With the Blessing of the Almighty
President of the Republic of Indonesia ,
that the State of the Republic of Indonesia is a constitutional state based on Pancasila (the five basic principles) and the Constitution of 1945 that holds in high regard the rights and duties of its citizens, and therefore taxation as one form of obligation to national development;
that the tax system forming the basis for collection of the state tax in effect until now is no longer in accordance with the level of growth of the economy and standard of living of the people of Indonesia, whether in view of national solidarity or in support of development of state finance;
that the tax system that has been created by the tax provisions in effect until now has not yet been fully able gain participation by all groups of tax subjects in increasing state revenues as needed to realize progress and increase in development in the framework of strengthening national stability;
that taxes are one source of state revenues that must grow and develop along with the growth in real prosperity of the people and the rapid national development;
that the system and regulations of tax law that form the basis for the collection of state taxes in effect until now need to be replaced and adapted to Pancasila and the Constitution of 1945;
that therefore the system and regulations of the law generally, and the corporation tax, income tax, and tax on interest, dividends and royalties in effect until now in particular, need to be replaced and adapted to give more legal certainty, simplicity, ease of administration, justice and equality;
that to fulfill the intentions referred to above it is necessary to set forth a Law concerning Income Tax. In view of:
Article 5 (1), 20 (1) and 23 (2) Constitution 1945;
Decision of the People's Consultative Assembly of the Republic of Indonesia Number II/MPR/1983 concerning the Guidelines of State Policy;
Law Number 6 Year 1983 concerning General Tax Provisions and Procedures (State Gazette Year 1983 Number 49 and Additional State Gazette Number 3262).
With the Approval of
THE HOUSE OF THE PEOPLE'S REPRESENTATIVES OF
THE REPUBLIC OF INDONESIA ,
With the revocation of:
- Article 15 (4) and (5) and Article 16 Law Number 1 Year 1967 concerning Foreign Investment (State Gazette Year 1967 Number 1, Supplement to State Gazette Number 2818) as amended by Law Number 11 Year 1970 concerning Changes and Additions to Law Number 1 Year 1967 concerning Foreign Investment (State Gazette Year 1970 Number 46, Supplement to State Gazette Number 2943);
- Article 9, Article 12 (4) and (5), Article 13, and Article 14 of Law Number 6 Year 1968 concerning Domestic Investment (State Gazette Year 1968 Number 33, Supplement to State Gazette Number 2853) as amended with Law Number 12 Year 1970 concerning Changes and Additions to Law Number 6 Year 1968 concerning Domestic Investment (State Gazette Year 1970 Number 47, Supplement to State Gazette Number 2944);
LAW CONCERNING INCOME TAX
Income Tax is imposed on individuals and organizations that receive or accrue income in a taxable year.
SUBJECT OF TAX
(1) Tax subject is:
a. 1) any individual;
2) any undivided estate as a unit in lieu of the individuals heirs;
b. any organization in the form of a corporation, limited partnership, state-owned enterprise and regional public enterprise in whatever form, partnership, or other association, firm, consortium, cooperative, foundation or institute, and permanent establishment.
(2) Tax subjects include resident Tax Subjects and non-resident Tax Subjects.
(3) Resident Tax Subject means:
a. any individual present in Indonesia for more than 183 (one hundred eighty-three) days in any twelve-month period, or any individual present in Indonesia during a tax year and intending to reside in Indonesia ;
b. any organization established or domiciled in Indonesia ;
c. any permanent establishment, meaning an establishment regularly used to carry on business in Indonesia by an organization or enterprise not set up or domiciled in Indonesia, which might be in the form of a seat of management, a branch office, a representative office, an agent, an office building, a factory, a workshop, a construction project, a mine or natural resource site, a fishery, a consulting team, the provision of services in whatever form by an employee or other individual, a dependent individual or organization acting in the name of an organization or enterprise not established or domiciled in Indonesia, and an insurance company not established or domiciled in Indonesia that receives insurance premiums or covers risks in Indonesia.
(4) Nonresident Tax Subject means any Tax Subject that is not resident, established, or domiciled in Indonesia that receives or accrues income from Indonesia .
(5) Whether an individual or organization is present in, resides in, or is domiciled in Indonesia shall be determined according to the facts.
(6) The Director General of Taxation is authorized to determine where an individual or organization is present, resides or is domiciled.
