Amended, Criteria for Corporate Taxpayers to Obtain Tax Holiday

JAKARTA, DDTCNews – The Ministry of Finance has amended the criteria that must be fulfilled by corporate taxpayers to obtain the tax holiday facility.

The amendments are contained in the Minister of Finance Regulation (MoF Reg.) 69/2024. This regulation constitutes the amendment to MoF Reg. 130/2020 concerning the Granting of the Corporate Income Tax Reduction Facilities. One of the amendments is related to Article 3 paragraph (1) of MoF Reg. 130/2020.

“To obtain the corporate Income Tax reduction … a corporate Taxpayer must fulfil the following criteria,” reads a fragment of Article 3 paragraph (1) of MoF Reg. 130/2020 as amended by MoF Reg. 69/2024, quoted on Monday (4/11/2024).

Six criteria must be fulfilled. First, constituting a pioneer industry. Second, having the status of an Indonesian legal entity. Third, performing new investments for which the following have never been issued:

• the decision on the granting or notification regarding the rejection of a corporate Income Tax reduction (tax holiday);

• the decision on the granting of Income Tax facility for investments in certain business sectors and/or in certain areas pursuant to Article 31A of the Income Tax Law (tax allowance);

• the notification concerning the granting of net income reduction for new investments or business spin-off in certain business sectors constituting labour-intensive industries pursuant to Article 29A of the government regulation concerning the calculation of taxable income and payment of Income Tax in the current year and (investment allowance);

• the decision on the granting of Income Tax facilities in Special Economic Zones (SEZ) pursuant to the government regulation concerning facility and concessions in SEZs; and

• the decision on the granting of the corporate Income Tax reduction facility pursuant to the government regulation concerning the granting of business licensing, ease of doing business and investment facilities for entrepreneurs in the Nusantara Capital (this point was not found in MoF Reg. 130/2020).

Fourth, having a new investment plan with a minimum value of IDR100 billion. Fifth, fulfilling the provisions on the amount of the debt-to-equity ratio as referred to in the MoF Reg. concerning the determination of the amount of the debt-to-equity ratio to calculate Income Tax.

Sixth, committed to starting realising the investment plan no later than one year after the issuance of the decision on the corporate Income Tax reduction (tax holiday).

As is known, through MoF Reg. 69/2024, the authority has extended the validity period of the tax holiday until 31 December 2025. MoF Reg. 69/2024 also includes a response to the plan to implement the global minimum tax policy. Check out some reviews of MoF Reg. 69/2024 here.

In respect of the tax holiday and various other tax incentives, DDTC will hold an exclusive seminar. Titled Prospects, Opportunities and Strategies for the Utilisation of Various Tax Incentive Menus in Indonesia, the event will be held on Wednesday, 20 November 2024. (kaw