At the end of 2023, the government will improve the provisions for Land and Building Tax (PBB), namely in the form of tax objects that can be given PBB deductions, procedures for submitting and completing applications for PBB deductions, as well as granting PBB deductions on a positional basis. This is regulated in Minister of Finance Regulation Number 129 of 2023 (PMK 129/2023) which will become effective on December 30, 2023.

In this provision, the government emphasizes that the Minister of Finance, through the Director General of Taxes, can provide PBB deductions to tax subjects who are obliged to pay PBB. Deductions are given through two schemes, namely personal application or ex officio.

Provision of PBB Deduction Based on Own Application

In general, taxpayers can make their own application to obtain a PBB deduction in the case of:

1. There are certain conditions, in the form of difficulties in paying off PBB payment obligations due to experiencing commercial losses and liquidity difficulties originating from the business activities of PBB objects for 2 (two) consecutive years; And
2. Affected by natural disasters or other extraordinary causes.

The specific conditions referred to PBB objects owned, controlled and/or utilized by taxpayers, including the plantation, forestry, oil and gas mining, geothermal mining, mineral or coal mining and other sectors. This is regulated in Article 3 paragraph (3) PMK 129/2023. Under certain conditions, a PBB deduction can be given at a maximum of 75% of the PBB amount that still has to be paid in the Notification of Tax Due (SPPT) or Land and Building Tax Assessment Letter (SKPPBB).

Furthermore, natural disasters as referred to are disasters caused by an event or series of events caused by nature in accordance with the provisions of laws and regulations in the field of disaster management. Meanwhile, other extraordinary causes are non-natural disasters or social disasters caused by events or a series of non-natural events or caused by humans in accordance with the provisions of laws and regulations in the field of disaster management. In the event of a disaster or other extraordinary reasons, the government can provide a PBB deduction of a maximum of 100% of the PBB amount still to be paid in SPPT, SKPPBB, or Land and Building Tax Collection Letter (STP PBB).

How to Apply for PBB Deduction?

In general, there are easy steps to request a PBB deduction:

1. Taxpayers make a request for PBB deduction and address it to the Director General of Taxes.
2. The application is submitted through the Tax Service Office (KPP) where the PBB Object is registered.
3. If there are certain conditions, the application is submitted within 3 months from the date of receipt of the SPPT or 1 month from the date of receipt of the SKPPBB. If there are corrections to the SPPT or SKPPBB, the application is submitted within 1 month from the date of receipt of the correction decision letter.
4. In the event of a natural disaster or other extraordinary cause, the application is submitted in the year the natural disaster or other extraordinary cause occurs.
5. The time period provisions in points 3 and 4 do not apply if the taxpayer can prove that the time period cannot be fulfilled due to circumstances beyond their control (accompanied by supporting evidence).
6. 1 (one) application is given for 1 (one) SPPT, SKPPBB, or STP PBB.
7. Applications are submitted in writing in Indonesian stating the percentage of PBB deduction requested and the reasons for the request.
8. The application is signed by the taxpayer or other party with a special power of attorney.
9. The application is accompanied by:
   a. Financial reports or documents that at least contain assets, liabilities, capital, income and costs for applications in the event of certain conditions; or
   b. A statement letter from the taxpayer and a statement letter from the relevant agency stating that the PBB object was affected by a natural disaster or other extraordinary cause.
10. Applications are submitted in person, by post, expedition service company, or courier service with proof of mail delivery, or electronically.
11. Applications cannot be made for SPPT, SKPPBB, and/or STP PBB that have been given a PBB deduction decision.

In addition, to apply for a PBB deduction, the taxpayer must fulfill conditions such as: not submitting an objection to the SPPT or SKPPBB, not submitting an application for a deduction in administrative fines on the SKPPBB, not submitting an application for a deduction or cancellation of an incorrect SPPT or SKPPBB, and is not currently submitting corrections to the SPPT or SKPPBB.

If the application is made in the event of a natural disaster or other extraordinary reason, the taxpayer must comply with provisions such as: withdrawing the objection to the SPPT or SKPPBB, withdrawing the appeal or withdrawing the request for reconsideration (if a decision has not been issued), withdrawing the request for correction/cancellation /deduction of sanctions for SPPT, SKPPBB or STP PBB, as well as withdrawing requests for deduction of incorrect SPPT or SKPPBB.

Follow-up to PBB Deduction Requests

Upon the application that has been submitted, the head of the Regional Office of the Directorate General of Taxes (Kanwil DJP) will follow up on the application by conducting testing, research and providing a decision. If the PBB deduction application does not meet the terms and conditions, the application will be returned to the taxpayer and the taxpayer can submit the application again.

Furthermore, if the application meets the terms and conditions, then the head of the DJP Regional Office can request documents, data, information and/or information, as well as conduct a location inspection. The request for these documents must be fulfilled by the taxpayer no later than:

• 15 working days from the date of sending the document request letter for the PBB deduction application when certain conditions exist; or
• 5 working days from the date of sending the document request letter for the application for PBB deduction when affected by a natural disaster or other extraordinary reasons.

After analyzing the condition of the PBB object along with documents, data and/or information, the head of the DJP Regional Office makes a decision. The decision can be in the form of granting all of it, granting it in part, or rejecting the taxpayer's request. The decision must be issued within a maximum period of 4 (four) months from the date the PBB deduction application is received. If the 4 month period exceeds, then the request is deemed to be granted in full.

Provision of Ex Officio PBB Deductions

Apart from the taxpayer's own request, the government can also provide a PBB deduction to the ex officio taxpayer (without going through a PBB deduction request). This is given to taxpayers affected by natural disasters. The maximum amount of PBB deduction that can be granted ex officio is 100% of the PBB that still has to be paid in SPPT, SKPPBB or STP PBB but has not been paid by the taxpayer.

Reference:
[1] Minister of Finance Regulation Number 129 of 2023