New Tax Amnesty Rule Directs Funds to Renewables, Processing Industries

The Finance Ministry has issued a new regulation to steer the proceeds of the second tax amnesty toward renewable energy development and certain processing industries. Finance Ministerial Decree No. 52/2022 states that 332 such industries may receive more of the proceeds than others. These include geothermal power production, power generator manufacturing, meat processing, furniture making, crude palm oil processing, and ceramic manufacturing.

The decree is a derivative of Finance Ministerial Regulation No. 196/2021 that offers lower tax rates of 6 to 12 percent on declared assets on the condition that they go either into government bonds (SBN) or direct investment in renewables or processing industries. A higher rate of 8 to 18 percent is payable on declared assets that go into any other industries or financial instruments. Neilmaldrin noted that the investments had to be made by September 2023 and with a minimum holding period of five years for the amnesty to apply. Taxpayers were also allowed to switch between investing in the 332 industries and investing in government bonds, under certain terms and conditions.

The tax office reported that 17,754 taxpayers had signed up for the tax amnesty as of Feb 28. They had declared Rp18.73 trillion (US$1.31 billion) in assets at home and Rp1.3 trillion abroad.  The taxpayers have invested in Rp1.1 trillion in government bonds and contributed Rp2.2 trillion in income tax through the amnesty program as of that date.

March 5, 2022, The Jakarta Post