Prayogo Serevin Wisnumurti, Fathan Qorib
Mrs. Sri Mulyani Indrrawati, Minister of Finance of the Republic of Indonesia. Photo by: RES
Indonesia’s Ministry of Finance has just made a breakthrough in terms of land-and-building tax. On 20 June 2017, Minister of Finance Mrs. Sri Mulyani Indrawati signed Regulation No. 82/PMK.03/2017 (Regulation 82/2017) on Land-and-Building Tax (Pajak Bumi dan Bangunan
– PBB), which makes a number of adjustments to the previous provisions on PBB deductions.
As quoted on the official setkab.go.id
website on Monday (10/7), PBB deductions can now be granted to taxpayers who meet two requirements. Firstly, the tax object should have a relationship to the tax subject (i.e. the taxpayer). Secondly, taxable objects should have been affected by natural disasters or by other force-majeure events.
Article 2, Paragraph (2), Parts (a) and (b) of Regulation 82/2017 set out certain conditions involving loss and liquidity difficulties at: 1) The end of the fiscal year prior to the year in which a given PBB deduction application is filed (if the relevant taxpayer undertakes a process of bookkeeping); or 2) The end of the calendar year prior to the year in which a given PBB deduction application is filed (if the relevant taxpayer undertakes a process of account recording).
The term “loss”as defined under Regulation 82/2017 refers to any commercial loss which is proved by: 1) Financial statements which are attached to an Annual Tax Return (Surat Pemberitahuan Tahunan
- SPT) of Annual Income Tax (Pajak Penghasilan
- PPh); or 2) Accounts which are attached to SPT PPh (if the relevant taxpayer does not undertake a process of bookkeeping).
Meanwhile, the term “liquidity difficulties” as mentioned above refers to a condition whereby taxpayers are unable to pay their short-term debts. Finally, the term “natural disaster” as defined under Regulation 82/2017 refers to an event or series of events which are the result of natural occurrences such as earthquakes, tsunamis, volcanoes, floods, hurricanes or landslides.
Further on in the regulation, specifically under Article 4, Paragraph (1), Parts (a) and (b) of Regulation 82/2017, it is clearly stated that PBB deductions can be granted for: a) A maximum of 75% of payable PBB (under certain conditions whereby the tax object has a relationship with the tax subject); or b) A maximum of 100% of payable PBB (under certain conditions whereby the relevant taxable objects are affected by natural disasters or other force-majeure events).
The term “payable PBB” as defined under Regulation 82/2017 refers to the amount of: 1) Tax stated in the relevant Notification of Due Tax (Surat Pemberitahuan Pajak Terutang
– SPPT); 2) Tax plus administrative fines, as stated in a Tax Assessment Letter (Surat Ketetapan Pajak
- SKP); and 3) Tax plus administrative fines, as stated in a Tax Collection Letter (Surat Tagihan Pajak
Applications for PBB Deductions
According to Regulation 82/2017, a PBB deduction is to be granted based on a taxpayer’s application, which is to be submitted to the Head of the Tax Service Office (Kantor Pelayanan Pajak
- KPP) on behalf of the Ministry of Finance.
It is stipulated under Regulation 82/2017 that a PBB deduction application under certain conditions must be submitted within three months of receipt being taken of a SPPT, within one month of receipt being taken of a SKP PBB, within one month of receipt being taken of a STP PBB (as issued based on a PBB objection letter) or within one month of receipt being taken of a SPPT, SKP PBB or STP PBB.
Meanwhile, PBB deduction applications which relate to natural disasters or force-majeure events must meet a number of requirements, including: 1) Must be filed within six months of the natural disaster in question; and 2) Must repeal any PBB objection applications, appeal applications, reconsideration applications or requests for corrections and cancellations.
The Head of the Regional Office of the Directorate General of Taxation (Direktorat Jenderal Pajak
- DJP), acting on behalf of the Ministry of Finance, has the authority to assess and decide upon all PBB deduction applications, a process which should be completed within four months of receipt being taken of any PBB deduction application.
This new Ministry of Finance Regulation has been in force since 21 June 2017.