The government has renewed the regulation regarding the provision of land and building tax (L&B tax) reduction facilities of a maximum of 75% and 100%, by issuing Minister of Finance Regulation (PMK) Number 129 of 2023 which will take effect on 30 December 2023.
The regulation also revokes the previous regulation governing the same matter, namely PMK Number 82/PMK.03/2017.
Several things are updated, including the criteria for granting facilities, the mechanism for granting facilities, the filing requirements, and the procedures for submitting applications for L&B tax reduction.
For example, regarding the mechanism for granting facilities, previously it could only be done if the taxpayer submitted an application. In the new provision, it can also be given by position, which is only given for a maximum L&B tax reduction of 100%.
Then related to the procedure for applying L&B tax reduction, previously it could only be done directly or by post, expedition service or courier service. While in the latest regulation, in addition to the two methods, it can also be done electronically.
Maximum 75% Reduction of Land and Building Tax (PBB)
The maximum 75% reduction of L&B tax payable is given to tax objects affected due to certain conditions, in this case the taxpayer experiences commercial losses or experiences liquidity difficulties for two consecutive years.
Commercial Loss Limitation
Financial Difficulty Limitation
The taxpayer is unable to generate net operating profit because the amount of operating expenses > the amount of gross profit
Taxpayer is unable to pay short-term liabilities with current assets
Both commercial loss and financial difficulty occur at the end of the financial year, before the year of application or at the end of the calendar year before the year of application.
The basis for the reduction of Land and Building Tax related to certain conditions includes:
a. L&B tax payable stated in the Tax Due Notification Letter (SPPT), or
b. The amount or difference of L&B Tax in the Tax Assessment Letter of Land and Building (SKP PBB) plus an administrative fine.
Eligibility for L&B Tax reduction up to 75%:
a. Taxpayers do not file an objection to the SPPT or SKP PBB, or if they file an objection, the objection request has been revoked.
b. The taxpayer does not submit an application for reduction of administrative fines on the SKP PBB, or if submitted, the application has been withdrawn.
c. Taxpayers do not apply for a reduction in the cancellation of incorrect SPPT or SKP PBB, or if already submitted, the application has been revoked.
d. The taxpayer is not applying for the correction of the SPPT or SKP PBB, if the application is already submitted, the decision letter has been issued.
The application shall be submitted within a maximum period of:
a. Maximum of three months since the SPPT is received
b. A maximum of one month after the SKP PBB is received, or
c. Maximum one month since the decision letter of the correction of SPPT or SKP PBB is received.
Maximum L&B Tax Reduction of 100%
The maximum 100% reduction of L&B Tax payable is given to tax objects affected by natural disasters and other extraordinary causes, such as social disasters, with the basis for reduction including:
a. L&B accrued in the SPPT of the tax year in which the disaster occurred
b. The amount or difference of L&B tax in the SKP PBB of the tax year of the disaster occurrence for other extraordinary reasons
c. The principal amount of tax plus administrative fines in the L&B Tax Collection Letter (STP PBB) related to the SPPT or SKP PBB.
The basis for the application for a 100% reduction of L&B Tax or related to natural disasters includes:
b. SKP PBB, or
c. STP PBB
Application for reduction of PBB related to natural disasters can be made, provided that the taxpayer is not currently submitting: an application for objection, appeal, review, correction, cancellation, reduction of administrative fines on SPPT, SKP PBB, or STP PBB and applying for reduction of SPPT, SKP PBB or STP PBB.
However, if already submitted, these applications must be revoked.
Application for L&B tax reduction can be submitted under the following conditions:
1. One application for one SPPT, SKP PBB, or STP PBB.
2. The application shall be submitted in Indonesian, accompanied by calculation and reason.
3. The application shall be signed by the taxpayer or proxy
4. Attached with supporting documents
Attachment for maximum L&B Tax reduction of 75%
Attachment for maximum L&B Tax reduction of 100%
Based on the application for L&B tax reduction submitted, the Head of the Regional Tax Office of the Directorate General of Taxes (DGT) will follow up by conducting testing, research, and issuing a Decision.
The decision taken can be in the form of granting it in full, granting it in part, or rejecting the taxpayer's request.
The decision is issued a maximum of four months after the application is received. If within four months the Head of the Regional Tax Office of the DGT has not issued a Decree, the L&B tax reduction request is deemed to have been granted in full. (ASP/KEN)