Last year, the government had issued Government Regulation No. 51 of 2008 on Income Tax on Income from Construction Services to increase the collection of income tax and the levels of compliance by tax payers. In order to facilitate the collection of income taxes in the construction services sector while simultaneously seeking to protect the conduciveness already established in the sector, the government has issued Regulation No. 40 of 2009 as a means of perfecting the earlier regulation.
The basic premise of the amendment has been driven by increasing material value that potentially hampers the existence of the sector.
Article 10 has been amended and 3 Articles have been inserted between Articles 10 and 11, specifically: Articles 10A, 10B, and 10C.
The new articles specifically deal with the income tax of any contract that is signed prior to 1 August 2008 and executed (payment, among others) no later than 31 December 2008.
Article 10 has been amended to state that any tax payers or permanent entity in the field of construction services is bound by the income tax provisions in Law No. 17 of 2000, and they would receive a tax deduction if they qualify as small-scale enterprises or have a procurement value of not more than IDR 1 Billion.
The Elucidation explains that although Law No. 17 of 2000 had been amended by Law No. 36 of 2008, the previous provisions still apply as a result of the enforcement of this Regulation being retroactively applied from 1 August 2008.
Article 10A sets out that Article 10 applies if the Record of Transfer of the Completion of Work (Berita Acara Serah Terima Penyelesaian Pekerjaan) is signed before 31 August 2008.
Furthermore, Article 10B stipulates that Regulation No. 51 of 2008 is applicable to any contract that is signed after 1 August 2008. Finally, Article 10C provides that any losses arising from construction services activities up to the 2008 tax year can only be claimed in the relevant party’s 2008 tax claim.
The Regulation has retroactive force from 1 August 2008. The Regulation was issued on 4 June 2009.
Last year, the government had issued Government Regulation No. 51 of 2008 on Income Tax on Income from Construction Services to increase the collection of income tax and the levels of compliance by tax payers. In order to facilitate the collection of income taxes in the construction services sector while simultaneously seeking to protect the conduciveness already established in the sector, the government has issued Regulation No. 40 of 2009 as a means of perfecting the earlier regulation.
The basic premise of the amendment has been driven by increasing material value that potentially hampers the existence of the sector.
Article 10 has been amended and 3 Articles have been inserted between Articles 10 and 11, specifically: Articles 10A, 10B, and 10C.
The new articles specifically deal with the income tax of any contract that is signed prior to 1 August 2008 and executed (payment, among others) no later than 31 December 2008.
Article 10 has been amended to state that any tax payers or permanent entity in the field of construction services is bound by the income tax provisions in Law No. 17 of 2000, and they would receive a tax deduction if they qualify as small-scale enterprises or have a procurement value of not more than IDR 1 Billion.
The Elucidation explains that although Law No. 17 of 2000 had been amended by Law No. 36 of 2008, the previous provisions still apply as a result of the enforcement of this Regulation being retroactively applied from 1 August 2008.
Article 10A sets out that Article 10 applies if the Record of Transfer of the Completion of Work (Berita Acara Serah Terima Penyelesaian Pekerjaan) is signed before 31 August 2008.
Furthermore, Article 10B stipulates that Regulation No. 51 of 2008 is applicable to any contract that is signed after 1 August 2008. Finally, Article 10C provides that any losses arising from construction services activities up to the 2008 tax year can only be claimed in the relevant party’s 2008 tax claim.
The Regulation has retroactive force from 1 August 2008. The Regulation was issued on 4 June 2009.
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