Preview of Indonesian tax regulations updates January – April 2024

Latest List of Entities or Institutions Determined as Receiver of Alms (Zakat) or Mandatory Religious Donations Deductible from the Gross Income

• This regulation is effective as of the 19th of April 2024.
• This regulation revised the Directorate General of Taxes Regulation No. PER-04/PJ/2022 dated 22 April 2022.
• The regulation provides updates of the list of entities and institutions which are established or legalized by the government as recipients of Alms (Zakat) or Mandatory Religious Donations, where the income can be deducted from the gross income. Kindly refer to the attachment to the regulation for further details.

Tax and Customs Facilities in Nusantara Capital City

• This regulation is effective as of the 29th of April 2024.
• This is the implementing regulation for the Government Regulations No. 12 of 2023 on the Granting of Business Licensing, Ease of Business, and Investment Facilities for Business Actors in Nusantara Capital City (Ibu Kota Nusantara — IKN).
• Under this regulation, taxable entity located or doing business in IKN may be granted facilities in the form of income tax, Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM) and customs facilities, as briefly summarized below.

Tax and Customs Facilities in Nusantara Capital City

• This regulation is effective as of the 29th of April 2024.
• This is the implementing regulation for the Government Regulations No. 12 of 2023 on the Granting of Business Licensing, Ease of Business, and Investment Facilities for Business Actors in Nusantara Capital City (Ibu Kota Nusantara — IKN).

• Under this regulation, taxable entity located or doing business in IKN may be granted facilities in the form of income tax, Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM) and customs facilities, as briefly summarized below.

  Income Tax Facilities

  • Significant reduction and/or exemption of Corporate Income Tax (CIT) for entities operating/domiciled in or relocated to the IKN (including special treatment for financial sector activities within the IKN’s Financial Center).
  • Deduction allowance (additional amount of deduction that can be used against the taxable income) for certain items of expenses, including: (i) on-the-job training, internship, and/or education activities for the training and development of human resources with certain competency, (ii) certain Research & Development activities, and (iii) donations and/or construction cost of public facilities, social facilities and/or other non-profit facilities.
  • Income Tax Article 21 (employee tax) is borne by the government and is a final tax.
  • Final Income Tax of 0% of the income of gross distribution for certain business classified as Micro, Small and Medium businesses.
  • Significant reduction of Income Tax for the transfer of rights of land and/or building.

  VAT and PPnBM Facilities

  • Exemption of VAT for certain taxable goods and/or services which are deemed strategic based on the regulation.
  • Exemption of PPnBM for certain luxury goods within the IKN.

  Customs Facilities

  • Customs exemption and Import Tax facility for importation of: (i) goods by the central or regional government for Public Interest, and (ii) capital goods for industrial constructions and development.
  • Customs exemption for the importation of goods and materials for industrial constructions and development.
  • Some tax and customs facilities may also be applicable for businesses located within certain areas surrounding the IKN — which area(s) are determined by the IKN Authority as the ‘Partner Areas’ (Daerah Mitra).
  • Further details on the eligible parties and applicability of tax and customs facilities, as well as the requirements, detailed period, guidelines and procedures to apply for and revocation of the abovementioned tax and customs facilities (including the relevant forms), obligations and prohibitions for parties granted with the facilities, as well as authorities of the Directorate General of Tax, are provided in the articles and attachments of this regulation.