The summary is: The Indonesian government has launched a Voluntary Tax Disclosure Program (PPS) from January to June 2022 to allow taxpayers to disclose previously unreported tax obligations. The PPS has two conditions - condition 1 is for those who participated in the 2016 tax amnesty but did not report all assets, while condition 2 is for individual taxpayers with unreported assets from 2016-2020. The PPS allows disclosure of assets in exchange for payment of final income tax rates ranging from 6-18% depending on the type of assets and conditions. The government has also increased individual income tax rates and VAT this year as part of tax reforms.

1. TAX FLASH
The government has once again provided an opportunity for taxpayers
to disclose their tax obligations that have not been fulfilled voluntarily
through the payment of income tax based on the disclosure of assets in
the Voluntary Tax Disclosure Program ("PPS").
This program can be implemented during the period from January 1,
2022 to June 30, 2022.
As of Wednesday, January 19, 2022, the Directorate General of Taxes
(DGT) of the Ministry of Finance recorded as many as 5,271 taxpayers
who have participated in the Voluntary Disclosure Program (PPS). Until
yesterday, the final income tax (PPh) that had been submitted in this
program reached IDR 384.84 billion. The total net assets disclosed by
these taxpayers reached Rp. 3.39 trillion. The net asset value consists of
a declaration of domestic assets of Rp. 2.68 trillion, of invested assets of
Rp. 251.1 billion, and a declaration ofassets abroad ofRp. 459.88 billion.
“Taxes are an important
backbone of a country.
There is no independent
country anywhere in the
world that does not collect
tax revenues. A strong
country, is a country which
is able to collect taxes
properly,”
~ Sri Mulyani (2021)
Voluntary Disclosure Program (PPS)
KIB E-newsletter January 2022
Today Issue:
- Voluntary Disclosure
Program
- VAT & Individual Tax
Rate increase
- Inconsistency in Coal
Export Ban
- Indonesia Economic
Situation

2. There are 2 conditions listed in this PPS program:
Condition 1
Who can take part in PPS condition 1?
Tax Amnesty participants in 2016 both individuals and corporate taxpayers who have not reported
all assets in the Asset Declaration Letter (SPH).
What is the basis for disclosure?
The basis for disclosure is the acquisition assets that are still owned as of December 31, 2015 and
have not been disclosed at the time of participating in the 2016 Tax Amnesty.
How much is the tariff?
11% for foreign declaration property
8% for repatriated overseas assets and domestic assets
6% for repatriated foreign assets and domestic assets, which are invested in SBN / downstream /
renewable energy
What are the benefits of joining PPS condition 1?
1. It is not subject to sanctions in Article 18 paragraph (3) of the Tax Amnesty Law of an
increase of 200%.
2. Data/information originating from SPPH relating to the implementation of the HPP Law
cannot be used as a basis for investigation, investigation, and/or criminal prosecution
against the Mandatory Tax.
What if DGT found other assets that are still not reported?
If found by the DGT, it will be considered as income and subject to Final Income Tax of 25% (Entity),
30% (Individual), 12.5% (Certain Taxpayers) of Additional Net Assets (PP-36/2017) plus a 200%
penalty.

3. What if the Repatriation/Investment default?
There is an additional Final Income Tax due to default Repatriation/Investment for condition 1
Condition 1
Final Income Tax Additional Final Income Tax
SPPH
Investmentfailure,
only foreign
repatriation/domestic
declaration
Failed investmentand
failed repatriation,
only foreign
declarations
Failed to repatriate,
only foreign
declaration
Overseas
Asset
Domestic
Asset
Voluntary SKPKB Voluntary SKPKB Voluntary SKPKB
Overseasasset
repatriation and
Domestic asset
declaration,
which are
investedin
Government
Securities /
downstream
natural resources
/ renewable
energy
6% 6%
3% 4.5%
6% 7.5%
Overseasasset
repatriation and
Domestic asset
declaration
8% 8%
4% 5.5%
Overseasasset
declaration
11%
Condition 2
Who can take part in PPS condition 2?
Those who can follow this PPS condition 2 are Individual Taxpayers who have or have not
participated in the 2016 Tax Amnesty on Assets acquired from 2016 to 2020 which are still owned as
of December 31, 2020 and have not been reported in the 2020 Annual SPT.
There are several Terms and Conditions for participating in PPS condition 2, including:
- Not being audited or booked for tax years 2016, 2017, 2018, 2019 and/or 2020
- Not being investigated, in the judicial process or undergoing a crime in the field of taxation
- Have tax id, pay final income tax
- Has submitted the 2020 Individual Tax Report
- Revoke requests for restitution or legal remedies for Fiscal Years 2016 to 2020

