Income Tax Incentives - Three Sectors Targeted

The Minister of Finance has issued Regulation No. 43/PMK.03/2009 to codify the elimination of Article 21 income tax under the provisions of Law No. 41 of 2008 on the 2009 State Budget. This is provided as an incentive to three specific sectors. The basic premise of the Regulation is that in times of financial instability or crisis the government must take pro-active and pre-emptive measures in order to minimize any long term damage to the Indonesian economy and to Indonesian businesses.

The three sectors that are to benefit from these incentives are:

There is an extensive list of sub-sectors within each of these three sectors. All are listed in an attachment to this Regulation. The attachment is some 55 pages in length and can be viewed at this location http://beta.hukumonline.com/Peraturan/PERMEN_KEU_43PMK032009_2009_L.pdf.

The Regulation sees the government becoming responsible for some IDR 6.5 trillion in tax revenue. The incentives are to be afforded to employees within these sectors for gross income of up to IDR 5 million.

Any additional regulations required under this Regulation are to be in the form of Director General of Taxation Regulations.

The Regulation was issued on 3 March 2009 and remains valid through 31 December 2009.