3 Years Have Passed, No Taxpayer Has Utilised Investment Allowance

JAKARTA, DDTCNews – The Fiscal Policy Agency (Badan Kebijakan Fiskal, hereinafter referred to as BKF) of the Ministry of Finance estimates that the realisation of the tax incentive in the form of the investment allowance will continue to be of IDR0 until the end of 2022

The investment allowance incentive has been in effect since 2020 in line with the issuance of the Minister of Finance Regulation (MoF Reg.) Number 16/2020 on 9 March 2020. To date, however, no taxpayer has taken advantage of the incentive.

“The [investment allowance] incentive did not take effect until 2020. No taxpayer has taken advantage of this facility,” stated BKF in the 2021 Tax Expenditure Report, quoted on Monday (26/12/2022).

Investment allowance is one of the incentives set by the government through Government Regulation (Gov. Reg.) Number 45/2019. In addition to the investment allowance, the Gov. Reg. also constitutes the legal basis for the granting of vocational supertax deduction facilities and R&D supertax deduction.

At first glance, the investment allowance incentive is similar to the formerly applicable tax allowance. The investment allowance incentive promises a net income reduction of 60% of the investment value in the form of tangible fixed assets expensed 6 years from the tax year of the start of production.

The incentive is given to resident taxpayers in the labour-intensive industry Indonesian Business Classification that employ a minimum of 300 Indonesian workers.

In comparison, through the tax allowance, the government provides a net income reduction incentive although only amounting 30% of the investment value in the form of tangible fixed assets expensed for 6 years.

However, in the provisions on the tax allowance, taxpayers are also entitled to accelerated depreciation and amortisation, the imposition of Income Tax on dividends paid to non-resident taxpayers of 10% and a carry forward of losses for 5 years but not more than 10 years.

The realisation of tax expenditures due to the granting of tax allowance incentives is estimated to be only IDR754 billion in 2021 and is projected to reach IDR848 billion in 2022. (rig)