INDONESIAN GOVERNMENT REGULATION IN RESPONSE TO THE COVID-19 PANDEMIC

April 2020

Below are the unofficially translated regulations provided by the government of Indonesia to face COVID-19.

Due to the developing situation, Moores Rowland will update this article regularly.

This article is last updated on 22 April 2020.

POLICIES FOR THE BUSINESS

The State Budget shall keep the business industry moving and the Indonesian economy growing.

Policies of the Ministry of Finance for businesses and MSMEs:

1. Income Tax article (PPh) 21[1] is borne by the government for 440 manufacturing industry sectors which are relaxation on the import of goods for export purposes (KITE) companies valid from April to September 2020.
2. Exemption for PPh 22[2] for 102 specific sectors and / or KITE companies is valid no later than 30 September 2020.
3. Reduction of PPh 25[3] installments by 30% to 102 certain sectors and / or KITE companies is valid no later than September 2020.
4. The acceleration of VAT refunds are allowed for 102 certain sectors or KITE companies which overpaid VAT at a maximum of Rp5 billion.
5. Reduction in the general corporate income tax from 25% to 22% in 2020 and 2021, and 20% in 2022.
6. The reduction for Income Tax for Public Companies is 3% lower than the general tariff.
7. Imposition of VAT and Income Tax for electronic transactions.
8. Extension of the application period / tax administration settlement.
9. VAT is borne by the government for government agencies, referral hospitals, or other parties appointed to assist in handling COVID-19 on imports, acquisition and / or utilization of goods and services for handling COVID-19, effective April through September 2020.
10. Exemption of PPh 22 for the import and / or purchase of goods for handling COVID-19 conducted by government agencies, referral hospitals, or other parties appointed to assist in handling COVID-19, effective April through September 2020.
11. Exemption of PPh 22 for the sale of goods for handling COVID-19 to government agencies, referral hospitals, or other parties appointed to assist in handling COVID-19, effective April through September 2020.
12. Exemption of PPh 21 to domestic individual’s taxpayers who receive compensation from government agencies, referral hospitals, or other parties appointed for handling COVID-19 services.
13. Exemption of PPh 23[4] for domestic entities and forms of business taxpayers that receive compensation from government agencies, referral hospitals, or other parties appointed for technical, management, consultant, or other services needed in handling COVID-19, valid April through September 2020.
14. Additional incentives for companies listed in Bonded Zones (KB) and KITE that does delivery of production used to mitigate the impact of Covid-19 disease, and tools health for employees, and tax incentives for delivering local goods.
15. Provision of the postponement of the excise payment facility. The tax tape order submitted by the factory entrepreneur on 9 April-9 July 2020 will be granted a payment delay of 90 days or approximately 3 months.
16. Simplification / reduction of the number of import activities in order to improve the smoothness and availability of raw materials.

1. Reduction of the number of imported of Restricted and Prohibited Goods (Lartas), for producers (the initial stage will be applied to steel products, alloy steel, and its derivative products).
2. Simplification of regulations that regulates more than one ministries and agencies (duplication) in the form of horticulture, animal and animal products, as well as drugs, medicinal ingredients, and food.
3. Reduction of the number of imported Lartas for strategic food products used in the manufacturing industry, such as industrial salt, sugar, flour, corn, meat, potatoes, etc.

1. Simplification / reduction of the number of exported Lartas products to increase export smoothness and competitiveness:

1. Reduction of exported Lartas by 749 HS codes (55.19%) of the total export Lartas (1,357 HS) or 6.91% from Indonesian Customs Tariff Book (BTKI) 2017:

• Fish and fish products (Health Certificate) 443 HS codes (4.09%) of the 2017 total BTKI;
• Forestry industry products (V-Legal) 306 HS codes (2.82%) of the 2017 total BTKI.

1. Health Certificate and V-Legal documents are no longer the export requirements documents unless required by exporters in the destination country. Example: V-Legal for EU purposes.

1. Acceleration of the export and import process for reputable traders (companies with high levels of compliance) to increase the smooth flow of goods to reduce logistics costs.

