| |
| Income
Tax |
| |
|
1. What is the legal base of the imposition
of Income Tax in Indonesia? |
| 2.
Who are the tax subjects? |
| ·
Resident tax subjects |
| ·
Non-resident tax subjects |
| ·Definition
of permanent establishment |
| 3.
What is the Tax Object? |
| ·Definition
of income |
| ·Tax
object of a permanent establishment |
| ·Exclusion
of tax object |
| 4.
How is the method of the calculation of Taxable Income? |
| ·Permissible
deduction |
| ·Depreciation
and amortization |
| ·Loss
Compensation |
| ·Untaxed
Income |
| ·Non
tax deductible items |
| 5.
How much is the Tax Rate of Income Tax? |
| ·Tax
rate for resident individual taxpayers |
| ·Tax
rate for resident corporate taxpayers and permanent establishment |
| ·Tax
rate for non-resident taxpayers |
| 6.
Other questions? |
|
| Income
Tax |
|
| Legal
Base |
| Income
Tax in Indonesia is governed by |
| * |
Law
Number 7 Year 1983 concerning Income Tax. This Law was amended
by Law Number 7 Year 1991 |
| * |
Law
Number 10 Year 1944 |
| * |
Law Number 16 Year 2000 |
| Those
laws (hereinafter Income Tax Law 1984) are applicable either
for corporate or individual taxpayers.
|
| |
Above
>>>  |
|
| Tax
Subject |
|
| Tax
subject consists of |
| a. |
statutory
bodies, |
| b. |
individuals,
|
| c. |
inheritances
not yet dived as a unit, in lieu of rightful heirs, |
| d. |
permanent
establishments. |
|
| The
statutory body is defined as group of persons, and/or capital
that constitutes an unit carries on or not carries on businesses,
covering limited liability companies, limited partnership companies,
other companies, state or regional owned state companies in
any names and forms whatsoever, firms, joint companies, cooperatives,
pension funds, partnerships, groups, foundations, mass organizations,
social and political organizations of the same type, institutions,
permanent establishments and other forms of statutory bodies.
|
|
| The
statutory body is defined as group of persons, and/or capital
that constitutes an unit carries on or not carries on businesses,
covering limited liability companies, limited partnership companies,
other companies, state or regional owned state companies in
any names and forms whatsoever, firms, joint companies, cooperatives,
pension funds, partnerships, groups, foundations, mass organizations,
social and political organizations of the same type, institutions,
permanent establishments and other forms of statutory bodies.
|
| |
| Above
>>> |
|
| The
permanent establishment is defined as a business entity used
by individual not reside in Indonesia or present in Indonesia
for less than 183 days within any 12 month period, or statutory
bodies not established or not domiciled in Indonesia to carry
on business or activities in Indonesia, |
| Which
can be in the form of : |
| * |
place
of management, |
| * |
branches
of companies, |
| * |
representative
offices, |
| * |
office
buildings, |
| * |
factories, |
| * |
workshops, |
| * |
mining, |
| * |
fishery,
|
| * |
animal
husbandry, |
| * |
agriculture
or forestry |
| * |
construction, |
| * |
installation
or assembling projects, |
| * |
services
performed by employees or other persons as long as the services
are provided for over 60 days within any 12 month period, individuals
or statutory bodies acting as dependent agents, |
| * |
agent
or employees of foreign insurance companies.
|
| |
| Above
>>> |
|
| Tax
subject is categorized into two groups; those are resident tax
subject and non-resident tax subject.
