In the effort to ease procedures on the facilitation of tax holiday, the Directorate General of Tax had issued two regulations on the execution of tax holiday this December 2011. The two regulations regulated the beginning of commercial production for tax subject [WP] who were entitled to tax holiday and the procedures of reporting of fund utilization and realization of capital investment for organizational tax subject getting tax holiday.
Regulation of the Directorate General of Tax No: PER-45/PJ/2011 stipulated that by subjects [WP] which already had approval from the Ministry of Finance to have tax holiday was when they had realized all capital investment and had sold their production to the market. Only when such requirements were fulfilled, the tax subjects were allowed to benefit from the holiday.
To make sure that the two requirements were fulfilled, the Directorate General of Tax would carry out field examination based on written request of WP. To ensure accountability of examination, the Director General of Tax planned to issue a decree on the stipulation to commence production commercially within at least two months since issuance of notification letter addressed to tax subject.
Regulation of the Directorate General of Tax no: PER-44/PJ/2011 stipulated that report on fund utilization by tax subject having access to tax holiday must be submitted every quarterly. Meanwhile report on the realization of capital investment which had been audited must be submitted to annually. The two reports must be submitted to the Director General of Taxation and the Committee for Verification and Issuance of Tax Holiday facilities.
In the event that receiver of tax holiday failed to report within the given time, the Directorate General of Tax could propose to the Committee of Verification of Tax Holiday extension whereby to issue recommendation to the Minister of Finance to cancel the given tax holiday.