AMENDMENT TO GOVERNMENT REGULATION NO. 20/2000 ON TAX TREATMENT IN INTEGRATED ECONOMIC DEVELOPMENT AREAS
(Government Regulation No. 147/2000 dated December 23, 2000)
THE PRESIDENT OF THE REPUBLIC OF INDONESIA,
Considering :
That in connection with the amendment to the provision in Article 31A of Law No. 7/1983 on the income tax as already amended several times, the latest by Law No. 17/2000, it is necessary to stipulate a government regulation on amendment to Government Regulation No. 20/2000 on tax treatment in integrated economic development areas;
In view of :
1. Article 5 sub-article (2) of the Constitution of 1945 as already amended by the second amendment to the Constitution of 1945;
2. Law No. 6/1983 on the general provision and the procedure for taxation (Statute Book No. 49/1983, Supplement to Statute Book No. 3262) as already amended several times, the latest by Law No. 16/2000 (Statute Book No. 126/2000, Supplement to Statute Book No. 3984);
3. Law No. 7/1983 on the income tax (Statute Book No. 50/1983, Supplement to Statute Book No. 3263) as already amended several times the latest by Law No. 17/2000 (Statute Book No. 127/2000, Supplement to Statute Book No. 3985);
4. Government Regulation No. 20/2000 on tax treatment in integrated economic development areas (Statute Book No. 46/2000, Supplement to Statute Book No. 3949);
D E C I D E S
To stipulate :
A GOVERNMENT REGULATION CONCERNING THE AMENDMENT TO GOVERNMENT REGULATION NO. 20/2000 ON THE TAX TREATMENT IN INTEGRATED ECONOMIC DEVELOPMENT AREAS.
Article I
To amend the provision in Article 1 of Government Regulation No. 20/2000 on tax treatment in integrated economic development areas (Statute Book No. 46/2000, Supplement to Statute Book No. 3949), so that Article 1 shall entirely read as follow :
"Article 1
Companies undertaking business activities in an integrated economic development area, hereinafter referred to as KAPET, shall be given treatment in the income tax area as follows :
=============================================================== Group of Period of Tariffs of Depreciation and
Assets Benefit zation based on the Method of
Becomes A Straight Line Declining Balance ==============================================================
I. Non-Buildings or Intangible
Group I 2 years 50% 100%
Group II 4 years 25% 50%
Group III 8 years 12,5% 25%
Group IV 10 years 10% 20%
---II. Buildings
Permanent 10 years 10%
Non-Permanent 5 years 20%
===============================================================
c. the compensation for fiscal losses shall begin in the next fiscal year consecutively up to a maximum of 10 (ten) years;
d. the imposition of the income tax on the dividends paid to an overseas tax subject shall amount to 10% (ten percent), or a lower tariff in accordance with the prevailing treaty on the avoidance of double taxation.
Article II
(1) In the case of an application made by a company to obtain tax facilities in an integrated economic development area, which has been received prior to the enforcement of this government regulation and which is yet to be decided when this government regulation comes into effect, the company shall, in the case of income tax facilities, be granted the income tax facilities pursuant to this government regulation.
(2) As for a company already stipulated to obtain tax facilities in an integrated economic development area prior to the enforcement of this government regulation, it may file an application for obtaining additional income tax facilities pursuant to this government regulation.
Article III
This government regulation shall take effect as from January 1, 2001.
For public cognizance, this presidential decree shall be promulgated by publishing it in the Statute Book of the Republic of Indonesia.
Stipulated in Jakarta On December 23, 2000
THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd.
ABDURRAHMAN WAHID
On December 23, 2000 THE SECRETARY, sgd.
DJOHAN EFFENDI
ELUCIDATION ON
GOVERNMENT REGULATION NO. 147/2000 ON
AMENDMENT TO GOVERNMENT REGULATION NO. 20/2000 ON TAX TREATMENT IN
INTEGRATED ECONOMIC DEVELOPMENT AREAS
GENERAL
One of the provisions amended in Law No. 7/2000 on the third amendment to Law No. 7/1983 on tax treatment shall be Article 31A, namely adding the income tax facilities granted to taxpayers making investment in particular areas and or in particular regions.
This facility shall be a reduction in the net income by a maximum of 30% (thirty percent) of the investment made in Indonesia (investment allowance).
With this amendment to Article 31A, the income tax facilities referred to shall become as follows : a. reduction the net income by 30% (thirty percent) of the total investment made;
b. accelerated depreciation and amortization
c. compensation for longer losses but the time may not exceed 10 (ten) years;
d. the imposition of 10% (ten percent) income tax Article 26 on dividends with the exception that a tariff based on the prevailing treaty on avoidance of double taxation is set lower.
On the basis of Government Regulation No. 20/2000, the income tax facilities granted to a company undertaking business activities in an integrated economic development area (KAPET) still refer to the provision of Article 39A, which has not been amended and which shall encompass only tax facilities as meant in Article 1 letters b, c and d.
In conformity with the amendment to the provision in Article 31A, the granting of the income tax facilities in Government Regulation No. 20/2000 must be adjusted.
ARTICLE BY ARTICLE
Article I Article 1
The facilities of reduction in the net income shall be granted for 6 (six) years as from the time when commercial production kicks off, namely 5% (five percent) of the amount of the investment realized in the permanent assets which may or may not be depreciated.
Article II
Sufficiently clear
Article III
Sufficiently clear
