The year 2021 is awaited as a fresh start for many people considering what has happened in 2020. However The Coronavirus Disease (COVID-19) pandemic will seep into 2021 at least for part of it. In the first month of 2021, several areas in Indonesia adopted a more flexible version of lockdown called PPKM or Implementation of Restrictions on Community Activities, especially for Java and Bali since the positive cases of the COVID-19 pandemic has reached 1 million in the last week of January 2021. This condition will undoubtedly have a great impact on the public, including Indonesian Taxpayers.

Amid uncertain conditions, the Government issued Press Release Number 5 of 2021 on February 3, 2021 regarding the extension of tax incentives for Taxpayers affected by the COVID-19 Pandemic. This tax incentive extension adds to the list of tax incentives provided by the Directorate General of Taxes (DGT) in 2021 after previously stipulating tax incentives for the procurement of goods and services needed in the context of handling the COVID-19 pandemic and income tax facilities for the community members who help the Government's efforts to combat the COVID-19 outbreak through production, donations, assignments, and provision of assets contained in Press Release Number SP-1/2021 on January 15, 2021.

The issuance of Minister of Finance Regulation (PMK) Number 9 of 2021 revokes PMK Number 86 of 2020 in conjunction with PMK Number 110 of 2020. Both PMK are declared invalid as of February 1, 2021. PMK Number 9 of 2021 consists of 22 articles that outline PMK Number 9 of 2021 to extend the period of granting several tax incentives including:

1.  Tax Period of January 2021 to Tax Period of June 2021 for:

2. Deadline on June 30, 2021 for:

Incentive for Income Tax Article 21 is provided to employees who work for a company that operates in one of 1,189 certain business fields, companies that obtain Export Destination Import Facility (KITE), or companies in bonded zones. This incentive is given to employees with Taxpayer Identification Number (NPWP) and regular annualized gross income of not more than Indonesian Rupiah (IDR) 200,000,000 (two hundred million). This incentive marks employee income as non-deductible. Such tax incentive also applies to branch companies.

Tax Incentive for UMKM is provided based on Government Regulation Number 23 of 2018 (Final Income Tax Government Regulation 23). Thus, UMKM does not need to make tax deposits. Parties who make payment transactions to UMKM also do not need to deduct or collect taxes. UMKM does not need  to submit  PP 23 statement, and only required to submit a realization report every month to earn this incentive.

Incentive for Final Income Tax in construction service is provided to Taxpayers who receive income from construction service business in the Program for the Acceleration of Improving Water Use for Irrigation (P3-TGAI). This incentive is intended to support the increase of water supply (irrigation) as a labor-intensive project which required in the agricultural sector.

Incentives for Import Tax Article 22 on imports in the form of exemption of Income Tax Article 22 on imports are given to Taxpayers engaged in one of 730 specific business fields (previously 721 business fields), KITE companies, or companies in bonded zones. Additional business fields contained in PMK Number 9 of 2021 include:

Incentive for Income Tax Installment Article 25 is in the form of a 50% reduction in Income Tax Article 25 installment by 50% of the installments that should be owed to Taxpayers engaged in one of 1,018 certain business fields (previously 1,013 business fields), KITE companies, or companies in bonded zones. Additional business fields contained in PMK Number 9 of 2021 include:

Incentive for VAT is in the form of accelerated restitution to a maximum overpayment of IDR5 billion given to a low-risk taxable entrepreneur (PKP) operating in one of 725 certain business fields (previously 716 business fields), KITE companies, or companies in bonded zones. Additional business fields contained in PMK Number 9 of 2021 include:

To maximize the benefit of tax incentives, Employers or Taxpayers who have submitted a notification of Income Tax Article 21 DTP incentives, apply for a Certificate of Free Income Tax Article 22 Imports and/or notification of incentives to reduce the amount of Income Tax Article 25 installments must re-submit the application and/or notification based on this PMK to earn tax incentives. In addition, Taxpayers who already have a certificate of exemption (SKB) or submit a notification of incentive for fiscal year 2020, must submit an application for SKB or submit a notification of re-incentive utilization to get this incentive in the 2021 tax year.

In addition, PMK No. 9/2021 also added a regulation regarding tax incentive realization report. Based on realization report, an employer can submit corrections no later than the end of the following month after the reporting deadline (every 20th of the following month).

The ratification of tax incentive extension rule in early February 2021 provoked a variety of reactions from Taxpayers. Some Taxpayers think the tax incentive extension should be granted in mid-January before January tax return. In response, the Directorate General of Taxation provides some waivers to employers or Taxpayers who want to make us of incentive for Income Tax Article 21 or the reduction of installments for Income Tax Article 25 starting from January 2021 to February 15, 2021. In addition, employers, UMKM, and P3-TGAI construction services benefitting from Income Tax incentives in fiscal year 2020 can submit their realization report no later than February 28, 2021.