To establish a Limited Liability Company (PT), each founder must put in capital as a sign of ownership of the company.
The capital can come from domestic or foreign sources.
For investments made by domestic investors, the company form is commonly known as PT Penanaman Modal Dalam Negeri (PT PMDN).
So, will all PTs whose capital comes from domestic investors become PT PMDN?
Check out the review below.
According to Article 109 of Law No. 11 of 2020 on Job Creation (Job Creation Law) which amends Law No. 40 of 2007 on Limited Liability Companies (PT Law), a PT is a legal entity that is a capital partnership, established based on an agreement, conducting business activities with authorized capital that is entirely divided into shares or individual legal entities that meet the criteria of micro and small businesses as stipulated in laws and regulations regarding micro and small businesses.
Meanwhile,
Based on Article 5 of the Investment Law, PMDN can be carried out in the form of a business entity in the form of a legal entity, unincorporated or individual business, in accordance with the provisions of laws and regulations.
So, PMDN activities can actually also be carried out in forms other than PT.
However, in its development, PMDN is mostly carried out in the form of legal entities such as PT.
Industri Jamu dan Farmasi Sido Muncul, PT.
Limas Indonesia Makmur Tbk, PT.
Bentoel Prima, and others.
PT PMDN Facility
If so, what is the difference between a regular PT and a PMDN PT?
Aren’t they both getting capital from within the country?
The most distinguishing thing is that ordinary PTs do not get facilities like PT PMDN.
This is because PT PMDN requires special licenses in certain fields which are regulated in Presidential Regulation No. 10 of 2021 concerning Investment Business Fields which is a revision of Presidential Regulation No. 44 of 2016 concerning List of Business Fields that are Closed and Business Fields that are Open with Requirements in the Investment Field.
In accordance with Article 77 of the Job Creation Law, the facility is given to investors who expand their business or make new investments.
To obtain the facility, the investor must at least meet the criteria:
- Labor-intensive
- Including high priority scale
- Including infrastructure development
- Transferring technology
- Doing pioneer industry
- Located in remote areas, underdeveloped areas, border areas, or other areas deemed necessary
- Preserve the environment
- Carry out research, development and innovation activities
- Partnering with micro, small, medium enterprises or cooperatives
- Industries that use capital goods or domestically produced machinery or equipment, and/or
- This includes the development of tourism businesses.
PT PMDN Tax Facility
The form of facilities provided to investment is carried out in accordance with the provisions of laws and regulations in the field of taxation.
For example, Article 31 Paragraph 1 of Law No. 36 Year 2008 on the Fourth Amendment to Law No. 7 on Income Tax regulates the tax facilities provided to taxpayers who make investments in certain business fields and/or in certain areas that receive high priority on a national scale.
The tax facilities are in the form of:
- Net income deduction at a maximum of 30% of the amount of investment made
- Accelerated depreciation and amortization
- Compensation for longer losses, but not more than 10 (ten) years; and
- The imposition of Income Tax on dividends as referred to in Article 26 shall be 10% (ten percent), unless the rate under the applicable taxation agreement stipulates lower.
In addition, domestic corporate taxpayers who make new investment or business expansion in certain business fields that are labor-intensive industries can be given income tax facilities in the form of a net income reduction of 60% of the amount of investment in the form of tangible fixed assets including land used for main business activities that are charged within a certain period of time.
This is as stipulated in Article 29A of Government Regulation No. 45 of 2019 concerning Amendments to Government Regulation No. 94 of 2010 concerning Calculation of Taxable Income and Payment of Income Tax in the Current Year.
Read also: Entrepreneurs Must Know!
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