Obligation of Compiling Realization Reports for Tax Allowance Recipients

AFTER the decision from the Director-General of Taxes stating that the taxpayer has the right to take advantage of the tax allowance facility, the taxpayer concerned is required to fulfill certain obligations.

The obligation in question is the preparation of reports on investment realization and product realization. The two reports will later become the basis for the government to carry out the monitoring process.

The obligation to submit reports on the realization of investment and production is regulated in Government Regulation no. 78 of 2019 concerning Income Tax Facilities for Investment in Certain Business Fields and/or in Certain Regions ( PP 78/2019 ) and its derivatives rules.

The derivative rule in question is the Minister of Finance Regulation No. 11/PMK.010/2020 concerning the Implementation of Government Regulation Number 78 of 2019 concerning Income Tax Facilities for Investment in Certain Business Fields and/or in Certain Regions stated Regulation of the Minister of Finance No. 96/PMK.010/2020 ( PMK 96/2020 ).

Based on Article 15 paragraph (1) of PMK 96/2020, corporate taxpayers who have obtained a decision on the approval of the granting of corporate income tax facilities are required to submit a realization report regarding 2 things.

First, is the report on the amount of investment realization. The investment realization report should at least contain information on the identity of the corporate taxpayer, the total plan and realization of investment, and the source of financing.

For the investment realization part, corporate taxpayers must state the amount of investment that has been issued in a period. The amount of investment in question can be in the form of the purchase value of land, buildings or buildings, machinery, equipment, and also working capital.

Then, the realization report is prepared and signed by the authorized company management or the taxpayer’s proxy by including the name, position, and also the company seal. If the investment realization report is submitted by the taxpayer’s proxy, a special power of attorney also needs to be attached.

The second, is the production realization report. For the product realization report, there is some information that must be included, namely the identity of the corporate taxpayer, the decision number for the provision of tax allowance facilities, and the realization of production. In the production realization section, corporate taxpayers are required to state the amount of production capacity, production realization within a certain period, as well as the production price.

For information, reports on investment realization and product realization are prepared according to the format specified in Attachment letter D of PMK 96/2020. Then, the realization report must be submitted to the director of audit and collection and the head of the tax service office (KPP) where the taxpayer is registered.

Referring to Article 15 paragraph (2) of PMK 96/2020, the submission period for the two realization reports is no later than 30 days after the end of the tax year in question. For investment realization reports, the determination of the period is calculated from the issuance of the decision on the approval of the tax allowance facility until the issuance of the decision when commercial production begins.

Meanwhile, for the production realization report, the submission period is determined from the issuance of the decision when starting commercial production until the end of the fiscal useful life of the asset.

If the corporate taxpayer does not submit the realization report or submits but does not meet the provisions of the specified period, the relevant taxpayer can be audited by the Directorate General of Taxes (DGT). This provision is as regulated in Article 15 paragraph (3) of PMK 96/2020.

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