Ministry of Finance Finalizes the Tax Treatment Mechanism for DHE SDA to 100%

The government, through the Ministry of Finance (Kemenkeu), will finalize the mechanism for the Income Tax (Pajak Penghasilan– “ PPh ”) treatment on Income from Foreign Exchange Proceeds (Devisa Hasil Ekspor– “ DHE ”) from Exports of Natural Resources (Sumber Daya Alam– “ SDA ”) in Monetary Instruments and/or Certain Financial Instruments. The amendment in the DHE SDA provision to 100% for a period of one year is included in the revision of Regulation of the Government No.36 of 2023 on Export Exchange Proceeds from the Business, Management, and/or Processing of Natural Resources (“ PP 36/2023 ”).

“Even if later DHE becomes 100% for a period of 1 year, it will be enforced at the time the revision of PP 22/2024 is issued. Therefore, we will ensure that the system can run smoothly," said the Minister of Finance Sri Mulyani at the press conference of the Financial System Stability Committee (Komite Stabilitas Sistem Keuangan/KSSK) some time ago.

Nonetheless, the government is committed not to revise the amount of PPh as stipulated in Regulation of the Government No.22 of 2024 on the Treatment of Income Tax on Income From the Placement of Foreign Exchange Proceeds From Exports of Natural Resources in Certain Monetary Instruments and/or Financial Instruments in Indonesia (“ PP 2/2024 ”). Moreover, Bank Indonesia (BI) has established a new instrument for the placement of DHE SDA in the form of BI Foreign Exchange Securities (Sekuritas Valuta AsingBI/SVBI) and BI Foreign Exchange Sukuk (Sukuk Valuta Asing BI/SUVBI).

"Is it necessary to revise the PPh? It seems not, as we are still using the same mechanism for the incentives. The investment placement instrument has been positively conveyed by the Governor of Bank Indonesia," she concluded.