Tax Depreciation Regulation Updated, DGT: For Legal Certainty

JAKARTA. The provisions regarding depreciation of tangible assets (depreciation) and intangible assets (amortization) related to fiscal matters are updated through Minister of Finance Regulation (PMK) Number 72 Year 2023.

The regulation is a derivative of Law Number 7 of 2021 concerning Harmonization of Taxation (HPP Law) and Government Regulation (PP) Number 55 of 2022.

The Directorate General of Taxes (DGT) said that this provision was issued to provide legal certainty for taxpayers in carrying out their obligations.

PMK Number 72/2023 also revokes the previous provisions related to depreciation and amortization contained in PMK-96/PMK.03/2009, PMK-248/PMK.03/2008, and PMK-249/PMK03/2008 as amended by PMK-126/PMK.011/2012.

Read: Flexibility of Depreciation and Amortization Rules for Assets in the Latest Income Tax Regulation

Depreciation

In general, the new provisions contain several things. Such as depreciation and amortization mechanisms, including the methods that can be used and the useful life that can be used as a reference for calculating them.

Regarding the provisions of the useful life of tangible assets, it remains the same as the previous arrangement, namely group 1 for 4 years, group 2 for 8 years, group 3 for 16 years, and group 4 for 20 years. As for buildings, namely permanent buildings for 20 years and non-permanent for 10 years.

In its written statement, the DGT said, related to the useful life for permanent building assets there is an adjustment. Namely, taxpayers can now choose to depreciate permanent buildings for 20 years or according to the actual useful life based on taxpayers' bookkeeping. This provision is actually in line with the rules above it, namely Government Regulation Number 55 of 2022.

Amortization

Meanwhile, amortization is carried out on intangible assets that have a useful life of more than one year owned or used for 3M.

As with depreciation, the provisions for the useful life of depreciation are also the same, which is divided into several groups, such as; group 1 for 4 years, group 2 for 8 years, group 3 for 16 years, and group 4 for 20 years.

Likewise, the amortization provisions for assets with a useful life of more than 20 years, there are adjustments as well as depreciation provisions, namely taxpayers can choose to use a useful life of 20 years or the actual one based on bookkeeping. As for the conditions, taxpayers must submit a notification no later than April 30, 2024.

Other provisions regulated in PMK No. 72 of 2023 include depreciation on insurance and depreciation procedures in certain business fields, including forestry, plantations, and animal husbandry. (ASP/KEN)