Industry Minister Airlangga Hartarto has said that labor-intensive industries will soon enjoy income tax (PPh) reductions of up to 60 percent of their total investments.
"Let's await the finance minister's regulation first. We have determined the industries . It (the income tax reduction) applies to all labor-intensive industries applying for it," he said in Karawang, West Java, on Tuesday.
The income tax reduction is stipulated in Government Regulation No. 45 of 2019 concerning the calculation of taxable income and the settlement of income tax in the ongoing year. President Joko Widodo (Jokowi) has signed the regulation.
The government regulation also deals with super tax deductions of 200 to 300 percent for industries contributing to vocational training and innovation.
"The government regulation has been issued. It is incorporated into the super tax deduction," he said
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Haris Munandar, Secretary General of the Industry Ministry, is optimistic that the incentive will attract more investment in the country's labor-intensive industries.
"This is our effort to attract investment through various ways. We hope it could be utilized well," he said.
Article 29A of the government regulation stipulates that resident corporate taxpayers making new investments or expanding their business in labor-intensive industries will qualify for the income tax reduction.
The facility includes the net income reduction of up to 60 percent of total investment in the form of tangible fixed assets, including land used for main business activities for a certain period of time.
The facility will be granted if the taxpayer does not receive tax allowances, as referred to in article 31A of the Income Tax Law..
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