until 31 December 2022.
The use of the three incentives was supposed to end on 30 June 2022. However, the Government considers that the impact of the Covid-19 pandemic on the business world is still not over, so it still needs support in the form of tax incentives.
The extension period was carried out by issuing the Minister of Finance Regulation (PMK) Number 114/PMK.03/2022 which was issued and came into force on 11 July 2022. The regulation is an amendment to PMK Number 3/PMK.03/2022.
Nevertheless, the issuance of the latest regulation does not change the other substance related to the types of incentives provided and the terms and criteria for the recipients.
As regulated in the previous regulation, the incentives provided are in the form of exemption of ITA 22 on Import and a reduction in ITA 25 installments to 50% of the ITA 25 payable.
Meanwhile, the facility can only be used by taxpayers who are included in the Business Classifications (KLU) which are designated as recipients of incentives.
The Exemption of ITA 22 on Import
In the previous regulation, the government determined 72 KLUs that are entitled to take advantage of the ITA 22 on import facility. To obtain this facility, taxpayers must also have a tax exemption letter of ITA 22 obtained.
Tax exemption letter can be obtained by submitting an application to the Directorate General of Taxes (DGT) through certain designated channels, including the www.pajak.go.id page.
The application for a tax exemption letter must also be made by taxpayers who have used similar facilities based on the previous regulations.
After using the facility, the taxpayer must submit a report on the realization of the exemption of ITA 22 on import, maximum on the 20th of the following month, after the tax period ends.
Reduction of ITA 25 Installments
Meanwhile, the incentive to reduce ITA 25 installments up to 50% is only given to companies that are included in the 156 Business Classifications (KLU) receiving the facilities.
If they have used the facility, the company must submit a report to the tax office where the company is registered, through various channels including the www.pajak.go.id page.
The report must be submitted no later than the 20th of the following month after the tax period.
However, for the tax period of July 2022, the government provides a grace period for submitting reports on the realization of the reduction in ITA 25 installments, a maximum of 30 days after the regulation takes effect.
Final Income Tax for Construction Services
The submission of a report on the realization of the government-borne final income tax facility for construction services that could only be done a maximum of 30 September 2022, now also extended to 31 January 2023.
In addition to being extended, the provisions regarding the realization of government-borne final income tax realization reporting on construction services were also amended. In the previous regulation, the tax collector must submit reports to the Directorate General of Taxes every tax period.
Meanwhile, in the latest provisions, the tax collectors are only required to submit reports to the person in charge, that is the Director General of Water Resources, Ministry of Public Works, and Public Housing.
Only after that, the person in charge will report the realization of the government-borne final income tax for construction services to the DGT, one of which is through the www.pajak.go.id page every tax period. In addition to reporting, the person in charge can also make corrections.