On 14 August 2020, the Minister of Finance (“MoF”) issued a new Regulation No. 110/PMK.03/2020 (“PMK-110”) as an amendment to MoF Regulation 86/PMK.03/2020 (“PMK-86”) regarding Tax Incentives for Taxpayers Affected by the 2019 Corona Virus Disease Pandemic (“COVID-19”).

The essential points of PMK-110 are as follows:

1. Government-Borne Final Income Tax Incentives for Construction Service Businesses. PMK-110 inserts new articles related to Final Income Tax Incentives for the Taxpayers that generate income from the Construction Services business, which is borne by the Government. The above tax incentive applies to the income received or obtained by Taxpayers that receive the Program for the Acceleration of Improvement of Irrigation Water Use (“P3-TGAI”).
2. Changes in Article 25 Income Tax Instalment Rates. PMK-110 changes the rate of the Tax Incentive of Article 25 Income Tax Instalments for Taxpayers that are affected by COVID-19 and meet specific criteria. The rate is changed from 30% to 50%.  This is effective from the tax period of July 2020 for Taxpayers that have submitted the notification of Article 25 Income Tax Instalment Reduction to the Tax Office where the Taxpayers are registered.

Taxpayers that have applied for reduction of their Article 25 Income Tax Instalments based on the previous regulations do not need to re-submit a new notification to the Tax Office. The Tax Incentive is also valid until the Tax Period of December 2020.

PMK-110 became effective on 14 August 2020.