Not included in Tax Subject as referred to in Article 2 are:
diplomatic and consular representatives and other foreign officials, and the individuals who assist them with work and reside with them, as long as they are not Indonesian citizens and do not carry on other work or business activities in Indonesia and the country represented gives such exemption in return;
representatives of international organizations designated by the Minister of Finance;
Government enterprises ("Perusahaan Jawatan") as designated by Decree of the Minister of Finance.
OBJECT OF TAX
(1) The Tax Object is income, meaning any increase in economic prosperity received or accrued by a Taxpayer, whether originating from within or outside Indonesia, that may be used for consumption or to increase the wealth of such Taxpayer, in whatever name and form, including:
wages, salary, commissions, bonuses, pensions or other compensation for work performed;
honoraria, lottery prizes and awards;
gross profit from business;
gains from the sale or transfer of property, including gains accrued by a corporation, partnership or other organization on the distribution of property to shareholders, partners, or members, including distributions in liquidation;
refunds of tax payments already deducted as cost;
dividends, in whatever name and form, paid by a corporation, payments of dividends by an insurance company to policyholders, distributions of Business Profits of a cooperative to managers and refunds of Business Profits of a cooperative to members;
rents from property;
annuities received or accrued;
gains from cancellation of indebtedness.
The taxation of interest from time deposits and other savings shall be specified further by Government Regulation.
(3) Not included as Tax Objects are:
gifts or assistance unrelated to the business or professional work of the parties involved;
payments from an insurance company because of accident, illness or death of the insured and payments of scholarship insurance;
compensation for work or services received in-kind, if the party paying such compensation is the Government or a Taxpayer under this law and the Taxpayer giving such compensation may not deduct such compensation as cost according to Article 9 (1) (a) of this law;
gain on the transfer of property of an individual, or property of the members of a firm, limited partnership or kongsi, to a resident corporation in exchange for shares, with the condition that:
the transferor or joint transferors own at least 90% (ninety percent) of the total issued capital;
such transfer is reported to the Director General of Taxation;
the imposition of tax at a later date on such gain is guaranteed by the organization;
property received by a corporation, partnership or other organization in exchange for shares or as a contribution to capital;
any dividend received by a resident corporation, other than a bank or other financial institution, from another corporation in Indonesia, if the corporation receiving such dividend owns at least 25% (twenty-five percent) of the value of the issued shares of the organization paying the dividend and such two organization have an economic relationship in the course of business;
contributions received or accrued by a pension fund approved by the Minister of Finance, whether paid by an employer or an employee, and income of the pension fund from capital invested in certain sectors based on Decree of the Minister of Finance.
income of a foundation from business exclusively in the public interest;
income of a foundation from capital to the extent such income is used exclusively in the public interest;
distribution of profits by a limited partnership whose capital is not divided into shares, a firm, a kongsi or a partnership to members, unless determined otherwise by the Minister of Finance because abuse is found;
(1) The Object of Tax of a permanent establishment is:
income from business activities of such permanent establishment and from property controlled or owned by it;
income of a parent company, or other organization having a special relationship to the parent company that is not a resident Taxpayer, from business activity or sales of goods and/or provision of services in Indonesia of the same type as the business activity or sales of goods and/or provision of services carried out by the permanent establishment in Indonesia, except for income referred to in paragraph (2).
If the parent company of a permanent establishment in Indonesia , or other organization with a special relationship to the parent company that is not a resident Taxpayer, receives or accrues income from Indonesia covered by Article 26 of this law:
the costs associated with the income of such parent company or other organization may not be deducted from the income of the permanent establishment, and
the tax of the parent company or other organization may not be credited against the tax of the permanent establishment.
(1) Taxable income shall be determined by deducting from gross income:
costs of earning, recovering and securing such income, including costs of buying materials, wages and salaries of employees including bonuses, honoraria, interest, rent, royalties, travel costs, bad debts, insurance premiums, administrative costs, and taxes other than Income Tax;
depreciation of costs to obtain tangible business property and amortization of costs to obtain rights and/or other costs with a useful life of more than one year as provided in Article 11 of this law;
contributions to a pension fund approved by the Minister of Finance;
losses from the sale or transfer of property and/or rights owned and used in business or to earn, recover and secure such income;
Business Profits of a cooperative connected with business activities exclusively from and for members.
