2022 State Budget and Fiscal Incentives Presentation
Tax Regulation Harmonization Law (HPP) Strengthens Tax Reform
Raising the tax ratio as well as maintain fiscal sustainability
POLICY CHANGES IN THE HPP LAW
GENERAL PROVISIONS AND PROCEDURES
Integration of the ID Number with the Taxpayer Number,
Appointment of third parties as withholding, collecting, depositing
and/or reporting tax (including e-commerce)
VOLUNTARY DISCLOSURE PROGRAM
Improve taxpayers' compliance through voluntarily reporting or disclose
unfulfilled tax obligations with applied final income tax rate. The program is
implemented from 1 January 2022 to 30 June 2022
EXCISE
Strengthening the mechanism for determining excisable goods; and
Applying criminal sanctions as a last resort in excise crime for violations
of permits, releasing excisable goods, unpackaged excisable goods,
excisable goods originating from criminal acts, and the sale and purchase
of excise stamps.
INCOME TAX
•
New bracket for income >IDR 5 billion at 35% tax rate,
Corporate Income Tax in 2022 remains at 22%
Income Tax rate at 0.5% for MSME (threshold IDR 500 million)
Employee non-cash benefits become tax object
VALUE ADDED TAX
•
Increasing VAT rate from 10% to 11% from 1 April 2022, and to 12%
by 2025
Reducing the VAT exemptions and facilities,
CARBON TAX
•
Introduction of the carbon tax in 2022 through a gradual basis
according to a roadmap that will consider the development of a
carbon market, achievement of NDC targets, sector readiness, and
economic conditions.
Tax Reform Impact
• Without reform and the HPP Law, tax
ratio 2021-2025 will stagnate in
8.3%-8.9% of GDP.
• With the reform and implementation
of the HPP Law, the tax ratio is
estimated to reach 9.25% of GDP (in
2022) and 10.14% of GDP (in 2025).
•
TAXATION REVENUE AND TAX RATIO 2021-2025
10.14
11
10
9.55
9.25
9.33
10
8.87
9
di
9
8.87
8
8.28
8.30
8.35
8.42
8
00
With yearly average growth of tax
7
revenue by 13.07, tax ratio is
2021
2022
2023
2024
2025
expected to 10.14% of GDP in 2025.
Tax ratio baseline
Tax Ratio reform+HPPView entire presentation