The Regulation of the Minister of Finance of the Republic of Indonesia Number 72 of 2023 on Depreciation of Tangible Assets and/or Amortization of Intangible Assets (PMK 72/2023) is a regulation that regulates the depreciation of tangible assets and the amortization of intangible assets for tax purposes in Indonesia.
The regulation defines tangible assets as assets that have a physical form, such as land, buildings, machinery, and equipment. Intangible assets are assets that do not have a physical form, such as goodwill, patents, and copyrights.
The regulation sets forth the following depreciation and amortization methods:
- Straight-line method: This method allocates the cost of an asset evenly over its useful life.
- Declining-balance method: This method allocates a greater proportion of the cost of an asset to the earlier years of its useful life.
- Units-of-production method: This method allocates the cost of an asset based on the number of units it produces or uses.
The regulation also sets forth the following depreciation and amortization rates:
- Tangible assets: The depreciation rates for tangible assets are specified in the regulation.
- Intangible assets: The amortization rates for intangible assets are specified in the regulation.
PMK 72/2023 is effective as of July 17, 2023. It supersedes the following regulations:
- Regulation of the Minister of Finance Number 248/PMK.03/2008
- Regulation of the Minister of Finance Number 249/PMK.03/2008
- Regulation of the Minister of Finance Number 126/PMK.011/2012
- Regulation of the Minister of Finance Number 96/PMK.03/2009
Explanation
PMK 72/2023 is a significant update to the regulations on depreciation and amortization for tax purposes in Indonesia. The regulation introduces several new features, including:
- A new definition of intangible assets: The regulation defines intangible assets to include goodwill, patents, copyrights, trademarks, and other assets that do not have a physical form.
- New depreciation and amortization methods: The regulation introduces the declining-balance method and the units-of-production method as additional depreciation and amortization methods.
- New depreciation and amortization rates: The regulation sets forth new depreciation and amortization rates for both tangible and intangible assets.
These changes are expected to have a significant impact on the tax liability of businesses in Indonesia. Businesses will need to review their depreciation and amortization policies in light of the new regulations.
Conclusion
PMK 72/2023 is a comprehensive regulation that provides clear guidance on the depreciation and amortization of assets for tax purposes in Indonesia. The regulation is expected to improve the transparency and fairness of the tax system.