An individual resident Taxpayer may deduct the income exempt from tax under Article 7 of this law.
If the deductions from gross income for costs provided in paragraph (1) result in a loss, such loss may be credited against income in:
5 (five) years, or
more than 5 (five) years but not more than 8 (eight) years for specific types of businesses, based on decree of the Minister of Finance, beginning with the first year after such loss is incurred.
For individuals who are resident Taxpayers, deductions are permitted for exempt income of:
Rp 960,000 (nine hundred sixty thousand rupiah) for the individual Taxpayer;
an additional Rp 480,000 (four hundred eighty thousand rupiah) for a married Taxpayer;
an additional Rp 960,000 (nine hundred sixty thousand rupiah) for a wife who has income from business or professional work that is not related to the business of her husband or another member of the family;
an additional Rp 480,000 (four hundred eighty thousand rupiah) for each family member by blood or by marriage in a straight line, including any adopted child, who is a full dependent, up to at most 3 (three) individuals per family.
The application of paragraph (1) shall be determined by conditions at the beginning of the tax year or at the time of becoming a resident Tax Subject.
The amounts of exempt income mentioned in paragraph (1) above shall be adjusted by an adjustment factor set by decree of the Minister of Finance.
Income or losses of a woman married at the beginning of the tax year as well as losses from earlier years not yet set off as provided in Article 6 (3) shall be considered as income or losses of the husband, except for income of the wife from work subject to withholding of tax under Article 21 of this law and not related to the business of her husband or another family member.
Income of a minor child not from work and income from work that is related to the business of another family member shall be consolidated with the income of the parents.
(1) In determining taxable income the following may not be deducted:
payments of dividends or other profit distributions by a corporation or other organization to shareholders, partners or minors in whatever name and form, including distributions by a cooperative of Business Profits that are not refunds of Business Profits connected with services for members, dividends paid by an insurance company to policyholders and costs incurred for the benefit of shareholders, associates and members;
formation of or additions to reserves, except in cases designated by Government Regulation;
premiums for life, health, double-purpose or scholarship insurance, unless paid by an employer and such premiums are treated as income of the Taxpayer;
costs of holiday leave, recreation and other benefits provided by the Taxpayer for the needs of employees, including the use of business automobiles and housing, except for housing in isolated areas as designated by decree of the Minister of Finance;
excessive compensation for work performed, paid to shareholders or parties with a special relationship;
gifts, support payments, and inheritances referred to in Article 4 (3) (a) and (b);
costs incurred for the personal needs of the Taxpayer or his dependents;
(2) Costs of earning, recovering and securing income that have a useful life of more than one year may not be deducted at once, but rather shall be deducted through amortization as provided in Article 11 (10) of this law.
(1) In taking depreciation and amortization on property and in calculating gain or loss from a sale not influenced by a special relationship, the acquisition price shall equal the cost actually incurred by the taxpayer, or in the case of a transfer of property the acquisition value shall equal the cost that would have been incurred, except that:
in the case of a transfer to which Article 4 (3) e applies, the basis of shares or other participation received by the transferor shall equal the value of the property so transferred according to the books of the transferor;
in the case of a transfer of property of which Article 4 (3) f applies, the basis of property received by the transferee shall equal the basis of the property transferred according to the books of the transferor;
in the case of a transfer of property by gift, as a nontaxable support payment, or by inheritance, the basis used by the transferee shall be the same as the basis used by the transferor.
(2) The acquisition price or acquisition value of property used by a Taxpayer in receiving or accruing income shall be adjusted for depreciation and/or amortization, additions, improvements or additions made.
(3) Inventory may be valued only at acquisition cost, using either average cost of inventory or the cost of inventory acquired first.
(1) Depreciable property means tangible property owned and used in business or owned for the production, recovery and securing of income, with a useful life of more than one year, except land. Gain or loss on the transfer of depreciable property must be calculated as provided in paragraph (7)(b).
(2) Depreciation allowed in a tax year equals the sum of depreciation for each asset class as provided in paragraph (3), and depreciation for each asset class is calculated by multiplying the depreciable base of such class as provided in paragraph (4) by the rate depreciation as provided in paragraph (9).
