Government Regulation Affirms OSS System as Channel for Tax Incentive Applications
JAKARTA, DDTCNews - The government has issued Government Regulation (PP) 28/2025 on the Implementation of Risk-Based Business Licensing, which also affirms the role of the Online Single Submission (OSS) system as a channel for applying for tax incentives. The topic was among the subjects covered by national media on Monday (23/6/2025).
Under Article 188 paragraph (3) of PP 28/2025, the investment facility subsystem is stipulated as one of seven subsystems within the OSS framework. The investment facility subsystem can be accessed using authorised credentials.
"The investment facility subsystem... can be accessed using authorised credentials," reads Article 235 paragraph (1) of PP 28/2025.
Features available within the investment facility subsystem include: applications for import duty exemptions on machinery, goods and materials for industrial development or expansion under investment schemes; applications for import duty exemptions on capital goods for public electricity generation development; applications for import duty exemptions or reductions on goods imported under contracts of work or coal mining exploitation agreements; applications for corporate income tax reduction facilities (tax holiday); applications for income tax facilities for investment in certain business sectors and/or regions (tax allowance); applications for gross income reductions for practical work, apprenticeship and/or competency-based learning activities (vocational supertax deduction); applications for gross income reductions for certain research and development activities in Indonesia (R&D supertax deduction); and/or net income reduction facilities for new investment or business expansion in certain labour-intensive industries (investment allowance).
The provisions for submitting tax incentive applications through OSS had previously been regulated in ministerial regulations (PMK) serving as the legal basis for each type of incentive. For example, procedures for submitting tax holiday applications through OSS are contained in PMK 130/2020 as amended by PMK 69/2024 on Corporate Income Tax Reduction Facilities.
OSS is an integrated electronic system managed and operated for risk-based business licensing. It also features subsystems for information services, basic requirements, business licensing, partnerships and supervision. OSS must be used by all agencies and entities, from ministries and institutions, regional governments, special economic zone administrators and the Batam Development Authority, through to business operators.
**NPWP Remains Part of Business Identification Number**
PP 28/2025 stipulates that the Taxpayer Identification Number (NPWP) is one of the data types included in the Business Identification Number (NIB) issued through OSS. NPWP data will be validated by the OSS system through integration with the Ministry of Finance's systems. Individual business operators who do not yet hold an NPWP may apply for one through OSS.
"Individual business operators who do not yet hold an NPWP may apply for one through the OSS System," reads Article 207 paragraph (6) of PP 28/2025.
**Three Types of VAT Returns for Digital Economy Tax Collectors**
Through PER-12/PJ/2025, the Directorate General of Taxes (DJP) has specified the types of periodic VAT returns used by operators of trade through electronic systems (PMSE). There are three types: first, VAT returns for taxable entrepreneurs (PKP); second, VAT returns for VAT collectors and other parties who are not PKP; and third, VAT returns for PMSE VAT collectors.
**DJP Monitors High Wealth Individual Tax Compliance**
The DJP is paying special attention to the compliance of high wealth individual (HWI) taxpayers. Senior Adviser to the Minister of Finance for Tax Supervision Nufransa Wira Sakti said the DJP has been mapping non-compliance methods used by HWIs. "The ability of HWIs to engage in tax planning is extraordinary, whether through consultants or on their own," he said.
**MSME Taxpayer Oversight**
Bisnis Indonesia reported that many MSME operators have engaged in tax avoidance practices in recent years. Policymakers have detected several companies avoiding tax by perpetuating their business status as MSMEs. B. Bawono Kristiaji, Director of DDTC Fiscal Research and Advisory, assessed that MSME tax dynamics stem from limited awareness of participation, affecting compliance levels. In the context of income tax, MSME operators still struggle with bookkeeping due to limited knowledge of accounting principles and human resources. Regarding VAT, minimal knowledge and administrative capacity cause MSMEs to frequently struggle in fulfilling their roles as collectors, remitters and reporters. "When participation is lacking, the support structure of our tax system becomes less robust, as it is upheld by only a handful of taxpayers," Bawono said.
**Government Promotes Uptake of Electric Vehicle VAT and Luxury Tax Incentives**
The government is again encouraging the public to take advantage of government-borne VAT and luxury goods sales tax (PPnBM) incentives for electric vehicles. The incentives have even been expanded to cover hybrid vehicles this year. "Last year, to support demand in the automotive industry, we only provided incentives for EVs. In 2025, we are also providing them for hybrids," said Ferry Irawan, Deputy I of the Coordinating Ministry for Economic Affairs. Ferry expressed hope that the incentives would boost domestic demand for electric vehicles and lift the performance of the automotive sector.
**Personal Income Tax Rate Gap Highlighted**
The ASEAN+3 Macroeconomic Research Office (AMRO) has urged the Indonesian government to consider personal income tax reform, particularly by adding tax brackets for high-income earners. In its report, AMRO assessed that Indonesia's income tax structure remains less progressive compared to neighbouring Asian countries. "To optimise income tax revenue, consideration should be given to expanding tax brackets for high-income groups," the AMRO report stated.
