The relationship between the Job Creation Law or Omnibus Law in the Income Tax Law

(Income Tax) are:

a. Individual taxpayers or business entities will not be subject to dividend tax if the
dividend income earned domestically and / or abroad is invested in Indonesia.
Dividends invested in Indonesia are at least 30% of profit after tax and corporate
taxpayers are not allowed to buy and sell their shares on the Indonesia Stock
Exchange before the Director General of Taxes issues an assessment letter on
dividend tax. And this regulation is also written in the Job Creation Law Article 4
paragraph (3) letter f. With the tax exemption for domestic dividends, this
arrangement changes Indonesia taxation system, which was originally a classical
system, into a one-tier system. So that it can avoid double tax burdens and reduce
effective tax rates for Indonesian investors which will make the investment climate
more attractive. As for the exemption of foreign dividends, this regulation changes the
international tax system in Indonesia from a worldwide direction to a semi-territorial
direction. There are several provisions if dividends and after-tax income from a
Permanent Establishment (PE or BUT) abroad which is invested in Indonesia is less
than 30% of the total profit after tax, namely:
- BUT will be exempted from income tax if dividends and after-tax income are
invested.
- BUT will be taxed if there is a difference of 30% of the total profit after tax minus
the dividends invested.
- BUT will not be taxed if the remaining profit after tax is reduced by dividends
invested.
b. Changes in the income tax rate for article 26 that the corporate tax rate will be cut
from the current 25% to 22% and 20%, 22% for the periods 2021 and 2022 and in
2023 it will be 20%. Especially for corporate income tax that will go public, get an
additional reduction discount of 3% for 5 years after going public. Thus, for those
who go public, their PPh will drop from 22% to 19% and those who go public later in
2023 will drop from 20% to 17%, because they fall 3% below the normal rate. In the
Job Creation Law Article 26 paragraph (1b) it is stated that the Government
Regulation (PP) can reduce the tariff by 20% of the gross amount by parties that are
obliged to pay interest including discounts, premiums, and compensation in
connection with guarantees of debt management.
c. There is an affirmation in regulating the status of Domestic Tax Subjects (SPDN) and
Foreign Tax Subjects (SPLN) and there is also an expatriate regime. This is beneficial
for Indonesian citizens because in the future it will create superior human resources in
Indonesia.
d. For foreign citizens (WNA) who do not meet the criteria according to the provisions,
they can be exempted from the tax object where the foreigner is a Domestic Tax
Subject (SPDN). This regulation is an additional regulation in Article 4 concerning
Income Tax in the taxation cluster of the Job Creation Law Article 111. In Article 4
paragraph (1a), it is stated that foreigners who have become SPDN will be subject to
income tax if the income they earn from Indonesia is the result of certain expertise.
and will be valid for 4 years in which the tax will be calculated since becoming
SPDN. If a foreigner makes use of the Double Taxation Avoidance Agreement (P3B)
between Indonesia and other partner countries, the exemption from the imposition of
PPh will not apply to him.
e. In the Job Creation Law Article 111 concerning tax clusters Article 4 concerning
Income Tax, there are also additional regulations, namely regarding the arrangements
for managing the deposit funds for Hajj Implementation Fees (BPIH). In article 4
paragraph (3) letter o, it is stated that the funds deposited by BPIH and / or special
BPIH, and income from the development of Hajj finance in certain financial fields or
instruments will be received by the Hajj Financial Management Agency (BPKH)
which is regulated by PMK. In Article 4 paragraph (3) letter p, it is stated that the
remaining excess received by business entities or social institutions and religious
institutions registered in the agency in charge of them will be reinvested in the form
of social and religious facilities or infrastructure within a period of not more than 4
years from the receipt of the remaining excess or will be placed as an endowment
fund and its provisions are regulated by PMK.
f. In the Job Creation Law in the taxation cluster Article 14 paragraph (3), it is stated
that if the Taxable Entrepreneur PPH pays less tax, it will be subject to administrative
sanctions, namely based on the provisions of the Minister of Finance, PKP will be
subject to an interest fine equal to the interest rate per month calculated from the PKP.
underpayment of taxes or the expiration of the tax period, part of the tax year, or tax
year until the tax collection letter is issued (STP).
g. In the Job Creation Law in the taxation cluster Article 14 paragraph (5), it is stated
that if the PKP does not issue an invoice or issues an incomplete invoice, it will be
subject to 1% penalty from the Tax Imposition Base (DPP).
h. If taxpayers who already have STP are late in paying Additional Underpaid Tax
Assessment (SKPSBT), Correction Decree, Objection Provisions, Appeal Provisions,
and Re-Submission Provisions, then according to the provisions stipulated by the
Minister of Finance, the taxpayer will subject to sanctions by calculating the reference
interest rate divided by 12, and a maximum of 24 months.
i. If the taxpayer postpones tax payments due to installments, then according to the
provisions of the Minister of Finance, the taxpayer will be penalized by calculating
the reference interest rate divided by 12, a maximum of 24 months. Meanwhile, STP
postponement has a lower interest value, where according to the provisions set by the
Minister of Finance, the interest penalty to be paid is to calculate the interest rate
divided by 12, and a maximum of 24 months.
j. In the Job Creation Law in the Article 44B tax cluster, taxpayers can stop
investigating criminal acts in the field of taxation, if the taxpayer has paid off the tax
debt that was not / underpaid / should have been returned and added with
administrative sanctions, namely a fine of 3 times the amount of tax that was not or
was underpaid, or which should not have been returned.
k. In Law Number 36 of 2008 concerning Income Tax, the government still applies
Income Tax for several tax objects. In the Omnibus Law there are several objects that
are exempt from Income Tax, namely as follows:
- Assistance or donations, including zakat received by amil zakat bodies.
- A gift that is received by a blood family in a straight line of one degree.
- Legacy.
- Assets include cash deposits received as a substitute for shares or equity
participation.
- Rewards relating to work or services.
- Payment from an insurance company due to accident, illness, or death of an
insured person.
- Dividends or other income.
- Contribution received or earned by pension funds.
- income from capital invested by pension funds.
- Share of profit or residual income received or obtained by cooperative members.
- Income received or earned by a venture capital company is in the form of a share
of the profits from a business partner established and running a business or
activity in Indonesia.
- Scholarship.
- The remainder is received by non-profit institutions or institutions engaged in
education.
- Assistance for taxpayers paid by social security administering bodies.
- Deposit funds of BPIH (Hajj Pilgrimage Travel Costs) and income from the
development of Hajj finance, and received by BPKH (Hajj Financial Management
Agency).
- The remainder is received by social and religious bodies or institutions.
- Profits from the transfer of private property.
 Reference list

Klikpajak. (2020, November 24). Isi dan Poin-Poin Omnibus Law UU Cipta Kerja Bidang
Perpajakan. Retrieved from https://klikpajak.id/blog/berita-regulasi/isi-dan-poin-poin-
omnibus-law-uu-cipta-kerja-bidang-perpajakan/

Mediatama, G. (2020, June 25). Sah, pemerintah pangkas tarif PPh Badan dari 25% menjadi
22% mulai 2020. Retrieved from https://nasional.kontan.co.id/news/sah-pemerintah-
pangkas-tarif-pph-badan-dari-25-menjadi-22-mulai-2020

Untung-Rugi Omnibus Law UU Cipta Kerja Klaster Perpajakan. (n.d.). Retrieved from
https://katadata.co.id/0/analisisdata/5f8cf74e2ba65/untung-rugi-omnibus-law-uu-cipta-
kerja-klaster-perpajakan