(3) In calculating depreciation, depreciable property shall be divided into asset classes as follows;
a. Class 1:
depreciable property not in the Building Class with a useful life of not more than 4 (four) years;
b. Class 2:
depreciable property not in the Building Class with a useful life of more than 4 (four) years and not more than 8 (eight) years;
c. Class 3:
depreciable property not in the Building Class with a useful life of more than 8 (eight) years;
d. Building Class:
building and other immovable property, including additions, improvements or alterations carried out.
(4) The depreciation base of each asset class for a tax year shall equal the opening value for the tax year for the asset class increased by any additions, improvements, or alterations, and decreased by the subtractions provided in paragraph (7).
(5) The opening value of each of classes 1, 2, and 3, for a tax year shall equal the depreciation base for the previous year, reduced by depreciation allowed for such previous year.
(6) The opening value of the building class for a tax year shall equal the depreciation base for the previous tax year, meaning the acquisition price or value.
(7) In the case of a retirement of property:
a. if extraordinary, as a result of casualty or termination of a large segment of a business, the total remaining book value may be deducted from the beginning value in determining the depreciation base, and the total remaining book value may be considered as a loss in the relevant tax year, whereas proceeds from sale or insurance proceeds shall be considered income;
b. if ordinary, meaning other than those mentioned in (a), net proceeds from such property shall be deducted from the beginning value in determining the depreciation base.
(8) if the deductions provided in paragraph 7 in a tax year reduce the depreciation base to below zero, such depreciation base must be increased to zero, and the amount of such increase shall be added to income for such tax year.
(9) The rate of depreciation per year for:
a. Class 1 : 50% (fifty percent)
b. Class 2 : 25% (twenty-five percent)
c. Class 3 : 10% (ten percent)
d. Building Class : 5% (five percent).
(10) The acquisition price of intangible property used in business for the production, recovery, or securing of income, including other costs with a useful life of more than one year, such as leases of tangible property, shall be amortized using a rate based on useful life as provided in paragraph (9) (a), (b), and (c), or with the level rate of class 1 as provided in paragraph (11), or using the unit of production method as provided in paragraph (12) or (13).
(11) Costs of setting up and issuing capital of an enterprise shall be amortized using the level rate of depreciation for Class 1, unless the Taxpayer considers them as costs under Article 6 (1) (a) according to his books.
(12) Costs of acquiring mineral rights other than for oil and gas and costs of acquiring forestry rights shall be amortized using the unit of production method, at most 20% (twenty percent) per year.
(13) Costs of acquiring rights and/or other costs with a useful life of more then one year in the oil and gas sector shall be amortized using the unit of production method.
(14) The Minister of Finance shall issue a decree determining the types of property included in each asset class as referred to in paragraph (3), considering the useful lives of such types of property.
(1) The Tax Year is the calendar year, unless the Taxpayer uses a book year other than the calendar year.
(2) A Taxpayer may not change its tax year without receiving approval from the Director General of Taxation.
(1) A resident Taxpayer that receives or accrues business and/or professional income must keep books in Indonesian in a manner that permits calculation from such books of the amount of income subject to tax under this law.
(2) At the end of each tax year, a Taxpayer must close such books by preparing a balance sheet and income statement based on bookkeeping principles consistent with those used in the previous year.
(1) Calculation Norms are guides used to determine turnover or gross receipts, and to determine net income by type of business or professional work, calculated, continuously updated and published by the Director General of Taxation, based on guidelines set by the Minister of Finance.
(2) Any Taxpayer with turnover from business or gross receipts from professional work of less than Rp 60,000,000 (sixty million rupiah) per year may calculate net income using Calculation Norms, if such intention is communicated to the Director General of Taxation within the first 3 (three) months of such tax year.
(3) The figure of Rp 60,000,000 (sixty million rupiah) shall be adjusted by an adjustment factor determined by Decree of the Minister of Finance.
(4) A Taxpayer referred to in paragraph (2) that does not communicate to the Director General of Taxation an intention to calculate net income using Calculation Norms, shall be considered to have chosen to keep books, and is therefore not permitted to calculate net income with Calculation Norms without the surcharge referred to in paragraph (7).
(5) A Taxpayer referred to in paragraph (2) that calculates net income using Calculation Norms is obligated to keep a record of turnover or gross receipts.
