Income Tax Incentives in Response to COVID-19

On 10 June 2020, the Government issued Regulation No. 29 of 2020 (GR-29) providing Income Tax Facilities to qualified parties that have assisted the government in handling the COVID-19 pandemic.

  1. 30% additional deductible cost from the total costs for an Indonesian Taxpayer that produces medical devices and/or household health supplies for handling COVID-19.
    • Such reduction may be applied on the medical devices’ production costs that are incurred up to 30 September 2020, which are expensed simultaneously in the same fiscal year / period when the relevant costs are incurred. Taxpayers that use this facility shall submit a report of the medical device production cost to the Directorate General of Taxes (DGT).
  2. Donations that may reduce gross income.
    • Donations in the form of money, goods, services and/or asset utilization without receiving any compensation.D
    • Donations made to a donation collection organizer such as BNPB, BPBD, Ministry of Social Affairs, Ministry of Health, and any other donation collector institutions
  3. Additional income from the Government received by an Individual who works in the health sector/ institution handling the COVID-19 pandemic will be subject to 0% income tax rate. The 0% rate will be valid up to 30 September 2020.
  4. Income received from the Government in the form of compensation and/or indemnity from the rental of land, building, and any other assets related to COVID-19 handling is subject to 0% final income tax rate. The 0% rate will be valid up to 30 September 2020.
  5. Buybacks of shares that are traded through the stock exchange.
    • Indonesian qualified share issuers that buy back the company’s shares may be entitled to a 3% lower income tax rate if the buyback is in line with the policy from the central government or the authorized institution to cope with significantly fluctuating market conditions.
    • The facility will be valid if the share buybacks are done before 30 September 2020.
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