The DGT will impose an assessment following the tax audit. This can be a zero, underpaid or overpaid (refund) tax assessment. The taxpayer is required by tax court law to pay at least 50% of the tax due before filing the letter of objection. The tax court will hold hearings on the appeal and must complete them within 12 months of the appeal being filed.
Filing a request for revision does not delay the execution of the decision of the tax court, including the compensation of interest due to the taxpayer. 2% monthly for a maximum of 24 months or 50% or 100% surcharge of underpaid tax, as the case may be. Fixed assets used by the PE to conduct business or carry out the activities of the PE in Indonesia; or
Investment in intangible property used by the permanent establishment to conduct business or activities of the permanent establishment in Indonesia. The prior year corporate income tax return of the taxpayer claiming such gift expenses must be in a taxable profit position;.
Buildings
Income from transactions with derivative financial instruments on the stock market and futures market are no longer subject to final income tax. In this case, the profit from such transactions is recognized as taxable income subject to the normal corporate income tax rate under Article 17 of the Income Tax Act. Income tax on dividends, as stated in Article 26 of the Income Tax Act, amounts to 10%, unless the relevant tax treaty stipulates a lower rate.
The industry sectors that qualify for these income tax breaks are, among others, food; textiles; chemicals and their products; plantation, forestry and logging; coal and lignite mining; oil, natural gas and geothermal mining. Taxpayers who make a new investment in a pioneering industry but are not eligible for any tax relief under section 31A of the Income Tax Act (as mentioned in the above paragraph) can now avail exemption or reduction of tax on income as mentioned in Article 18(5) of Investment Law No. Some taxpayers in certain industries are subject to final income tax based on gross receipts (see page 39).
The treatment of income and expenditure as set out in the Income Tax Act applies equally to Shariah-based business activities. The income tax treatment of Sharia banking and Sharia financial services can be summarized as follows:
Sharia Banking
Other Sharia financing fee or other income is treated in accordance with the normal income tax regulation for the relevant transaction. The effective income tax rate may differ, as it may be covered by a tax treaty or any changes to the rate in the Income Tax Act and/or the regulations. If the actual dividend received is greater than the estimated dividend, the deviation is subject to income tax and must be stated in the annual tax return for the financial year in which the actual dividend is received.
The sale of shares of a conduit company (SPC) holding Indonesian shares in a tax haven country by a non-Indonesian taxpayer can be regarded as a sale of shares of the Indonesian party by the non-Indonesian taxpayer, insofar as there is a special relationship between the SPC and the Indonesian party. Individual taxpayers are required to file annual individual income tax returns (Form SPT 1770 or 1770 S or 1770 SS). The Minister of Finance is authorized to re-establish the amount of the above personal allowances.
The tax withheld from payments to residents can be either a final income tax on the income for the recipient or a prepaid tax that can be credited or credited by the recipients against their final tax liability. Identification number 7.5% of auction price Imported goods auctioned 1.5% of sales value Sale of goods to the government. that is accompanied by payment by the treasury and certain state-owned companies. 1.5% of export value Export of coal raw material, metallic mineral and non-metallic mineral 0.3% of sales value Purchase of steel products by. 0.45% of the sales value Purchase of car products by distributor.
0.1% of the sales value Purchase of paper products from the distributor. 0.25% of sale value Purchase of cement from distributor 0.3% of sale value Purchase of medicinal products from. in gross amounts). 5% of the sale value Purchase of very luxury goods (3) 0.45% of the sale value of the vehicle sold by a single agent. ATPM), agent (APM), or general importer in Indonesia 0.25% of purchase value Purchase of material from. 0.3% of sales value Sales of kerosene at non-Pertamina gas stations 0.3% of sales value Sales of lubricants.
1.5% of the sales value Purchase of coal, metallic mineral and non-metallic mineral from companies or individuals with a mining license (Izin Usaha Pertambangan). 0.45% of the sales value Sales of gold bullion from manufacturers (except sales to Bank Indonesia). The other major categories of withholding are referred to as Section 23 or Section 26 Income Tax.
WHT on Payment to Indonesia Tax Resident WHT Rate (1) (2)
2% • Securities trading services, except for trading conducted by the Indonesian Stock Exchange, KSEI (Central Indonesian Securities Depository) and KPEI (Indonesian Clearing and Guarantee Corporation). Repair and maintenance services, except for building repair and maintenance services performed by a construction company. 2% • Service in providing space and/or time in the media, external media or other media for providing information.
Laboratory services and/or laboratory testing services, except if performed by an educational institution for academic research.
WHT on Payment to Non-Indonesian Tax Resident WHT Rate (1) (2)
Tax Settlement (SSP) for the payment of VAT on delivery of taxable goods via auctioneer accompanied by the minutes of the auction. Educational service that is an integral, inseparable part of the provision of other goods and/or services. Under the new scheme, taxpayers are required to provide a summary of the Main File and Local File as an appendix to the corporate income tax return in the prescribed format.
The deadline for submitting transfer pricing documentation is not set by law, but it must be submitted at the request of the tax office. Recently, G20 member states and members of the Organization for Economic Co-operation and Development (OECD) agreed on very important changes regarding the compliance and reporting of global information for the purposes of risk assessment and transfer pricing. The OECD has adopted a three-tier approach to documentation that includes: a) local file, b) master file and c) country-by-country (CbC) report to ensure transparency of tax administration and provide all relevant governments with the information they need about their global distribution of income, economic activities and taxes paid between countries in line with the joint proposal (Action 13 on the Base Erosion and Profit Shifting Initiative (BEPS)). CbCR must be based on data and information available by the end of the tax year.
The CbC report must be available within 12 (twelve) months after the end of the tax year. A Request for Information/Evidence Letter – This form provides a format for the letter to be issued by the tax assessor requesting information/evidence. PMK-240 reinforces what was established in Government Regulation number 74 of 2011 (“GR-74”): the flexibility for taxpayers to apply for an MAP and pursue domestic resolution at the same time.
DGT will also initiate consultation with the tax authority of the treaty partner country, which may be in the form of face-to-face meeting, electronic communication or correspondence. With respect to bilateral FTAs, the FTA shall be effective in accordance with the terms of the mutual agreement. Deadlines • The deadline for submitting the pre-declaration request – 6 months before the beginning of the tax year that will be included in the MCA.
Deadline for submitting an official request for an APA – DGT must send an invitation letter to the taxpayer no later than 1 month before the beginning of the tax year that will be covered by the APA. In bilateral APA cases, the deadline is specified in the provisions of the mutual agreement procedure. APA extension • You can apply for an APA extension in the last tax year of the covered period.
These forms contain a Certificate of Domicile (CoD) which must be approved by the Tax Authority of the DTA's partner country. These rates are only applicable if the shareholders are the beneficial owners of the dividends. For the UK, the lower rate applies if the recipient controls 15% or more of the voting power.
These fees are only applicable where the recipient is the beneficial owner of the interest.