(6) For any Taxpayer that is obligated to keep books or records of turnover or gross receipts yet does not fully keep them as specified in this law or show books and records as well as other evidence requested by the Director General of Taxation in connection with the obligation to keep such books or records, net income shall be calculated using Calculation Norms.
(7) The tax resulting from the calculation provided in paragraph (6) shall be increased by an administrative sanction in the form of a surcharge as provided in Article 13 (3) of the Law Number 6 Year 1983 concerning General Tax Provisions and Procedures.
The Minister of Finance may issue a decree setting special Calculation Norms to use in calculating net income of certain Taxpayers whose net income cannot be calculated under Article 16 of this law.
METHOD OF CALCULATING TAX
(1) Taxable Income used as the tax base of a resident Taxpayer in a tax year shall be calculated by reducing income as defined in Article 4 (l) by the deductions provided in Article 6 (1), Article 7 (1) and Article 9 (1) (b), (c), and (d).
(2) Taxable income for specified resident Taxpayers as provided in Article 14 (2) shall be calculated using Calculation Norms as provided in Article 14 (1).
(3) Taxable income for nonresident Taxpayers shall equal the gross amount of income received or accrued.
(1) The tax rate to be applied to taxable income except income referred to in Article 26 of this law is as follows:
Taxable Income Tax Rate
up to Rp 10,000,000 15%
(ten million rupiah) (fifteen percent)
above Rp 10,000,000 25%
(ten million rupiah) (twenty-five percent)
to Rp 50,000,000
(fifty minion rupiah)
above Rp 50,000,000 35%
(fifty million rupiah) (thirty-five percent)
(2) The amounts of taxable income mentioned in paragraph (1) shall be adjusted by an adjustment factor set by Decree of the Minister of Finance.
(3) In applying the tax rates provided in paragraph (1), taxable income shall be rounded off to the lower thousand rupiah figure.
(4) If the status as resident Tax Subject of an individual Taxpayer arises after the beginning of the tax year or ends during the tax year, the tax due shall equal the total number of days in such portion of the tax year divided by 360 (three hundred and sixty) and multiplied by the tax due for a tax year resulting from the application of paragraphs (1) and (2). Net income accrued during such portion of the taxable year shall first be grossed up to a full year.
(5) For purposes of calculating tax as provided in paragraph (4), each month shall be considered as 30 (thirty) days.
(1) The Minister of Finance is authorized to issue a decree concerning the ratio of debt and equity of a firm for purposes of collecting tax due under this law.
(2) The Director General of Taxation is authorized to redetermine the amount of income and/or deductions and to consider debt as equity in calculating the amount of taxable income if the Taxpayer has a special relationship with another Taxpayer.
(3) A special relationship as referred to in Article 5 (1) and (2), Article 9 (1) (e) and paragraph (2) of this Article means:
a. if the Taxpayer is an organization:
1. a relationship between two or more Taxpayers that are under common ownership or control, whether directly or indirectly;
2. a relationship between a Taxpayer that owns 25% (twenty-five percent) or more of the capital of another party, or a relationship between a Taxpayer that owns 25% (twenty-five percent) or more of two or more parties, and the relationship between the two or more parties last mentioned.
b. if the Taxpayer is an individual:
family relations by blood or by marriage in a direct line or one level to the side.
(4) two or more parties that are each corporations, partnerships or other organizations that have a special relationship with 50% (fifty percent) or more participation may use the lower rate brackets referred to in Article 17 only once in calculating tax due.
An adjustment factor may be set by Government Regulation if a mismatch arises between the elements of cost and income because of rising prices.
SETTLEMENT OF TAX DURING THE YEAR
(1) The estimate of tax that will be due for a tax year shall be paid by the Taxpayer during the year through withholding and collection of tax by other parties as well as payments of tax by the Taxpayer himself.
(2) The payment of tax through withholding and collection of tax by other parties as well as tax payments by the Taxpayer himself shall represent installment payments of tax that shall be credited against Income Tax due for such entire tax year.
(3) The Tax Period is used as the length of time for determining the amount of taxable income and tax that is due and must be paid in installments in the course of a year.
(4) The Tax Period referred to in paragraph (3) is 1 (one) month or another length of time set by the Minister of Finance.
