On 9 October 2024, the Minister of Finance issued Ministry of Finance Regulation Number 69 of 2024 (PMK-69) to update PMK Number 130/PMK.010/2020. PMK-69 introduces changes to the previous regulations regarding the corporate income tax (Pajak Penghasilan / PPh) reduction facility, aiming to support Indonesia's economic growth through pioneer industry development. This regulation aligns with the global minimum tax policy, which affects the provision of tax facilities.
Eligibility
PMK-69 includes several noteworthy changes, particularly in the criteria for granting corporate income tax reduction facilities. To qualify for the tax reduction, taxpayers must meet the following criteria:
- be a Pioneer Industry;
- have the status of an Indonesian legal entity;
- make new investments that have never been issued before, with a minimum value of IDR 100 billion;
- meet the provisions regarding the debt-to-capital ratio; and
- commit to realizing the investment plan no later than 1 year after the issuance of the corporate income tax reduction decision.
Additionally, PMK-69 specifies that the decision to grant the corporate income tax reduction is based on the Government Regulation concerning the granting of business licenses, ease of doing business, and investment benefits for entrepreneurs in the Ibu Kota Nusantara.
Another change concerns the requirements for the Tax Clearance Certificate for taxpayers whose shares are directly owned by other domestic taxpayers. Previously, taxpayers had to attach a Tax Clearance Certificate from all shareholders recorded in the Deed of Establishment or the latest Deed of Amendment. However, according to PMK-69, pioneer industry taxpayers whose shares are owned by other domestic taxpayers must provide an automatically generated Tax Clearance Certificate. The procedure for obtaining this certificate is based on the provisions governing the issuance of a Tax Clearance Certificate.
Procedure
Applications for the corporate income tax reduction facility are made by taxpayers online through the Online Single Submission (OSS) system by uploading several documents. PMK-69 modifies the regulations for the documents that must be uploaded. Previously, taxpayers had to upload two types of documents. In the new provisions, however, taxpayers only need to upload one document: the digital copy of the fixed assets details in the investment value plan. A Tax Clearance Certificate from shareholders is no longer needed.
The application for corporate income tax reduction for taxpayers who invest in business sectors not listed as Pioneer Industries has been updated in PMK-69. Since Tax Clearance Certificates from shareholders are no longer required, taxpayers only need to upload three documents:
- a digital copy of fixed asset details in the capital investment value plan;
- a digital copy of the Pioneer Industry eligibility criteria report; and
- a digital copy of Pioneer Industry's own quantitative criteria calculations.
PMK-69 also changes the rules for the utilization application that must be submitted by taxpayers after receiving a decision on corporate income tax reduction. Previously, taxpayers were required to upload a Tax Clearance Certificate. In the new provisions, taxpayers only need to upload two main documents:
- a list of investment realization in the form of fixed assets along with layout drawings; and
- documents related to transactions for the sale of goods or the delivery of services from the main business activity to the market for the first time, which can be in the form of tax invoices or proof of billing, as well as self-usage reports if the products are used for further production processes.
Taxpayers are also required to have an automatically generated Tax Clearance Certificate, obtained through the procedure governing the issuance of a Tax Clearance Certificate.
PMK-69 removes Article 7, meaning there will no longer be any offline application submissions. All application processes must now be carried out online through the OSS system under applicable provisions. For taxpayers who have been decided by the Minister of Finance to be granted the corporate income tax reduction, the OSS system is also where taxpayers must upload annual reports to the Director General of Taxes and the Head of the Fiscal Policy Agency.
Impact of Global Minimum Tax on PMK-69's Corporate Income Tax Reduction Facility
PMK-69 adds two new articles: Article 15A and Article 30A. Article 15A stipulates that taxpayers who are multinational corporate groups selected to utilize facilities and are classified as a certain taxpayer category, as regulated in the global minimum tax imposition rules, will be subject to domestic minimum additional tax under applicable tax regulations. This domestic minimum additional tax also applies to taxpayers who have been selected to utilize the corporate income tax reduction facility before the enactment of PMK-69. The PMK-69-based corporate income tax reduction facility involves a proposal for a tax reduction that must be submitted to the Minister of Finance by December 31, 2025.
