On 19 December 2018, the Minister of Finance (“MoF”) issued regulation No.167/PMK.03/2018 (“PMK-167”) regarding the Provision of Food and Beverages to All Employees and Compensation in the Form of Benefit in Kind (“BIK”) in Certain Region that Can be Deducted from Gross Income. PMK-167 replaces the previous regulation, i.e. MoF Regulation No.83/PMK.03/2009 (“PMK-83”).

Benefit in kind that can be deducted from the employer’s gross income are as follows

a. Provision of food and beverages to all employees relating to the performance of work.

Provision of food and beverages to all employees by an employer at a workplace also covers food and beverage coupons given to employee who are unable enjoy the food and beverages in the workplace, e.g. employees in marketing, transportation and on other business trips.

b. Compensation in the form of BIK that is provided in relation to the performance of work in a certain region in order to support government policies to encourage development in that certain region.

The compensation as said above covers the following:

1. 1. • Residence, including housing;
      • Health service;
      • Education;
      • Religious service;
      • Transportation; and/or
      • Sports, excluding golf, power boating, horse racing, and gliding.

In relation to BIK in the form of “transportation”, PMK-167 specifically governs that it is only related to the beginning and the end of an assignment.

The certain region facility is given for a period of five years, and it can be extended for another five years, provided the location still meets the requirements as a “certain region”. Especially for Special Mining Business License (“IUPK”) holders, the period of “certain region” is 10 years and can be extended for another 10 years, provided the location still meets the requirements as a “certain region”.

c. Provision of BIK which is a necessity in carrying out the work such as safety equipment or because of the nature of the work requires it.

Provision of BIK for performance of work shall be related to the workers’ safety as required by a government institution handling manpower.

The BIK covered are:

1. • Clothing and safety equipment;
   • Uniforms for security personnel;
   • Shuttle transport for employees;
   • Lodging for ship crews and the like; and/or
   • Taxpayer’s vehicles that are used by certain employees.

If the BIK has useful life more than 1 (one) year, it should be expensed through depreciation; if not, then it is directly expensed.

Especially for vehicles used by certain employees, 50% of the depreciation and the maintenance expense is allowed to be tax deductible expense.

This regulation is effective from 19 December 2018.