|
|
| Parties
who are considered as resident tax subject are: |
| * |
an
individual who resides in Indonesia; |
| * |
an
individual who is present in Indonesia more than 183 days in
any twelve-month period; |
| * |
an
individual who is present in Indonesia during a tax year and
intends to reside in Indonesia; |
| * |
a
statutory body that is established or domiciled in Indonesia. |
|
| Parties
who are considered as non-resident tax subject are: |
| * |
an
individual who does not reside in Indonesia, but he/she receives
or earns income from Indonesia; |
| * |
an
individual who is present in Indonesia for no more than 183
days in any twelve-month period, but he/she receives or earns
income from Indonesia; |
| * |
a
statutory body that is not established or domiciled in Indonesia,
but carries on business through a permanent establishment in
Indonesia or receives or earns income from Indonesia not resulting
from carrying on business in Indonesia |
|
| The
permanent establishment is considered as a non-resident tax
subject.
|
| |
| Above
>>> |
|
| Tax
Object |
| |
| Definition
of Income |
| To
determine income, which is subject to Income Tax, Indonesia
adopts the so called "economic accretion concept".
Under Income Tax Law 1984, income is defined as any economic
ability received or accrued by a taxpayer, derived from both
Indonesia or outside Indonesia, which can be used for consumption
or to add the wealth of such taxpayer, in any names and forms
whatsoever. |
|
| Tax
object of a permanent establishment is: |
| a. |
any
income from business or activities of such permanent establishment
and from the asset owned or controlled; |
| b. |
any
income of the head office from business or activities, sales
of goods, or services rendered in Indonesia of the same type
as performed or conducted by the permanent establishment in
Indonesia; |
| c. |
any
income as stated in Article 26 of Income Tax Law 1984 received
or accrued by head office, as long as there is an effective
connection between the permanent establishment the assets or
activities providing such income. |
| The
basis for calculating income of a resident taxpayer is worldwide
income, which is income derived by the taxpayer from Indonesia
and from outside Indonesia. |
| |
| Above
>>> |
|
| The
tax objects shall exclude from: |
| a. |
donations
including tithe (zakat), granted assets, |
| b. |
inheritance, |
| c. |
assets
including cash payment received by any statutory bodies as compensation
for shares or capital participation, |
| d. |
reimbursement
or compensation connected with jobs or services received or
accrued in kind and/or fringe benefit, |
| e. |
payment
from insurance firms to individuals related to health, personal
accident, life, dual function, and scholarship insurances, |
| f. |
dividend
or portion of profits received or earning by limited liability
companies as a resident taxpayers, cooperative, and state/regional
owned companies, that fulfil requirements stipulated in the
law, |
| g. |
contribution
received or accrued by a pension fund whose establishment approved
by the Minister of Finance, |
| h. |
income
from capital invested by a pension fund in certain fields, |
| i. |
portions
of profits received or accrued by members from limited partnership
companies whose capital is not divided into shares, partnerships,
groups, firms, and joint business, |
| j. |
interest
of bonds received or accrued by mutual funds for the first 5
years as from the date of establishment of companies, |
| k. |
income
received or accrued by any venture capital company that fulfil
requirements stipulated in the law. |
| |
| Above
>>> |
|
| Taxable
Income |
|
|
| For
resident taxpayers and permanent establishments, the taxable
income is calculated by deducting gross income with the following
permissible deductions: |
| a. |
cost
for obtaining, collecting and maintaining income, |
| b. |
depreciation
of expenditure to acquire tangible assets and amortization of
expenditure to obtain rights and other costs having a useful
life of more than 1 year, |
| c. |
contributions
to a pension fund whose establishment has already validated
by the Minister of Finance, |
| d. |
losses
due to the sales or transfer of assets owned by and used in
enterprises, or owned for obtaining, collecting and maintaining
income, |
| e. |
costs
of research and development of enterprises performed in Indonesia, |
| f. |
expenses
of scholarship, apprenticeship and training, |
| g. |
bad
debt claims that fulfil requirements stipulated in the law. |
| |
| Above
>>> |
|
| The
Depreciation and Amortisation |
|
| The
depreciation shall start from the month of realization of expenditure,
while the depreciation of under construction assets shall start
from the month of the completion of construction of the assets.
