The Government Officially Reduces Income Tax Rates

Topic

The government again provides tax incentives for the private sector. Through the Director General (Perdirjen) Tax Regulation No. PER-8/PJ/2020 on Calculation of Income Tax Installments with Tariff Adjustments for Corporate Taxpayers, the government officially reduces the corporate income tax (PPh).

There are two tariff reduction incentives. First, a general income tax reduction for all corporate taxpayers. The original tax rate of 25 percent was lowered to 22 percent for 2020 and 2021. In 2022, the tax rate will be reduced again to 20 percent.

Second, a reduction in tax rates for public companies whose shares are traded on the Indonesia Stock Exchange (IDX). The requirement is that the portion of shares traded on the stock exchange be at least 40 percent of the total shares of the company. They will enjoy three percent lower tariffs. So, these companies will enjoy 19 percent income tax rates in 2020 and 2021 and 17 percent in 2022.

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