In the Seventh Policy, the Government Gives Tax Relief

Coordinating Minister for the Economy Darmin Nasution announced the Seventh Policy Package at the Presidential Office, Jakarta, on Friday (4/12) evening

In the Seventh Policy Package that was announced on Friday (4/12) evening, the Government will give tax relief on Income Tax Article 21 or the employees’ tax that paid by labor-intensive companies.

Coordinating Minister for the Economy Darmin Nasution said that this tax relief facility for labor-intensive companies shall apply for two years and it will be evaluated after considering whether it needs to be extended or not. This facility will be drawn up in a Government Regulation.

“Should a tax payer can meet the requirements of labor-intensive industry it can apply to get this facility,” Darmin said to the journalists, at the Presidential Office, Jakarta, on Friday (4/12) evening.

Darmin said that the requirements for a labor-intensive company to be able to apply for the tax relief are: it has at least 5,000 Indonesian labors and it submits the list of the employees that will be given the tax relief. “There should be the list,” Darmin explained.

The relief of Income Tax Article 21, Darmin added, is also given to a company which productions are exported 50 percent in minimum, based on the production in the previous year.

In addition, the tax relief is also given to taxable income not more than Rp 50 million. “The salary that can enjoy the facility is Rp 50 million in maximum,” Darmin said while mentioning the usage of the facility of Tax Income subsidy shall not carried out at the same time or it is given after the company gets another facility that related to tax.

Still related to labor-intensive company, Darmin Nasution said that there is a change in Government Regulation Number 18 of 2015 on Tax Income Facility for Capital Investment in Certain Business Sectors or Certain Regions.

 “The facility is tax allowance. How to calculate it? First, if an investor invests one hundred, in tax calculation it is calculated 95. There is a 5 percent-facility for six years. Then, there is divident reduction that is paid as foreign tax subject which tax is reduced from 20 percent to 10 percent,” Darmin said.

With this change, the industries that meet the requirements can get tax facility in all provinces.

 “There is addition in textile and clothing industry. There are five industrial sectors that become labor-intensive industry. All of them can get tax allowance facility,” Darmin added.(MMB/YM/Naster)