Stimulating The Economy Through Tax Policy

in Response to
Global Pandemic of Covid -19
an Indonesian Perspective

P.M. JOHN L. HUTAGAOL

Director of International Taxation
Directorate General of Taxes
 CURRICULUM VITAE

Name : Prof. Dr. Poltak Maruli John Liberty Hutagaol, M.Acc.,

M.Ec.(Hons.), S.E., Ak., C.A.
Place/Date of Birth : Jakarta, 27 November 1965
Office Address : Jalan Gatot Subroto Kav. 40-42, Jakarta

I. Job Title
 Head of Tax Office Foreign Direct Investment One (2009-2011)
 Advisor for Tax Services (2011-2011)
 Advisor for Tax Law Enforcement (2011-2012)
 Director of Tax Regulation II (2012-2016)
 Director of International Taxation (2016-now)
 Indonesian Competent Authority, 2012 – now
 Head of Indonesian Delegation for MAP, 2012 – now
II. Education
 Bachelor of Economics (University of Brawijaya, Malang) – 1988
 Master of Economics in Accountancy (University of Macquarie, Sydney) – 1994
 Master of Economics by Research (University of Macquarie, Sydney) – 1995
 PhD in Business Management (University of Padjadjaran, Bandung) – 2004

III. Professional Expertise

 Professor in Taxation (PERBANAS Institute), 2008 – now
 Chairman of Board Advisor of Association of Universities Tax Center in Indonesia (ATPETSI), 2018 – 2022
 Chairman of Tax Accountant Compartment of Indonesia Accountant Association (KAPj IAI), 2018 – 2020
 Covid-19 in Indonesia
DKI Jakarta INDONESIA WORLDWIDE
Cases 46.333
Cases 200,035 Cases 27.733.421
Recovered 34.792
Deaths 1.274 Recovered 142,958 Recovered 19.827.663
Deaths 8,230 Deaths 901.833
Jawa Timur
Cases 35.634
Recovered 28.044
Deaths 2.545
Jawa Tengah
Cases 15.351
Recovered 10.018
Deaths 1.084
Sulawesi Selatan
Cases 12.684
Recovered 9.663
Deaths 371

Jawa Barat
Cases 12.505
Recovered 6.554
Deaths 281
World Economic: Growth Projections - IMF

(percent change)
 IMF - GDP Growth Projections
(Percent Change)

Projections
Region / Country 2019
2020 2021
a. World 2.9 -4.9 5.4
b. Advanced Economies 1.7 -8.0 4.8
  United States 2.3 -8.0 4.5
  Euro Area 1.3 -10.2 6.0
  Japan 0.7 -5.8 2.4
Emerging Market &
c. 3.7 -3.0 5.9
Developing Economies
  China 6.1 1.0 8.2
  Indonesia 5.0 -0.3 6.1
  Thailand 2.4 -7.7 5.0
  India
Source: 4.2 Update
International Monetary Fund, World Economic Outlook, June 2020 -4.5 6.0
 Indonesia Macroeconomic Projection

2020
RAPBN
Indicator Others Institutions
APBN Outlook 2021

a. Economic Growth (%, yoy) 5,3 (1,1) - 0,2 4,5 - 5,5

b. Inflation (%, yoy) 3,1 2,0 - 4,0 3,0

c. SPN Quarterly Interest Rate (%) 5,4 4,5 -

  SBN Interest Rate 10Y (%) - - 7,29

d. Exchange Rate (Rp/US$) 14.400 14.900 - 15.500 14.600

e. Crude Oil Price

63 30 - 35 45
(US$/barrel)
f. Oil Lifting
755 705 705
(thousand barrels per day)
Sources : IMF, World Bank, ADB 2020
Gas Lifting
g. (thousand barrels per day hari) 1.191 992 1.007

Source : Ministry of Finance R.I.

 Economic Growth of Indonesia Second Quarter 2020

GDP Growth 2018-2020

(Y-ON-Y), (percent)

Y-ON-Y Q-TO-Q

-5,32% -4,19%

GDP in current prices

Rp3.687,7 Trillion
Source : The Central Bureau of Statistics
 What Government Should Do ?

National Economic Recovery

Social Welfare
get
my
l Life

State Bud
l th

Econo
a
Hea

Soci

Policies

COVID-19 IS NEGATIVELY
AFFECTING ALL SECTORS
 Government Regulation No. 43/2020
on the Amendment to GR No. 23/2020
The Execution of the National Economic Recovery (PEN) program in the Event
of Supporting State Financial Policies in Mitigating the COVID-19 Pandemic
and/or Other Threats to the National Economy and/or the Stability of
the Financial System as well as in Saving the National Economy 29.3%
Total Budget Rp. 695,2 Trillion

Social Protection 203,90 Trillion

17.8 %
Micro, Small and Medium-sized Enterprises 123,46 Trillion

Business Incentives 120,61 Trillion 17.3 %

Ministries/Institution and Regional
Governments
106,11 Trillion
15.3 %
Healthcare 87,55 Trillion

Funding for Corporates 53,57 Trillion 12.6 %

Source : Ministry of Finance R.I. 7.7 %
 COVID-19: Common Tax Policy Around The World

COVID-19
Crisis Phase 1 2 3 4
Overview Short Policies Revenue Impact and
Crisis Recovery
Term Measure Through Restoring Public Finances
Containment

