President Joko ‘Jokowi’ Widodo has mentioned a plan to introduce an omnibus tax law, the first in the country, to accelerate the reform program. The Omnibus Law consists of six group of issues: Income Tax, VAT, General Provisions and Procedures, Regional Taxes, Regional User Charges, and other affected Laws. Introducing an omnibus law will indeed be the most effective and fastest way of resolving all the problems caused by the many contradictory and overlapping laws and regulations that have to date hindered the reform program. Finance Minister Sri Mulyani issued a press release on Tuesday, 26 November 2019 regarding the changes proposed in the Omnibus Tax Law for deliberation by the House of Representatives (DPR RI). Below are the major proposed changes.

No. Proposed Change Prevailing Provisions
1. Corporate Tax Rate

Single Corporate Tax Rate reduced to 22% and 20%: 22% for 2021-2022 and 20% in 2023.

Additional 3% deduction, from 22% to 19% for listed companies that have just gone public within the past 5 years.

20% normal rate reduced to 17% for corporations that are newly listed in 2023.

25% for regular Corporate Taxpayers and 20% for qualified public companies.
2. Dividend

  • Local Corporate shareholder that owns shares in an Indonesian Corporation less than 25% could be exempted from tax if the dividend is invested in Indonesia.
  • Individual shareholder could be exempted from tax on the dividend if the dividend is invested in Indonesia.
  • Dividend from offshore could be exempted from tax if it is invested in Indonesia.
  • subject to 25% Corporate tax.
  • 10% final tax
  • Subject to 25% Corporate tax
3. Tax Base For Expatriate Indonesian Tax Resident

Territorial basis for certain overseas income for foreigners that are Indonesia Tax residents.

World-wide income basis so that all income sourced both from Indonesia and from abroad is taxable in Indonesia.
4. Input Vat

  • Can be credited even though the input VAT is obtained when the company has not yet obtained a VAT ID.
  • Input VAT that is not reported in the VAT return but is obtained during a tax audit can still be credited
  • Input VAT that is obtained before the company starts to produce VATable goods/services can be credited.
  • Is not creditable.
  • Is not creditable
  • Limited only to input VAT on capital goods.
5. Penalties

  •  Late Payment is subject to monthly interest penalty using current market interest rate +5% /12.
  • Penalty of 1% on VAT base will be imposed for not or late issuing VAT invoices
  • 2% per month.
  • 2% penalty on VAT base


6. Tax On E- Commerce

Foreign taxpayers that are not present in Indonesia or operating in Indonesia, but are generating income from business activities in Indonesia, are required to collect VAT on such income.

Has not been regulated.
7. Tax Facility

Tax holiday can be given to: Pioneer Industries or Companies doing business in specific areas or specific industrial areas.

Is given only to Pioneer industries
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