Why Permanent Buildings May Be Depreciated More Than 20 Years

JAKARTA, DDTCNews – Government Regulation (Gov. Reg.) Number 55/2022 allows taxpayers to depreciate or amortise for more than 20 years.

Head of Corporate Income Tax Section I of the Directorate General of Taxes (DGT) Hari Santoso said the provisions have been stipulated to allow taxpayers to align depreciation and amortisation in their bookkeeping with tax provisions.

“Many constructions have a useful life of more than 20 years and in practice, in companies’ bookkeeping, depreciation exceeds 20 years,” he remarked at the Regular Tax Discussion event held by IAI, quoted on Sunday (19/2/2023).

With the enactment of Gov. Reg. 55/2022, taxpayers have room to depreciate or amortise according to the actual useful life based on the taxpayers’ bookkeeping. This only applies to permanent buildings and intangible assets with a useful life of more than 20 years.

“This provides space for taxpayers wishing to align their bookkeeping with the provisions, although of course, there will be slight differences,” said Hari.

If taxpayers are to depreciate a permanent building according to its useful life in the bookkeeping, the taxpayer must notify the Director General of Taxes no later than the end of the 2022 tax year.

This provision applies to permanent buildings held and used before the 2022 tax year.

In contrast, taxpayers wishing to amortise according to the useful life must also notify the Director General of Taxes no later than the end of the 2022 tax year.

This provision applies to intangible assets with a useful life of more than 20 years held and used before the 2022 tax year.

The procedures for the submission of the notification of the depreciation and amortisation of more than 20 years will continue to be further regulated in a minister of finance Regulation (MoF Reg.). (rig)