Time Leniency in Tax Administrations

Deadlines Payment Administrative Reduction of Collection

Extension Deferral Sanctions Alleviation Installment Adjournment

International Temporary Changes in Service and Communication

Measures Accelerated Refund
Audit and Appeal Improvement
 Indonesian Tax Incentives Budget

Total Budget Rp. 123,01 Trillion

Government-Borne Income Tax Art 21 39,66 Trillion 32.2%

Government-Borne MSME Income Tax 2,40 Trillion 2.0 %
Exemption of Income Tax Art 22 on Imports 14,75 Trillion 12.0 %

Reduction of Income Tax Art 25 Installment 14,40 Trillion 11.7 %

VAT Preliminary Refund 5,80 Trillion 4.7 %

CIT Reduction 20,00 Trillion 16.3 %

Other reserves and stimulus 26,00 Trillion 21.1 %

Source : Ministry of Finance R.I.
 G.R in lieu of Law Number 1 of 2020
Legal Basis for Economic Recovery

2020 – 2021 → 22%

Budgeting + CIT and PE Tax Rate
2022 onwards → 20%
Financing Adjustment -3% for Tbk ( 40% traded ++)

State Financial Policy

Local/Regional Value Added Tax
Tax Treatment on e-
Government
G.R in lieu of Financing
Commerce
Income Tax
Law No. 1
of 2020 Tax Policy
Time Extension in Fulfilling Electronic Transaction Tax
Tax Payer’s Taxation Rights
and Liabilities

Economic
Recovery Customs Facilities

Officially promulgated as Law Number 2 of 2020

State Financing Policy and Financial System Stability in Managing Corona Virus Disease
Pandemic (COVID-19) and/or Mitigating Threats that Endager National Economy and
Financial System Stability
 Indonesian Tax Incentives

Incentives PMK-110 /2020

(Amendment to PMK-86 /2020)

• Taxpayers of specific types of business (1.189 types),

Government-Borne Import Facility for Re-export, and Bonded Zone.
Income Tax Article 21 • Until December 2020.
• Notification by the branches is no longer mandatory.

• Taxpayers need not apply for the Certificate – only

Government-Borne MSME
report the realization every month.
Income Tax
• Until December 2020.

• Taxpayers of specific types of business (721 types), Import

Exemption of Income Tax Facility for Re-export, and Bonded Zone.
Article 22 on Imports • Until December 2020.
• Monthly reporting, no later than 20th of the following
month.
 Indonesian Tax Incentives

Incentives PMK-110 /2020

(Amendment to PMK-86 /2020)

• Taxpayers of specific types of business (1.013 types), Import

Facility for Re-export, and Bonded Zone.
Reduction of Income Tax
• Until December 2020.
Article 25 Installment
• 50% reduction in installments of Income Tax Article 25 from
July to December 2020.
• Monthly reporting, no later than 20th of the following
month.

 Taxpayers of specific types of business (716 types), Import

Facility for Re-export, and Bonded Zone.
VAT Preliminary Refund
 Until Tax Period December 2020.

 Income received by the Recipient of the Program for the

Government-Borne Final Tax Acceleration of Improving Irrigation Water Use (P3-TGAI)
borne by the government.
on Construction Services
 Incentives are given from the promulgation of PMK-
110/2020 until The December 2020 Tax Period.
 Tax Incentives for Medical Goods and Services
Essential Goods and/or Services
Goods • Medicines;
• Vaccines;
• Laboratory equipment;
• Testing kits;
• Personal protective equipment;
• Nursing equipment; and/or
• Other supporting equipment
declared necessary to handle the
COVID-19 pandemic
Services • Construction services;
• Consulting, technical, and
management services;
• Rental services; and/or
• Other supporting services declared
necessary to handle the COVID-19
pandemic
PMK 28 / 2020
• VAT-Not Collected on Import on taxable goods by certain
entities
• VAT-Borne by Government on supply of taxable goods or
rendering taxable service by Taxable Entrepreneurs to certain
entities
• VAT-Borne by Government on utilization taxable of service
from outside customs area within the customs area by certain
entities.
• Individual Income Tax (Art.21) exemption on Income derived
from certain activities (no prior notification-SKB needed)
• Income Tax Art. 22 on Importation or Procurement of certain
goods (no prior notification needed-SKB).
• Income Tax Art. 22 on selling goods to certain entities.
• Income tax exemption (Art. 23) for Corporation on certain
services.
 GR No. 29 /2020
Income Tax Facilities in the Effort to Mitigate COVID-19

Domestic Taxpayers who produce medical devices and/or Household Health Supplies for
1 the purposes of handling Covid-19 in Indonesia can be given additional reduction in net
income of 30% of the costs incurred

Donations in the form of money, goods, services and/or use of assets without
2 compensation in handling Covid-19 in Indonesia that are submitted by taxpayers to
donation collection organizers can be deducted from gross income

3 Additional income received by human resources in the health sector, subject to income
tax at a rate of 0%

4 Income in the form of compensation and reimbursement for the use of assets in
handling Covid-19, subject to income tax at a rate of 0%

5 Buyback shares traded on the stock exchange

 GR No. 30/2020
Corporate Income Tax Reduction

Single tax rate

* Incentives for Go Public Companies Now
3 tier tax rates 30%
28%

25%
22%
Was *23% 20%

*20%
*19%
*17%
<2008 2008 2010 2020 2022

ITL No. 7 Year 1983 Gov. Reg in lieu of Law 1/2020

as amended by Law No 36 2008 Law No. 2/2020
Gov. Reg No. 30 2020
Thank You