Corporate Income Tax rate and Facility – The responsibility to calculate, deposit and report the Income Tax Due is an implementation of the self-assessment system in Indonesia, no exception for the Corporate Taxpayer. Corporate Income Tax will be charged after the fiscal correction and the due will be calculated based on the Income Tax rate multiplied with the amount of taxable income.
To encourage the growth of Small and Middle Enterprises, the government modified the rate structure related to Corporate Income Tax to be more simple and facilitate them with the rate deduction.
The Provisions of Corporate Income Tax rate and Facility
1. Article 17 paragraph 1b
Basically, the Corporate Income Tax has a single rate of 28%. This rate was applied in 2009 and decreased to 25% in 2010. Corporate Income Tax rate of 25% is applied for 2010 and so on. This rate applies to the domestic Corporate Taxpayer and permanent establishment.
2. Article 17 paragraph 2b
This rate is applied to the domestic Public Corporate Taxpayer of which gets the rate deduction of 5% lower than the normal rate. To obtain this rate deduction facility, the Taxpayer should fulfill the requirements as follow;
a) A minimum of 40% of the paid-up capital is reported for trading in Indonesia Stock Exchange.
b) Shares which mentioned on point a must be owned at least by 300 Parties.
c) Each Party which mentioned on point b only allowed to have shares less than 5% from the subscribed and paid-in capital.
The provisions mentioned in the letter a, b, and c should be fulfilled at least 183 calendar days during one Tax Year.
3. Income Taxpayer rate
The domestic Corporate Taxpayer with the gross turnover up to Rp 50.000.000.000,00 will get the rate deduction facility of 50% from the rate mentioned in Article 17 Paragraph 1b and Paragraph 2a and gets charged on Income Tax from gross turnover up to Rp 4.800.000.000,00.
The provisions of Law No. 36 Article 31E as follow;
a) The rate deduction facility as mentioned in Article 31E Paragraph 1, Income Tax Law will be applied in the self-assessment system when reporting the Annual Tax Return so the Corporate Taxpayer doesn’t need to request to get that facility.
b) A permanent establishment is subjected to a foreign tax, so this entity can’t get the rate deduction facility.
c) Gross turnover up to Rp50.000.000.000,00 is the maximum limit of the gross turnover received by the domestic Corporate Taxpayer for obtaining rate deduction facility.
d) Gross turnover is the total of income from the business activities and outside business activities after deducted from return and discounts during the Tax Year, before the deduction of fees to get, bill, and maintain the income, either from Indonesia itself or from outside of Indonesia, such as:
– income which liable to final Income Tax
– income which not liable to final Income Tax
– income which excluded from the Taxable Object
e) Rate deduction facility is not an option, so for the domestic Income Taxpayer which has the gross turnover accumulation up to Rp. 50.000.000.000,00, Income Tax rate which applied on taxable income for domestic Corporate Taxpayer are obliged to follow the provision of rate deduction as mentioned Income Tax Law Article 31E Paragraph 1.
f) Rate deduction facility is applied for the calculation of Income Tax Due to the taxable income which based on the non-liable final Income Tax.
g) For calculating the installment amount of Income Tax Article 25 on the following year, domestic Taxpayer who fulfilled the Income Tax deduction facility requirements as mentioned in Income Tax Law Article 31E Paragraph 1 is obliged to use the Income Tax.
1. Gross turnover up to Rp. 4.800.000.000
2. Gross turnover more than Rp. 4.800.000.000 up to Rp. 50.000.000.000
– Gross turnover which got the gross turnover facility
– Gross turnover which didn’t get the gross turnover facility
In general, based on the Income Tax on Law No. 36 of 2008 Article 17, to implement the rights and obligations of Corporate Income Tax, the Taxpayer should pay attention with any kind of provisions which regulated in the Tax Law, no exception for the provisions which related to Corporate Income Tax rate and facilities.