Under Article 188 paragraph (3) of PP 28/2025, the investment facility subsystem is stipulated as one of seven subsystems within the OSS framework. The investment facility subsystem can be accessed using authorised credentials.
"The investment facility subsystem... can be accessed using authorised credentials," reads Article 235 paragraph (1) of PP 28/2025.
Features available within the investment facility subsystem include: applications for import duty exemptions on machinery, goods and materials for industrial development or expansion under investment schemes; applications for import duty exemptions on capital goods for public electricity generation development; applications for import duty exemptions or reductions on goods imported under contracts of work or coal mining exploitation agreements; applications for corporate income tax reduction facilities (tax holiday); applications for income tax facilities for investment in certain business sectors and/or regions (tax allowance); applications for gross income reductions for practical work, apprenticeship and/or competency-based learning activities (vocational supertax deduction); applications for gross income reductions for certain research and development activities in Indonesia (R&D supertax deduction); and/or net income reduction facilities for new investment or business expansion in certain labour-intensive industries (investment allowance).
The provisions for submitting tax incentive applications through OSS had previously been regulated in ministerial regulations (PMK) serving as the legal basis for each type of incentive. For example, procedures for submitting tax holiday applications through OSS are contained in PMK 130/2020 as amended by PMK 69/2024 on Corporate Income Tax Reduction Facilities.
OSS is an integrated electronic system managed and operated for risk-based business licensing. It also features subsystems for information services, basic requirements, business licensing, partnerships and supervision. OSS must be used by all agencies and entities, from ministries and institutions, regional governments, special economic zone administrators and the Batam Development Authority, through to business operators.
**NPWP Remains Part of Business Identification Number**
PP 28/2025 stipulates that the Taxpayer Identification Number (NPWP) is one of the data types included in the Business Identification Number (NIB) issued through OSS. NPWP data will be validated by the OSS system through integration with the Ministry of Finance's systems. Individual business operators who do not yet hold an NPWP may apply for one through OSS.
"Individual business operators who do not yet hold an NPWP may apply for one through the OSS System," reads Article 207 paragraph (6) of PP 28/2025.
**Three Types of VAT Returns for Digital Economy Tax Collectors**
Through PER-12/PJ/2025, the Directorate General of Taxes (DJP) has specified the types of periodic VAT returns used by operators of trade through electronic systems (PMSE). There are three types: first, VAT returns for taxable entrepreneurs (PKP); second, VAT returns for VAT collectors and other parties who are not PKP; and third, VAT returns for PMSE VAT collectors.
**DJP Monitors High Wealth Individual Tax Compliance**
The DJP is paying special attention to the compliance of high wealth individual (HWI) taxpayers. Senior Adviser to the Minister of Finance for Tax Supervision Nufransa Wira Sakti said the DJP has been mapping non-compliance methods used by HWIs. "The ability of HWIs to engage in tax planning is extraordinary, whether through consultants or on their own," he said.
**MSME Taxpayer Oversight**
Bisnis Indonesia reported that many MSME operators have engaged in tax avoidance practices in recent years. Policymakers have detected several companies avoiding tax by perpetuating their business status as MSMEs. B. Bawono Kristiaji, Director of DDTC Fiscal Research and Advisory, assessed that MSME tax dynamics stem from limited awareness of participation, affecting compliance levels. In the context of income tax, MSME operators still struggle with bookkeeping due to limited knowledge of accounting principles and human resources. Regarding VAT, minimal knowledge and administrative capacity cause MSMEs to frequently struggle in fulfilling their roles as collectors, remitters and reporters. "When participation is lacking, the support structure of our tax system becomes less robust, as it is upheld by only a handful of taxpayers," Bawono said.
**Government Promotes Uptake of Electric Vehicle VAT and Luxury Tax Incentives**
The government is again encouraging the public to take advantage of government-borne VAT and luxury goods sales tax (PPnBM) incentives for electric vehicles. The incentives have even been expanded to cover hybrid vehicles this year. "Last year, to support demand in the automotive industry, we only provided incentives for EVs. In 2025, we are also providing them for hybrids," said Ferry Irawan, Deputy I of the Coordinating Ministry for Economic Affairs. Ferry expressed hope that the incentives would boost domestic demand for electric vehicles and lift the performance of the automotive sector.
**Personal Income Tax Rate Gap Highlighted**
The ASEAN+3 Macroeconomic Research Office (AMRO) has urged the Indonesian government to consider personal income tax reform, particularly by adding tax brackets for high-income earners. In its report, AMRO assessed that Indonesia's income tax structure remains less progressive compared to neighbouring Asian countries. "To optimise income tax revenue, consideration should be given to expanding tax brackets for high-income groups," the AMRO report stated.