(1) Withholding of tax on income connected with work and remission of such tax to the State Treasury shall be required of :
- employers who pay wages, salary and honoraria in whatever name, as compensation for work performed by employees or other individuals in Indonesia ;
- Government agencies that pay wages, salary, honoraria, support payment and other payments whatever, in connection with work or official service, that are borne by State Finances;
- pension fund organizations that pay pension benefits;
- firms and organization that pay honoraria or other payments as compensation for services provided in Indonesia by experts and/or consulting partnerships as resident Taxpayers who carry on independent work.
(2) The portion of income subject to withholding in each tax period is the portion of income that exceeds one twelfth of income exempt from tax under Article 7.
(3) At the time an individual begins to work or to receive a pension, in determining deductions provided under Article 7 such individual must submit a declaration letter to the employer, Government agency or pension fund organization that states the total number of family dependents.
(4) The declaration referred to in paragraph (3) shall be used by the employer, Government agency or pension fund organization, to determine the amount of taxable income, unless such Taxpayer submits a new declaration letter concerning changes.
(5) The rate of withholding of tax on salary, wages and honoraria shall be the same as the rate of tax on taxable income provided in Article 17.
(6) The total tax to be withheld from the portion of wages each tax period shall be determined in a Guide Book issued by the Director General of Taxation, as referred to in paragraph (9).
(7) For any individual who has no income other than income related to work accurately and fully subject to withholding of tax, the amount of tax already withheld as provided in paragraphs (2) and (5) shall constitute settlement of the tax due for such year under this law.
(8) Any individual who has income other than income related to work and any individual who accrues income related to work from more than one employer must file an Annual Tax Return as provided in Article 30 of this law and Article 3 of Law Number 6 Year 1983 concerning General Tax Provisions and Procedures. Total tax due shall be reduced by any tax already withheld as a credit in accordance with Article 28 of this law.
(9) The Director General of Taxation shall publish a Guide Book concerning the withholding of tax on payments of wages, salary, honoraria and other payments related to work to work or other services performed.
(1) The Minister of Finance my appoint certain organizations to collect tax from a Taxpayer carrying out business activities in the importing sector or carrying out business activities in other sectors and receiving payments for goods and services from State Expenses.
(2) The collection base and amount collected shall be set by Decree of the Minister of Finance based on the consideration that total collections should approximate the total tax due on such income from business.
(1) Income mentioned below, in whatever name and form, paid or owed by a Governmental organization, state-owned or regional enterprise in whatever name and form, or by another resident Taxpayer that is an organization to a resident Taxpayer other than a bank or other financial institution, shall be subject to withholding of tax by the party obligated to pay in the amount of 15% (fifteen percent) on the gross amount:
a. dividends from a resident corporation;
b. interest, including loan guarantees;
c. rents, royalties and other income related to the use of property;
d. compensation paid for technical or management services performed in Indonesia .
(2) Individuals who are resident Taxpayers may be appointed by the Director General of Taxation to withhold tax as provided in paragraph (1).
(3) Certain interest and dividends that do not exceed an amount determined by Government Regulation shall be exempt from withholding of tax as provided in paragraph (1).
(1) A credit shall be allowed against tax imposed in a tax year, as calculated under this law, for tax paid or due abroad by the Taxpayer in the same tax year on income received or accrued abroad.
(2) The credit permitted in connection with income received or accrued abroad for such tax year shall be limited to the total tax due on foreign income under this law.
(3) In calculating the limit of creditable tax, income items referred to in Article 26 of this law shall be considered to be from within Indonesia , and the source of other items of income shall be established using similar principles.
(4) If any such credited foreign income tax is reduced or refunded, the tax due under this law must be increased by such amount in the year the reduction or refund is granted.
(1) The amount of the installment payment of tax during the course of a year that must be paid by the Taxpayer himself in each tax period shall equal the tax due for the preceding tax year reduced by withholding and collection of tax and tax paid or due abroad as provided in Articles 21, 22, 23 and 24 divided by the number of tax periods.
(2) The meaning of tax due in paragraph (1) is tax according to the latest Annual Tax Return, unless the tax finally assessed by the Director General of Taxation is greater.
