Depreciation of Tangible Assets and/or Amortization of Intangible Assets
- August 10, 2023
- Posted by: Administrator
- Category: Tax News
On 13 July 2023, the Minister of Finance (MoF) issued a new regulation number 72/2023 (“PMK-72”) regarding the Depreciation of Tangible Assets and/or Amortization of Intangible Assets. Through this regulation, the MoF has now revoked regulations No. 248/PMK.03/2008, 249/PMK.03/2008, 126/PMK.011/2012, and 96/PMK.03/2009.
Here are some new salient points taken from PMK-72/2023:
- Depreciation of Tangible Assets
Under the old regulation, permanent buildings should be depreciated over 20 (twenty) years. However, under PMK 72/2023, the taxpayer now has the option to use the following depreciation methods for permanent buildings which have a useful life exceeding 20 (twenty) years:
- 20 (twenty) years; or
- in accordance with the actual useful life based on the taxpayer’s accounting records, provided that they are maintained in a compliant manner.
Taxpayers who have already depreciated permanent buildings which were owned and utilized before the tax year 2022 according to the 20 years useful life may choose to depreciate based on the actual useful life by submitting a notification to the Director-General of Taxation no later than 30 April 2024.
- Similar to the treatment for depreciation of buildings, for the amortization of intangible assets with a useful life exceeding 20 years, the taxpayer can choose to use either a straight-line 5% amortization for 20 years or follow the actual useful life based on the taxpayer’s bookkeeping by submitting a notification to the tax authority no later than 30 April 2024.