Withholding Tax in Indonesia – So many types of withholding tax (PPh) applied in Indonesia, such as Article 21, Article 22, Article 29, and Article 25. Let’s discuss each of Article.

Withholding Tax Article 21

This tax will be charged to any kind of income such as salary, honorarium, allowance, and other payments related to work, services, and activities done by the domestic tax subject. The taxpayer categorized as employee, not employee, pension recipient, ex-employee, activity member, and commissioner. The ones who got charged by this tax have a right to get a withholding tax slip.

Withholding Tax Article 22

This tax is levied on certain business entities, both government and private, which carry out export, import and re-import trading activities. It will be charged at the end of the year and this installment will be calculated as a tax credit of corporate income tax and personal income tax.

This tax was imposed on trade in goods which were considered profitable, therefore it could be returned at the time of sale and purchase.

Withholding Tax Article 23

axes imposed on income on capital, delivery of services, or gifts and awards only. Generally, this occurs when there is a transaction between two parties, the party receiving income or the seller or service provider subject to withholding tax article 23. The party providing income or the buyer or recipient of the service will deduct or report this tax.

As a sign that this tax has been deducted, the cutter must provide proof of deduction. The cutter needs to report it by submitting the withholding tax return 23.

Usually a tariff of 2% of the gross amount of rent and other income related to the use of assets except rent for land and/or buildings or technical services, management services, construction services and consulting services other service fees described in Minister of Finance Regulation No. 141 / PMK.03 / 2015.

Withholding Tax Article 25

A tax paid in installments in purpose to ease the burden of taxpayers, bearing in mind that the tax owed must be paid within one year. These payments must be made by themselves and cannot be represented.

Withholding Tax Article 29

As Underpayment Income Tax listed in the Annual Income Tax Return, that is the remaining income tax payable in the tax year concerned is reduced by tax credit (withholding tax Article 21, 22, 23, and 24) and Article 25.

In this case, the Taxpayer must have the obligation to pay the tax underpayment due before the Annual Income Tax Return is submitted.

VAT (Value Added Tax)

VAT itself is a tax that is imposed on any value-added of goods or services in circulation from producer to consumer.

VAT is a type of indirect tax, meaning that this tax is paid by another party (trader) who is not a tax guarantor, or in other words, the end consumer does not directly deposit the tax.

The VAT objected Delivery of Taxable Goods (BKP) and Taxable Services (JKP) within customs areas is carried out by employers, Import Taxable Goods., Utilization of intangible Taxable Goods from outside the customs area inside the customs area, Utilization of intangible Taxable Services from outside the customs area inside the customs area, Export of tangible or intangible Taxable Goods and Export of Taxable Services by Taxable Entrepreneur (PKP).

VAT rate is 10% but there is also a 0% VAT rate but only applied to Export of tangible taxable goods, Intangible Taxable Goods Exports, and Taxable Export Services.

For PKP,  there is what is called an output tax which is VAT collected when PKP sells its products and an input tax which means VAT paid when PKP purchases, obtains or makes its products. Those need to be paid by them as one of the VAT components.

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