4. How much is the tariff?
18% for foreign declaration assets
14% for repatriated foreign assets and domestic assets
12% for repatriated Foreign assets and Domestic assets, which are invested in State
Securities/downstream/renewable energy
What is the benefit of joining PPS condition 2?
The benefit of joining PPS condition 2 is that no provisions are issued for obligations (Individual
Income Tax, Income Tax and VAT) for the year 2016 to 2020, unless assets are found that have not
been/under-disclosed and Data/information sourced from SPPH relating to the implementation of
the HPP Law cannot be serve as the basis for investigation, investigation, and/or criminal
prosecution of taxpayers.
Correction of the Individual Tax Report of PPS participants after the HPP Law was enacted (29
October 2021) is considered not to be submitted
What if the Repatriation/Investment default?
There is an additional Final Income Tax due to default Repatriation/Investment for condition 2
Condition 2
Final Income Tax Additional Final Income Tax
SPPH
Investmentfailure,
only foreign
repatriation/domestic
declaration
Failed investmentand
failed repatriation,
only foreign
declarations
Failed to repatriate,
only foreign
declaration
Overseas
Asset
Domestic
Asset
Voluntary SKPKB Voluntary SKPKB Voluntary SKPKB
Overseasasset
repatriation and
Domestic asset
declaration,
which are
investedin
Government
Securities /
downstream
natural resources
/ renewable
energy
12% 12%
3% 4.5%
7% 8.5%
Overseasasset
repatriation and
Domestic asset
declaration
14% 14%
5% 6.5%
Overseasasset
declaration
18%

5. INVESTMENT TERMS
1. Investment is made no later than September 30, 2023
2. Invested for 5 years ("holding period")
3. Investment can be transferred to another form after a minimum of 2 years
4. Transfer between investments a maximum of 2 times with a maximum of 1 transfer in 1
calendar year
5. A maximum gap of 2 years is given for transfers between investments
6. The inter-investment transfer delay suspends the holding period for 5 years
REPATRIATION PROVISIONS
1. Done by September 30, 2022
2. Invested for 5 years ("holding period")
Personal Income Tax Rate Increase in January 2022 and VAT
Increase in April 2022
the Law on the Harmonization of Tax Regulations has been enacted on October 7, 2021. The
government has confirmed that it will add one layer to the income tax tariff component. In this layer,
the amount of the income tax rate reaches 35% which is intended for people with incomes above IDR
5 billion per year. That way, rich people will pay higher taxes.
But on the other hand, the government also raised the lowest income tax rate of 5 percent to IDR 60
million from the previous IDR 50 million. In this way, domestic individual taxpayers are as follows:
This increase is in line with the trend of global taxation which has begun to increase revenue from
income tax.
> 5 Billion Rupiah
500 Million - 5 Billion
Rupiah
250 - 500 Million Rupiah
60 - 250 Million Rupiah
0 - 60 Million Rupiah
• 35%
• 30%
• 25%
• 15%
• 5%

6. Another context of the law is the increase in the VAT rate. The change in VAT will be implemented
starting from April 1, 2022. In this law, the government increases the current VAT rate of 10%
gradually to 11% starting April 1, 2022 and to 12% starting January 1, 2025.
The amendment to the Value Added Tax Law regulates the expansion of the Value Added Tax (VAT)
base by reducing VAT exemptions and facilities to better reflect justice and be on target, while
maintaining the interests of the community and the business world.
This regulation is intended that the expansion of the VAT base is carried out by considering the
principle of justice, the principle of benefit, especially in advancing the general welfare and the
principle of the national interest, so that the optimization of state revenues is carried out while still
realizing a tax system that is fair and with legal certainty.
VAT itself is one type of tax that is most often in direct with the public. The increase in VAT will have
an impact on consumer purchasing power, especially for basic and competitive products. In the Law
on the Harmonization of Tax Regulations (UU HPP) basic goods and the general public's main needs
for health services, education services, social services and several other types of services are abolished
from goods and services that are not subject to tax.
However, even though they are designated as taxable goods or services, they will be given a VAT
exemption facility so that middle- and small-income people will not pay VAT on the consumption of
these goods and services in the same way as the current condition. VAT for basic necessities only
applies to staple goods that have criteria or premium class. The same applies to the service sector,
such as health, education, to social services. In addition, the HPP Law also stipulates special tariffs for
certain types of goods and services, such as the goods and services tax (GST). Further provisions
regarding special VAT rates will be regulated in the Minister of Finance Regulation (PMK).