1. Lartas is processed by auto respond or auto approval
2. Elimination of LS (direct buying) for commodities that are required
3. Customs to send import realization report to related Ministries/ Agencies
4. Data from reputable traders has been submitted by DJBC to the Ministry of Trade (still in the research process)
5. It is proposed to make a regulation governing the relaxation of reputable traders

1. Development of National Logistics Ecosystem (NLE). NLE is a platform that facilitates collaboration of information systems between government and private agencies to simulate and synchronize the flow of information and documents in export / import activities at ports and trade / distribution activities in domestic goods through data sharing, business process simulations, and elimination of repetition, and duplication. It aims to increase and accelerate the services of the export-import process.
2. Exemption of ethyl alcohol excise for the prevention and control of COVID-19 based on orders from government agencies and non-governmental organizations.
3. Relax the provisions on the import of medical devices for the purpose of handling COVID-19 in the form of exemption from the obligation to issue a distribution permit or Special Access Scheme (SAS).

POLICIES FOR UMKM (MICRO, SMALL, AND MEDIUM ENTERPRISES)

The State Bugdet protects people whose income is reduced or lost due to the COVID-19 pandemic, including the Micro, Small, and Medium Enterprises sector.

Policies of Government with Bank Indonesia and OJK (Financial Services Authority):

1. Postponement of principal and interest payments for all KUR schemes that are affected by COVID-19 for 6 months.
2. Provision of relief and / or postponement of credit or leasing payments of up to Rp10 billion, including for MSMEs and informal workers, up to 1 year.
3. Loan restructuring through improving the quality of loans / financing, implemented by the Bank without credit ceiling limits.
4. Postponement of principal and interest installments for 6 months through credit restructuring for debtors of the Ultra Micro Financing (UMi) program affected by COVID-19.
5. Relaxation of administrative requirements and improvement of speed in giving UMi credit.
6. Ease and expansion of UMi lending.
7. The budget for the Pre-work Card (Kartu Prakerja)  was raised from Rp10 trillion to Rp20 trillion for 5.6 million workers who were laid off or laid off with unpaid leave, informal workers, and micro and small businesses affected by COVID-19. The beneficiaries receive training costs of Rp1 million, post-training incentives of Rp600 thousand / month for 4 months, and employment survey incentives of Rp150 thousand for 3 surveys.

POLICIES FOR MIDDLE CLASSES

The State Budget aim to keep maintaining people's purchasing power amid the COVID-19 pandemic.

Policy of the Ministry of Finance:

1. PPh 21 is borne by the Government for manufacturing industry workers with an income of up to 200 million per year;
2. Relaxation of reporting and deposit of Annual Personal Tax Return 2019 until 30 April 2020.
3. The budget for the Pre-work Card (Kartu Prakerja) was raised from Rp10 trillion to Rp20 trillion for 5.6 million workers who were laid off or laid off with unpaid leave, informal workers, and micro and small businesses affected by COVID-19. The beneficiaries receive training costs of Rp1 million, post-training incentives of Rp600 thousand / month for 4 months, and employment survey incentives of Rp150 thousand for 3 surveys.

POLICIES FOR LOW-INCOME CLASSES

The State Budget assists people whose income is reduced or lost and ensures the availability of basic necessities.

Policy of the Ministry of Finance Policy:

1. The number of Beneficiary Families (Keluarga Penerima Manfaat/KPM) of the Family of Hope Program (Program Keluarga Harapan/ PKH) is increased from 9.2 million to 10 million families.
2. The previous distribution of PKH per 3 months, became per month from April to December 2020. From April to June, KPM receives PKH twice.
3. The number of beneficiaries of the nine-basic-necessity cards (Kartu Sembako/Sembako Card) is increased from 15.2 million to 20 million people.
4. The nominal value of the Sembako cards rise from Rp150,000 to Rp200,000 per KPM, given for nine months to December 2020.
5. Exemption of 3 months postpaid and prepaid electricity costs (April-June 2020) for 24 million 450 VA electricity customers and 50% discount for 7 million 900 VA customers.
6. The budget for the Pre-work Card is raised from IDR 10 trillion to IDR 20 trillion for 5.6 million for workers who are laid off or laid off with unpaid leave, informal workers, and micro and small businesses affected by COVID-19. The beneficiaries receive training costs of Rp1 million, post-training incentives of Rp600 thousand / month for 4 months, and employment survey incentives of Rp150 thousand for 3 surveys.
7. Logistics support for groceries and basic needs worth Rp25 trillion.
8. Additional housing incentives for the construction of low-income community housing up to 175,000 units.