The last implementation regulation is PP 55/2022, which came into force on 20 December 2022. The purposes of amendment of this regulation are to provide legal certainty, simplification of administration, as well as follow-up to international agreements in taxation.

With the issuance of this PP, several regulations that were previously in force are declared to be revoked and null and void, with details as follows:

1)  PP No. 30 of 2020 – Reduction of Income Tax Rates;

2)  PP No. 18 of 2009 – Aid or Donations;

3)  PP No. 94 of 2010 – Calculation of Taxable income and Settlement of Income Tax in the Current Year;

4)  PP No. 23 of 2018 – Income Tax for SMEs;

5)  PP No. 29 of 2020 – Income Tax Facilities in the context of Handling Corona Virus Disease 2019 (COVID-19).

Among the important changes in this PP are the following:

1. An explanation of the detailed criteria or a reiteration of what is stipulated in the HPP Law concerning income that is excluded as Income Tax object, including promotion expense, uncollectible receivables, formation or accumulation of reserve funds, depreciation of tangible assets and/or amortization of intangible assets, and Income Tax on certain gross turnover (of SMEs).
2. Compensation or benefits in kind and amenities is Income Tax object. Expenses for compensations or benefit in kind and amenities could be deducted from gross income as long as such expenses are expenses to earn, collect, and maintain income.
   Compensations or benefit in kind shall be assessed based on market value. Meanwhile, compensation or benefits in amenities shall be assessed based on the amount of expense disbursed or that should be disbursed by the provider.
   The provisions regarding compensation or benefits in kind and amenities became effective as of 1 January 2022, while the withholding of Article 21 Tax on benefits in kind and amenities by the provider must be done starting from 1 January 2023. If the withholding of Article 21 Tax has not been done from 1 January 2022 until 31 December 2022, the Income Tax due must be calculated and self-remitted as well as being reported by the recipient in the 2022 Annual Income Tax Return.
3. The Minister has the authority to determine the time of acquisition of dividend and the basis of its calculation for a Resident Taxpayer from equity participation in a Foreign business entity other than a business entity who sells his/her shares on a stock exchange with equity participation of at least 50% by a Taxpayer or jointly with other Taxpayers;
4. Clarification concerning the method for determining Transfer Pricing in accordance with the Arm’s Length Principle and provisions for the DGT which has authority to reassess the amounts of income and/or deductions in such conditions;
5. Sale or transfer of shares of a company that is established or domiciled in a State that provides tax protection who are related parties with a business entity in Indonesia may be designated as sale or transfer of a business entity in Indonesia or business establishment in Indonesia, with Income Tax withheld at 20% of the estimated net income;
6. Recalculation of tax that should have been payable based on comparison of financial performance with Taxpayers in similar business activities may be applied to a Taxpayer that has made sales commercially for five (5) years and reported fiscal losses for three (3) consecutive years.

   There are two additional Ministry of Finance Regulation and PP issued at end of 2022, i.e. :

1. Ministry of Finance issued a regulation concerning VAT, i.e. MoF Regulation Number 186/PMK.03/2022 – Guidelines on Crediting of Input Tax (VAT)

In an effort to provide convenience and legal certainty in the crediting of Input Tax for Taxable Entrepreneurs that have performed deliveries on which tax is or is not payable, the Minister of Finance has issued Minister of Finance Regulation (PMK) Number 186/PMK.03/2022 concerning guidelines on crediting of Input Tax for Taxable Entrepreneur that make deliveries on which tax is payable and deliveries on which tax is not payable.

The basic changes stipulated in this regulation are in connection with the Guideline for Crediting of Input Tax on deliveries in the form of:

–  Deliveries on which tax is payable; and/or

-Deliveries on which tax is not payable or deliveries whose Input Tax cannot be credited (deliveries whose VAT is exempted).

This Guideline on Crediting of Input Tax needs to be used if a Taxable Entrepreneur cannot separate with certainty the Input Tax that is associated with deliveries on which tax is payable and the Input Tax associated with deliveries on which tax is not payable or whose VAT is exempted.

In calculating the Guideline for Crediting of Input Tax, there are several stages that must be performed by the Taxable Entrepreneur:

–  Calculate the estimated amount of Input Tax that may be taken into account and report it in the Periodic VAT Return; dan

–  Recalculate the amount of Input Tax that may be taken into account based on realization and report it in the Periodic VAT Return of the third tax period after the tax year concerned.

This regulation came into force on 12 December 2022 and replaces the previous regulation, PMK Number 78/PMK.03/2010 as most recently amended by PMK Number 135/PMK.011/2014.

The end of 2022 was closed with the issuance of Perpu No. 2 of 2022, as follows

2. Government Regulation in Lieu of Law Number 2 of 2022 – Concerning Job Creation (“Perpu Ciptaker No. 2/2022”)

The end of 2022 was closed with the issuance of Perpu No. 2 of 2022. This Perpu Ciptaker No. 2/2022 was issued because of an urgent emergency situation. In the tax cluster, the articles regarding taxation are already synchronized and harmonious through Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP). There are no significant changes with the issuance of this Perpu Ciptaker No. 2/2022; it only changes the use of certain words.

Perpu Ciptaker No. 2/2022 came into force on 30 December 2022.