Income mentioned below, in whatever name and form, paid by or due from a government organization, state-owned and regional enterprise in whatever name and form, or other resident Taxpayer to a nonresident Taxpayer shall be subject to withholding of final tax of 20 % (twenty percent) of the gross amount by the party obligated to pay:
a. dividends from a resident corporation;
b. interest, including guarantee fees;
c. rents, royalties, and other income for the use of property;
d. compensation paid for technical services, management services, and other services performed in
e. after-tax profits of a permanent establishment in Indonesia
Further regulations concerning the tax obligations referred to in Articles 21, 23, and 25 shall be set by Government Regulation.
TAX CREDITS, PAYMENT OF TAX DEFICIENCIES,
ANNUAL TAX RETURNS AND REFUNDS
OF TAX OVERPAYMENTS
In the case of a resident Taxpayer, tax due for an entire tax year under this law shall be reduced by tax credits from:
a. withholding of tax on income from work as referred to in Article 21;
b. collection of tax on income from business as referred to in Article 22;
c. withholding of tax on income in the form of interest, dividends, royalties, rents and other compensation as referred to in Article 23;
d. tax paid or due abroad as referred to in Article 24;
e. payments made by the Taxpayer himself for such tax year as referred to in Article 25.
If tax due for a tax year appears to be greater than the total credits referred to in Article 28, the tax deficiency still due must be paid at the latest by the end of the third month after such tax year ends, before the Annual Tax Return is filed.
(1) Every resident Taxpayer is obligated to file an Annual Tax Return with Financial Statements in the form of a balance sheet and income statement attached, in accordance with the provisions set out in Article 4 Law Number 6 Year 1983 concerning General Tax Provisions and Procedures.
(2) The Annual Tax Return referred to in paragraph (1) shall show at a minimum total turnover, total income, total taxable income, total tax due, total tax already paid in the course of the year, and total tax still due or overpaid.
(3) Exempt from the obligation referred to in paragraph (1) are individuals:
a. who have no income other than income related to work or official service for one employer as referred to in Article 21;
b. whose total net income does not exceed the amount of exempt income as provided in Article 7.
(4) The total tax due according to the Annual Tax Return filed by a Taxpayer is the total tax due under this law.
(5) If the Director General of Taxation receives evidence that the total tax due according to the Annual Tax Return is not accurate, the Director General of Taxation shall assess the actual total amount due.
(1) If the tax due for a tax year appears smaller than the total credits as referred to in Article 28, the excess tax payment shall be refunded or offset against another tax liability.
(2) Before an excess tax payment is refunded or offset as provided in paragraph (1), the Director General of Taxation is authorized to conduct an audit of Financial Reports, books and other records, and if necessary to assess the amount of tax due in accordance with the provisions of this law.
The method of imposing tax and sanctions connected with the implementation of this Law shall be provided in Law Number 6 Year 1983 concerning General Tax Provisions and Procedures, unless the method of imposing tax is specified otherwise in this law.
(1) Any Taxpayer whose book year ends on June 30, 1984 or between June 30, 1984 and December 31, 1984 may choose to calculate tax based on the Corporation Tax Ordinance 1925 or the Income Tax Ordinance 1944, or based on the provisions of this law.
(2) Tax incentives already granted on or before December 31, 1983 with:
a. a limited time period may be enjoyed by such Taxpayer until they expire;
b. an unlimited time period may be enjoyed during the tax year before tax year 1984.
(3) Taxable income received or accrued in the oil and gas sector or other mining sector connected with Contracts of Work and Production Sharing Contracts still in effect on the effective date of this law shall be subject to tax under the provisions of the Corporation Tax Ordinance of 1925 and the Tax Law on Interest, Dividends and Royalties 1970 and all implementing regulations.
With the coming into effect of this law, all implementing regulations related to the imposition of Corporation Tax 1925, Income Tax 1944 and Tax on Interest, Dividends, and Royalties 1970 shall remain in effect as long as they do not concern this law and as long as they have not yet been changed by new implementing regulations.
Matters not yet fully covered in this law shall be further specified by Government Regulation.
(1) This law shall take effect on January 1, 1984.
(2) This Law may be referred to as the Income Tax Law 1984.
In order that every individual may take cognizance of this Law, its promulgation in the State Gazette of the Republic of Indonesia is hereby ordered.
Enacted in : Jakarta
on : December 31, 1983
PRESIDENT OF THE REPUBLIC OF INDONESIA
Promulgated in Jakarta
on December 31, 1983
REPUBLIC OF INDONESIA
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 1983 NUMBER 50