The Minister of Finance has issued Regulation No. 16/PMK.010/2020 on the Granting of Net Income Deduction Facilities for New Investments and Business Expansions within Certain Business Sectors Classified as Labor-Intensive Industries (“Regulation 16/2020”) in regards to the implementation of Regulation of the Government No. 94 of 2010 on Calculations of Taxable Income and the Settlement of Annual Income Tax, as amended through the issuance of Regulation No. 45 of 2019.

Regulation 16/2020 encompasses that taxpayers who undertake any investment in industry may request for the income tax (Pajak Penghasilan – “PPh”) facilities in the form of Net Income Deduction facilities amounting up to 60% (sixty percent) of the relevant investment in tangible assets, including land, which are used for primary business activities. The facilities will be implemented for 6 (six) years, with deduction of 10% (ten percent) per year, starting from the tax year in which commercial production commences. 

There are several criteria and procedures that must be completed for the Net Income Deduction facilities to be granted. For further inquiries and assistance relating to taxation, do not hesitate to contact our associate specializing in taxation law, Ms. Anita Mihardja ([email protected] or [email protected]).

Source  :     'Govt. to Grant Net Income Deduction Facilities for New Investments in Labor-Intensive Industries', Indonesian Legal Brief, 27 March 2020, Accessed 28 March 2020, (www.hukumonline.com).