Micro Business

Up 2x from 2019, Tax Allowance Incentives are Used by Investors

Since August 2020, the Investment Coordinating Board (BKPM) has been given the authority to evaluate applications and provide tax allowances for entrepreneurs who have met the requirements. This policy is regulated in Minister of Finance Regulation (PMK) Number 96/PMK/0.10/2020 concerning Amendments to Amendments to PMK Number 11/PMK.011/2020 concerning Implementation of Government Regulation Number 78 of 2019 concerning Income Tax Facilities for Investment in Certain Fields and /or Certain Areas. However, it should also be noted that the requirements and criteria for the tax allowance are still the same and have not changed at all.

This good news is warmly welcomed by entrepreneurs in Indonesia. The tax allowance incentive is in demand by investors and even exceeded the number of applications in 2019 by 200%. Here is the full review.

What is a tax allowance?

In short, a tax allowance is a tax facility or incentive that cuts taxable income (PKP) by the amount of investment or investment in several regional business fields. This tax incentive is only given to investments that have a high value for exports, have a high level of local content, and have an impact on large employment.

According to BKPM, the tax allowance incentive is popular with investors because it provides a 30% reduction in net income based on the amount of investment made each by 5% for 6 years, accelerates depreciation of tangible fixed assets and amortization of intangible assets, and 10% income tax on dividends. , as well as compensation for losses between 5-10 years.

Furthermore, the tax allowance provided by BKPM on behalf of the Minister of Finance is also given automatically to small to medium-scale investments that fail to obtain a tax holiday, such as not having an investment value that reaches the tax holiday limit of Rp500 billion.


In addition, the terms and conditions of the tax allowance which are looser than the tax holiday are also one of the reasons why the tax allowance incentive is popular with investors. Domestic taxpayers whose investment has complied with the conditions mentioned above, can easily apply for a tax allowance.

The application process is so easy

There is no need to send an application letter or submit an offline application, now you and all taxpayers who meet the tax allowance requirements can apply for a tax allowance through the Online Single Submission (OSS) which is directly managed by BKPM. This facility has been in effect since August 11, 2020, and is believed to be one of the best-selling tax allowance incentive catalysts used by investors.

Business actors can apply at OSS by clicking on the Facility menu > Tax allowance > Application. Then, register the NIB and the project/business entity. Then proceed by filling in the blank fields in the business activity form by the business being run. Then, change the product data, select the product scope, and fill in the TKDN.

After that, please click Save Product and the applicant will get a notification on whether he is declared entitled to a tax allowance or not. This notification is included with a link that will take the applicant to the Tax Allowance Application page. Once completed, the applicant will be directed to the Requirements Document to upload several important documents. Finally, the applicant only needs to review the application to be submitted. The tax allowance application process is safe, easy, and fast with OSS.

The rate of submissions continues to increase

Since the implementation of the online tax allowance application process through OSS, the BKPM confirmed that 13 companies had submitted applications for the tax allowance. This is a significant achievement because only in the range of August-November, the same number of applications for tax allowances have been collected as in 2019.

In addition, BKPM also stated that in total there have been 26 applications for tax allowances received by BKPM from January 2020 to early November 1, 2020. Based on the data disclosed by BKPM, there were 3 applications in the second quarter of 2020, then 10 applications were added in the third quarter of 2020. , and 3 additional applications in the fourth quarter (until November 1, 2020).

It can be seen that the number of applications for tax allowances in 2020, especially since the authority to grant tax allowances was delegated from the Director General of Taxes to BKPM, has reached 2x from the 2019 period. Of course, this is clear evidence that the tax allowance incentives are in demand by investors and the government has also succeeded in promoting these facilities. and incentives to support entrepreneurs in Indonesia.
The tax allowance given in 2020 includes funds of IDR 28.3 trillion taken from the total value of the investment plan. Currently, tax allowance will be given to 166 business sectors which are included in the Standard Classification of Indonesian Business Fields and 17 KBLI in accordance with Government Regulation no. 78 of 2019.

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