In order to calculate depreciation, taxpayers may opt straight
line method or declining balance method, except for building
can only be used straight line method. For amortization, taxpayers
may also opt straight-line method or declining balance method.
|
| |
| Above
>>> |
|
|
Loss
Compensation
|
| In
the case of gross income after the deduction resulting in losses,
the losses shall be compensated for income starting from the
following tax year up to 5 years consecutively. |
| |
| Above
>>> |
|
| Non
Taxable Income |
|
| The
deduction in a form of untaxed income shall be granted to resident
individual taxpayers. The non-taxable income is as follows: |
| a. |
IDR
13,200,000.00 for individual taxpayers; |
| b. |
IDR
1,200,000.00 as addition to married taxpayers; |
| c. |
IDR
13,000,000.00 as addition to a wife whose income is combined
with income of husband; |
| d. |
IDR
1,200,000.00 as addition to each family member of the same blood
or by marriage in a straight descent line, including any adopted
child, who is a fully dependent, at a maximum of 3 individuals
per family. |
| The
amount of untaxed income to be claimed shall be determined by
conditions in the beginning of tax year or part of tax year. |
| |
| Above
>>> |
|
| The
net income of certain types of income, such as income from sipping
and airlines derived by foreign companies, income from construction
services derived by small-scale enterprises, are determined
by the Minister of Finance.
|
|
| In
order to determine amount of taxable income of resident taxpayers
and permanent establishment, the following items may not be
deducted as cost: |
| a. |
distribution
of profits in any names and forms whatsoever; |
| b. |
cost
charged or spent in personal interest of shareholders, partner
or members; |
| c. |
the
establishment or accumulation reserve fund unless the reserve
fund of bad debts for banking and leasing with option, reserve
fund of insurance business, and reserve fund of reclamation
cost of mining business; |
| d. |
premium
of certain types of insurance; |
| f. |
reimbursement
or compensation connected with jobs or services provided in
the form in kind and fringe benefit; |
| g. |
any
amount exceeding the reasonable paid to a shareholder or any
party having a special relationship as compensation in connection
with the work performed; |
| h. |
any
asset granted, aid or donation, and inheritance; |
| i. |
income
tax; |
| j. |
cost
charged or spent for personal interests of individual taxpayers
or their dependents; |
| k. |
salaries
paid to members of partnerships, firms, or limited partnership
companies whose capital is not divided into shares; |
| l. |
administrative
sanctions in the form of interest, fine , and raise as well
as criminal sanctions in the form of fines connected with the
implementation of taxation laws. |
| |
| Above
>>> |
|
| Income
Tax Rate |
|
| a.
Tax rate for resident individual taxpayers:
|
|
| Brackets
of Taxable Income Tax rate |
| 5%
Up to IDR 25,000,000.00 |
| 10%
Over IDR 25,000,000.00 up to IDR 50,000,000.00 |
| 15%
Over IDR 50,000,000.00 up to IDR 100,000,000.00 |
|
25% Over IDR 100,000,000.00 up to IDR 200,000,000.00 |
| 35%
Over IDR 200,000,000.00 |
|
| b.
Tax rate for resident corporate taxpayers and permanent establishments: |
|
| Brackets
of Taxable Income Tax rate |
| 10%
Up to IDR 50,000,000.00 |
| 15%
Over IDR 50,000,000.00 up to IDR 100,000,000.00 |
| 30%
Over IDR 100,000,000.00 |
|
| c.
Tax rate for non-resident taxpayers: |
| * |
Income
in the form of dividend, interest, royalties, rents and other
kinds of income in connection with the use of assets, compensation
in connection with services, works and activities, prizes and
awards, pensions and other kinds of periodical payment : 20%
of the gross income. |
| * |
Income
from the sales of assets in Indonesia: 20% estimated net income
determined by the Minister of Finance. |
| * |
Taxable
income after tax of a permanent establishment (branch profit):
20% of taxable income after tax. |
|
| Above
>>> |
| |
[ Withholding Tax ]
[ Value Added Tax ] |