7. Inconsistency in Coal ExportBan
The government has ban coal exports on January 1-31 January 2022. According to the government,
the reason behind the ban on coal exports was to avoid energy crisis and inflation risk as experienced
by a number of countries. The ban on coal exports was aimed primarily at maintaining the
sustainability of domestic electricity supply because coal is still the main resource that dominates
power plants in Indonesia. The Ministry of Energy and Mineral Resources said that at least 20 steam
power plants (PLTU), both owned by PLN and independent power producers (IPP) experienced a coal
supply deficit. This has the potential to disrupt the reliability of electricity for more than 10 million
PLN customers ranging from the general public to industry, in Java, Madura, Bali (Jamali) and non-
Jamali areas.
Provisions regarding Domestic Market Obligation (DMO) are contained in the Decree of the Minister
of Energy and Mineral Resources No. 139.K/HK.02/MEM.B/2021. This provision regulates the
obligation of business actors to supply 25 percent of their total coal production for domestic needs. If
this DMO policy goes well, the government will not take the decision to ban exports. However, he
understands that the opportunity to export coal is very high, in line with the high price of this
commodity.
The policy of banning coal exports, which was only for a period of corn, was then revoked by the
government. The government has lifted the policy of banning coal exports as of Monday (10/1/2022).
This was done after the government held an evaluation coordination meeting for 5 days. Thus, as of
Wednesday (12/1/2022), coal export activities have begun to be carried out in stages. The
government's decision to lift the ban on coal exports also raises questions for many parties. The
government is considered inconsistent with the policy of banning coal exports. The reason is, the
export ban was lifted again less than two weeks after it was enforced.
Deputy for Investment and Mining at the Coordinating Ministry for Maritime Affairs and Investment,
Septian Hario Seto, said the steps to lift the export ban were taken because the coal crisis experienced
by PLN was under control. The government stated that the supply of coal to steam power plants is
getting better day by day with a volume reaching 16.2 million tons until mid-January 2022. He also
denied that the allegations regarding the opening of the coal export faucet were taken due to pressure
from outside countries. Therefore, companies that will be granted export permits are those that have
fulfilled their DMO commitments.

8. IndonesiaEconomicCondition
Taken from the Bank of Indonesia news release, here is the condition of Indonesia Economic Situation.
The World Bank estimates that Indonesia will continue the momentum of economic growth in 2022.
Based on the Global Economic Prospects report from the World Bank released Tuesday (11/1/2022),
Indonesia's economic growth is estimated to reach 5.2 percent this year. "(Indonesia's economic
growth) was supported by strong domestic demand and rising commodity prices," the World Bank
wrote in the report. Furthermore, this international economic institution estimates that the
Indonesian economy will continue to grow at the level of 5.1 percent in 2023.
Bank Indonesia (BI) predicts Indonesia's economic growth in 2022 will reach 4.7-5.5%, from 3.2-4.0%
in 2021, driven by the continued improvement in the global economy which has an impact on export
performance which remains strong, as well as increasing domestic demand from increased
consumption and investment.
BI's policy mix in 2022 will continue to be synergized and as part of the direction of national economic
policy to accelerate recovery while maintaining economic stability. The policy mix includes 5 policy
instruments, namely:
Monetary policy
In line with the risk of increasing global financial market instability pressures from the normalization
of monetary policy by the Fed and a number ofAdvanced Economies (AEs), BI monetary policy in 2022
will be more directed at maintaining pro-stability, both achieving inflation targets and exchange rate
stability as well as macroeconomic and financial system stability. Normalization of monetary policy
will be carried out in a very careful and measured manner so as not to disrupt the process of national
economic recovery.
Meanwhile, 4 other policy instruments in 2022 will continue to be directed towards and as part of a
joint effort to accelerate national economic recovery (pro-growth), namely:
Macroprudential policy
The loose macroprudential policy will continue and even be expanded to encourage credit and banking
financing in priority sectors and MSMEs to accelerate national economic recovery, while maintaining
financial system stability and developing a green economy and finance.

9. Payment system policies
Digitalization of payment systems continues to be expanded to accelerate the national digital
economy and finance, among others through strengthening industrial consolidation, development of
modern payment system infrastructure (QRIS, SNAP, BI FAST), including expansion of QRIS with a
target of 15 million users, QRIS cooperation between countries, and continue the Electronification of
Regional Government Financial Transactions, G2P 4.0 social assistance, modes of transportation, as
well as digitizing MSMEs and tourism.
Money market development policy
Acceleration of money market and foreignexchange market deepening in accordance with the Money
Market Deepening Blueprint (BPPU) 2025 was also taken to strengthen the effectiveness of policy
transmission, development of modern and international standard money market infrastructure, and
development of financing instruments including the development of sustainable finance.
MSME policies and Islamic financial economy
Inclusive economic-financial development programs for MSMEs and sharia-financed economy also
continue to be expanded, including by digitizing and expanding access to domestic and export
markets.

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