Tax Allowance Facility Can Be Revoked, What Causes It?

The PROVISION of tax allowance facilities aims to encourage business activity and accelerate national development. Corporate taxpayers who have met certain requirements and criteria, of course, are entitled to a tax allowance facility based on the decree.

The decree was issued by the head of the Investment Coordinating Board (BKPM) for and on behalf of the minister of finance. However, the tax allowance facility that has been given has the potential to be revoked by the government. Several things cause the facility to be revoked.

The legal basis for the revocation of the net income reduction facility 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. 96/PMK.010/2020 concerning Amendments to the Regulation of the Minister of Finance No. 11/PMK.010/2020 concerning the Implementation of Government Regulation No. 78 of 2019 concerning Income Tax Facilities for Investment in Certain Business Fields and/or in Certain Regions (PMK 96/2020 ).

Based on Article 17 paragraph (1) of PMK 96/2020, the decision to grant the tax allowance facility can be revoked if the corporate taxpayer no longer fulfills several provisions.

First, corporate taxpayers no longer fulfill certain business fields and business fields in certain regions that are entitled to income tax facilities (PPh) as stipulated in Article 2 of PMK 96/2020 and Appendix I and Appendix II of PP 78/2019.

Second, the application for the tax allowance facility is not made before the start of commercial production. In other words, the submission of an application for a tax allowance facility from a taxpayer should be done before starting commercial production through online single submission (OSS). This provision is by Article 6 paragraph (4) of PMK 96/2020.

Referring to Article 1 point 7 of PMK 96/2020, when commercial production starts, it can be understood as the first time the production results or services from the main business activities are sold or delivered or are used alone for further production processes.

Third, if the corporate taxpayer uses tangible fixed assets other than to provide facilities or is transferred unless it is replaced with new tangible fixed assets. The prohibition on using tangible fixed assets other than to provide facilities or being transferred is stated in Article 16 of PMK 96/2020. The procedure for replacing assets in the use of the tax allowance has been described in the previous article.

In addition to revocation, if the corporate taxpayer does not meet the provisions described above, it will be subject to tax and sanctions by the provisions of the legislation in the field of taxation.

Then, based on the provisions of Article 17 paragraph (1) of PMK 96/2020, corporate taxpayers are also no longer able to obtain income tax facilities for investment in certain business fields and/or in certain areas.

By Article 17 paragraph (3) and paragraph (4) of PMK 96/2020, the revocation of the decision to approve the granting of such facilities is determined by the director-general of taxes for and on behalf of the minister of finance. (wow)

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