Overview

In an effort to establish a fair, sound, effective and accountable taxation system across Indonesia, while also narrowing the budget deficit and increasing the overall tax ratio,[1] the House of Representatives (Dewan Perwakilan Rakyat – “DPR”) passed the Bill on Harmonization of Taxation Regulations (“Bill”) into law during a plenary meeting that was held on 7 October 2021. Comprising nine chapters and 19 articles, the Bill adopts the omnibus law approach[2] and encompasses provisions that address the following specific areas: 1) General taxation provisions and procedures (ketentuan umum dan tatacara perpajakan – “KUP”); 2) Income tax (pajak penghasilan – “PPh”); 3) Value-added tax (pajak pertambahan nilai – “PPN”); 4) The Taxpayer Voluntary Disclosure Program; 5) Carbon tax; and 6) Excise.[3] Furthermore, in terms of its omnibus characteristics, the Bill’s many provisions amend the following laws:[4]