On June 19, 2020, the Government issued Government Regulation No. 30 of 2020 dated June 19, 2020 on the Reduction of Income Tax Fee for Domestic Corporate Taxpayers in the Form of Public Companies (“GR 30/2020”). GR 30/2020 is an implementing regulation of Article 5(3) of Law No. 2 of 2020 dated May 18, 2020 on the Implementation of Government Regulation in Lieu of Law No. 1 of 2020 dated March 31, 2020 (“Perppu 1/2020”) which was enacted to improve the social, economic, and community welfare due to the Covid-19 pandemic.
GR 30/2020 is meant to strengthen the capital market sector which holds an important role in the development of investment, business capitalization structure, and acceleration of national economic growth—which shall be realized through the increase of registered public companies. GR 30/2020 revokes Government Regulation No. 77 of 2013 dated November 21, 2013, as lastly amended by Government Regulation No. 56 of 2015 dated August 4, 2015 (“GR 77/2013”) which previously regulated the same matter.
Under GR 30/2020 is the deduction of Income Tax fee for corporate taxpayers and permanent establishments from 28% to (i) 22% for the Tax Years of 2020 and 2021 and (ii) 20% starting from 2022 Tax Year (before the Income Tax reduction incentive for eligible public companies). Further, under GR 30/200 an eligible public company is entitled to an additional 3% reduction of the income tax rates (the “3% Reduction”).
- Criteria of Eligible Public Companies
The criteria that must be satisfied by a public company to enjoy the 3% Reduction under GR 30/2020 are: (i) a public company, (ii) 40% of the total issued and paid-up shares must be traded on the stock exchange in Indonesia, and (iii) fulfill certain requirements, as follows:
- The shares referred to on point (ii) above must be owned by at least 300 persons;
- Each person referred to on point (a) above may only hold less than 5% of the total issued and paid-up shares; and
- The requirements referred to in points (a) and (b) above must be fulfilled for at least 183 calendar days in one tax year period.
Please note that points (a) and (b) above exclude any shares bought back by the public company and/or a related party of the public company.
- Transitional Provisions
The application for eligible public company to be granted the 3% Reduction, may be submitted to the Director General of Taxation.