{"id":281,"date":"2025-04-05T08:00:58","date_gmt":"2025-04-05T01:00:58","guid":{"rendered":"https:\/\/pro-visioner.com\/pvk\/?p=281"},"modified":"2025-04-05T08:00:58","modified_gmt":"2025-04-05T01:00:58","slug":"taxation-cluster-job-creation-law","status":"publish","type":"post","link":"https:\/\/pro-visioner.com\/pvk\/taxation-cluster-job-creation-law\/","title":{"rendered":"Taxation Cluster Job Creation Law"},"content":{"rendered":"\n

pro-visioner.com <\/a>– Testing the Efficacy of the Taxation Cluster Job Creation Law , The controversy over the Job Creation Bill, which people call the omnibus law, is over. The drama behind the passing of this law has become its own color. Pros and cons have emerged from experts in law, economics, state administration, and other components of society. Demonstrations have erupted everywhere, adding to the excitement of this law. However, this time, the author will only focus on the strategy and purpose of the government in issuing this regulation in order to add insight to the loyal readers of Tax Magazine.<\/p>\n\n\n\n

It is worth mentioning that this taxation cluster does not substantially replace the old taxation laws, namely KUP Law, Income Tax Law, and VAT and STLG Law, but only amends several articles in those laws. Why is it changed and not replaced? Because according to the policy makers in this country, both in the legislature and the executive, the focus of the taxation law is still relevant to be used today, so it is enough to change a few important articles that are adjusted to its main house, namely Job Creation.<\/p>\n\n\n\n

As the name implies, the Job Creation Law aims to combine many laws or regulations in order to create an investment climate that is friendly to investors, aka creating ease of doing business. The hope is that once this main goal is achieved, a series of other goals will emerge, namely creating new jobs, driving economic growth, and most importantly securing state revenue in the taxation sector.<\/p>\n\n\n\n

From the above explanation, the author will convey that the taxation cluster is expected to contribute reliable state revenue in the field of taxation, through (1) increasing the number of investments, (2) voluntary compliance, (3) providing legal certainty, and (4) creating fairness in the business climate.<\/p>\n\n\n\n

These four main objectives are the reasons why the taxation cluster is included in the Job Creation Law. Now, in the first part of this edition, the author will try to test the reliability of the Taxation Cluster of Job Creation Law on the first objective, namely increasing the amount of investment in this country.<\/p>\n\n\n\n

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Taxation Cluster Job Creation Law<\/figcaption><\/figure>\n\n\n\n

2021 economic projection<\/p>\n\n\n\n

Let’s take a look at the outlook for the Indonesian economy in 2021 compiled by the coordinating ministry for the economy.<\/p>\n\n\n\n

Indonesia’s economy, according to the projections of three international institutions, namely the OECD, World Bank and IMF, is in the top three in the world as a country that will increase its GDP (gross domestic product) in 2021.<\/p>\n\n\n\n

There is also other data that shows this optimism with the rebound of the household consumption index in the third quarter (Q3) of 2020, which had contracted, causing Indonesia to enter the brink of recession.<\/p>\n\n\n\n

The name is also a projection, of course it cannot be ensured that the final result is 100 percent accurate. It still has to be proven by the policies that accompany it. One of the policies that is awaited and used as a game changer in dealing with the Covid-19 pandemic outbreak is the discovery of the anti-Covid-19 vaccine which is planned to be given en masse and free of charge to all Indonesian citizens.<\/p>\n\n\n\n

The amended tax regulations in the Job Creation Law can be seen in Articles 111, 112 and 113 of this law which mention seven policies to increase investment, namely:<\/p>\n\n\n\n

A gradual reduction in the Corporate Income Tax rate of 22 percent (2020 and 2021) and 20 percent (2022 onwards).
A reduction in the corporate income tax rate for taxpayers going public (general rate reduced by 3 percent).
Elimination of income tax on dividends from within the country.
Dividends and after-tax profits from overseas are not subject to income tax as long as they are invested in Indonesia.
Non-object to Income Tax on (a) Share of profit\/SHU of cooperatives, and (b) Hajj funds managed by BPKH.
Room for Adjustment of Income Tax Article 26 Rate on b
Investment in the form of assets (imbreng) is not payable to VAT.
The seven policies touch on income tax (PPh) and value-added tax and sales tax on luxury goods (PPN & PPnBM) regulations. Let’s take a deep dive into these seven policies.<\/p>\n\n\n\n

