Head of Investment Coordinating Board (BKPM) has issued policy on guideline and procedure for submitting request for Income Tax exemption or reduction (Tax Holiday). To obtain tax facility, taxpayer shall submit an application to Head of BKPM or the Industry Ministry. So, investors may choose to submit the application for tax holiday to the BKPM or the Industry Ministry.
The policy of Head of BKPM stipulates a period of 14 working days since Applicant/Taxpayer submits application until issuance of recommendation of Head of BKPM concerning grant of holiday facility to the Finance Minister. The stages are as follows:
Complete application shall be received at the BKPM’s One-Roof Integrated Service (PTSP) and addressed to Head of BKPM within 1 day.
If Head of BKPM is absent for 2 days, BKPM’s Deputy for Investment Services shall start performing review and verification within 2 days.
The team shall perform preliminary review and verification and ask the applicant to do presentation in 1 day.
Applicant shall perform presentation and the Team shall review the result of presentation within 5 days.
The Team shall make details of verification and submits result of review and verification and submits result of review and verification to the Deputy for Investment Services within 3 days.
The Deputy for Investment Services shall present the result of review and verification to Head of BKPM. If the application is approved, the Deputy for Investment Services shall make a proposal letter of Head of BKPM to the Finance Minister. If application is rejected, the Deputy for Investment Services shall submit a letter of rejection to the applicant. This shall be done within 2 working days.
After Head of BKPM issues policy on guideline and procedure for submitting application for tax holiday, the investment company concerned whose business activities are classified as “pioneer industry” that has meet the stipulated requirements, may submit a tax holiday application through BKPM. With grant of tax holiday facility for 5-10 years, it is expected that the companies whose field of business is in pioneer industry such as oil refinery, steel industry, and renewable energy sources will grow and develop in Indonesia. This field of business is highly required to strengthen the deepening of Indonesia’s industry structure and economy.
Pioneer industries that can be given tax holiday facility are basic metal industry, oil refinery industry, and/or organic chemicals derived from natural oil and gas, machinery industry, and renewable energy and/or telecommunication devices industry. There industries shall have a minimum investment of Rp 1 trillions. Yet, however, by considering competitiveness of national industry and strategic value of certain businesses, the Finance Minister may grant tax holiday facility to other industries in addition to the pioneer industries.