First, the reduction of the Corporate Income Tax rate from 25 percent shows that the tax rate on income in our country is relatively high and less competitive with other neighboring countries. The average corporate income tax rates in various regions are the world (23%), Europe (21.77%), OECD (23.59%), ASEAN (23.35%), Asia (20.95%), and Africa (28.20%). This means that our country’s tax rate is higher than the average ASEAN country. Simply put, investors are looking for a lower tax rate as their investment destination. Therefore, it is only natural that the Corporate Income Tax rate is changed to below the average rate of ASEAN countries.<\/p>\n\n\n\n

Second, the Corporate Income Tax rate for taxpayers listed in the national stock exchange market or going public has also decreased by 3 percent from the general rate. In 2021, the general rate is 22 percent, while the rate for taxpayers going public is only 19 percent, which will be only 17 percent in 2022. The reduction in the WP go public rate is likely to encourage domestic companies to immediately conduct an IPO (initial public offering). Being a publicly listed company means that it is much better qualified and trusted. It is considered more accountable because it uses a good financial and audit system so that the risk of fraud is small. The government does not need a big effort to monitor the compliance of taxpayers who have IPO (go public).<\/p>\n\n\n\n

Third, the elimination of income tax on domestic dividends is also an effort to attract domestic and foreign investors because of course they expect dividends on their investment results. Dividends will not be subject to income tax if they come from within the country received by (a) Domestic Individual Taxpayers, as long as they are invested in the territory of the Republic of Indonesia within a certain period of time, and\/or (b) Domestic Corporate Taxpayers, are not subject to income tax (excluded from tax objects).<\/p>\n\n\n\n

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Fourth, dividends originating from abroad and after-tax income from an offshore business unit are not subject to income tax in Indonesia, in the event that they are invested or used to support other business activities in the territory of the Republic of Indonesia within a certain period of time and originate from an offshore listed company or an offshore private company.<\/p>\n\n\n\n

However, there are provisions for private companies abroad, namely (a) dividends invested in Indonesia, are not subject to income tax, (b) if invested below 30 percent of the profit after tax of the Foreign Business Entity, the difference from 30 percent minus the realization of investment in Indonesia (which is less than 30 percent), is subject to income tax; (c) the remaining profit after tax of the Foreign Business Entity after deducting a and b, is not subject to income tax.<\/p>\n\n\n\n

Fifth, exempted from the object of Income Tax are (1) the share of profit or the remaining results of operations received or obtained by members of cooperatives, limited liability companies whose capital is not divided into shares, partnerships, associations, firms, and partnerships, including unit holders of collective investment contracts; (2) deposit funds for Hajj Pilgrimage Fees (BPIH) and\/or special BPIH, and income from the development of Hajj finance in certain fields or financial instruments, received by the Hajj Financial Management Agency (BPKH) whose provisions are regulated by or based on the Minister of Finance Regulation; (3) surplus received\/obtained by social and religious bodies or institutions registered with the agency in charge, which is reinvested in the form of social and religious facilities and infrastructure within a maximum period of 4 (four) years from the acquisition of the surplus, or placed as an endowment fund, the provisions of which are further regulated by or based on a Minister of Finance Regulation.<\/p>\n\n\n\n

This new regulation indicates that the state provides very broad opportunities to communities, organizations or groups engaged in social and religious affairs. They will be more free to attract constituents and provide solutions to community problems because the government does not collect taxes on the income or surplus of their activities. And of course, cooperatives are also given further space to maneuver their business-especially into MSMEs-because the profit sharing received by members will not be taxed. This means that cooperatives can become leaders of MSMEs in channeling funds or independently managing their business units without worrying about the imposition of taxes on the profits they earn. In other words, the state wants to invite its people to dare to invest in cooperative legal entities, firms, CVs, and the like.<\/p>\n\n\n\n

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