Withholding Income Tax – Article 4(2) Corporate Taxpayer

If you are a land/building tenant, what you have to do is:

1. Withhold Article 4(2) Final Income Tax at 10% of the gross rent of the land and/or building;
2. Issue a withholding tax receipt using Article 4(2) Income Tax e-SPT application;
3. Pay withholding Article 4(2) Final Income Tax by first creating a billing code (MAP Code-Payment Type Code 411128-403). The payment must be made no later than the 10th day of the following month. For example: on a withholding Article 4(2) Final Income Tax made in March 2019, the Income Tax payment must be made no later than 10 April 2019;
4. File Article 4(2) Final Income Taxusing Income Tax e-SPT application on djponline.pajak.go.id or to an Application Services Provider.

If you are a land/building owner, what you have to do is:

1. If you transact with an Individual Taxpayer, you must pay Income Tax on the income you earn at 10% of the gross rent of your land and/or building yourself;
2. Pay Article 4(2) Income Tax by first creating a billing code (MAP Code-Payment Type Code 411128-403). The payment must be made no later than the date of the following month. For example: on an income earned from land/building lease in March 2019, the Income Tax payment must be made no later than 15 April 2019;
3. File Article 4(2) Income Tax using Income Tax e-SPT application on djponline.pajak.go.id or to an Application Services Provider no later than the 20th day of the following month.

The object of Article 4(2) Income Tax on a transfer of land and/or building is the income from:

a. Transfer of property such as land and/or building; or

b. Amendment to the land and/or building conditional sale and purchase agreement.

If you are not a Taxpayer carrying out transfer of land and/or building as your main business, what you have to do is:

1. Pay Article 4(2) Income Tax at 2.5% (two point five percent) of the gross amount of the transfer of your land and/or building by first creating a billing code (MAP Code-Payment Type Code 411128-402). The payment must be made prior to the deed, decision, agreement, or minutes of auction of the transfer of land and/or building being signed by an authorized officer;

2. Pay Article 4(2) Income Tax at 2.5% (two point five percent) of the gross amount of the transfer of your land and/or building by first creating a billing code (MAP Code-Payment Type Code 411128-402). The payment must be made prior to the deed, decision, agreement, or minutes of auction of the transfer of land and/or building being signed by an authorized officer;

3. File an application for formal verification of proof of compliance with obligation to pay Income Tax to the Tax Office (KPP) whose working area covers the location of land and/or building (in accordance with PER-26/PJ/2018);

4. Collect the Certificate of Formal Verification of Proof of Compliance with Obligation to Pay Income Tax or the Notice of Incomplete and/or Incorrect Verification Application yourself at the Tax Office whose working area covers the location of land and/or building within a maximum period of 3 (three) business days;

5. The application is prepared using the application letter in Appendix I to PER-26/PJ/2018 and enclosed with:

• Tax Payment Slip (SSP) or other administrative instruments equivalent to Tax Payment Slip;

• A statement letter of the transfer of land and/or building or the land and/or building conditional sale and purchase agreement and its amendment prepared using the form in Appendix II to PER-26/PJ/2018;

• A copy of all proofs of sales (transfer slips, sales invoices, and/or cash receipts);
• A copy of the latest Notice of Land and Building Tax Due;
• A copy of identity card (KTP) for buyer and seller who are Indonesian Citizens; and
• A copy of passport for buyer and seller who are Foreign Citizens;
• If the verification application is filed by a proxy, a power of attorney and a copy of identity card of the proxy submitting and/or collecting the document;
• If the Taxpayer qualifies for not being required to have a Taxpayer Identification Number (TIN), a statement letter as specified in Appendix III to PER-26/PJ/2018.

If you are a Taxpayer carrying out transfer of land and/or building as your main business, what you have to do is:

1. Pay Article 4(2) Income Tax at 2.5% (two point five percent) of the gross amount of the transfer of your land and/or building by first creating a billing code (MAP Code-Payment Type Code 411128-402). The payment must be made prior to the deed, decision, agreement, or minutes of auction of the transfer of land and/or building being signed by an authorized officer. If what being transferred is Low-Cost House and Low-Cost Apartment exempt from Value-Added Tax (VAT), the rate is 1%;
2. File an application for formal verification of proof of compliance with obligation to pay Income Tax to the Tax Office whose working area covers the location of land and/or building (PER-26/PJ/2018). The application is prepared using the application letter in Appendix IA to PER-26/PJ/2018 and enclosed with a list of Income Tax payments in hardcopy and softcopy formats made according to the format in Appendix IB to PER-26/PJ/2018;
3. Collect the Certificate of Formal Verification of Proof of Compliance with Obligation to Pay Income Tax or the Notice of Incomplete and/or Incorrect Verification Application yourself at the Tax Office whose working area covers the location of land and/or building within the following periods:

• No later than 3 (three) business days if there are maximum 10 payment slips on the list of Income Tax payments;
• No later than 10 (ten) business days if there are more than 10 payment slips on the list of Income Tax payments.

The object of Article 4(2) Income Tax on Construction Services is the income from:

1. Construction work planning and consulting services;
2. Construction workimplementation services;
3. Construction work inspection services.

Tax rate for construction services:

1. Contractor
   1. 2%: qualification as a small business;
   2. 4%: no qualification;
   3. 3%: qualification as other than a small business (medium and large);
2. Construction Planner/Inspector
   1. 4%: with qualification as a business;
   2. 6%: no qualification.

If you are a construction services business owner, what you have to do is:

1. If you transact with a Corporate Taxpayer, you have to make sure that you receive a withholding Article 4(2) Income Tax receipt. You should then keep and use the withholding tax receipt as a supporting document when filling out Appendix IV to your Annual Corporate Income Tax Return for the relevant Tax Year. If the withholding agent makes an underwithholding, you will have to pay the rest yourself;
2. If you transact with an Individual Taxpayer, you must pay Article 4(2) Income Tax yourself by first creating a billing code (MAP Code-Payment Type Code 411128-409) and then file Article 4(2) Income Tax e-SPT through djponline.pajak.go.id or an Application Services Provider.

If you are a construction services user, what you have to do is:

1. Withhold Article 4(2) Income Tax according to the applicable rate and issue a withholding tax receipt using Article 4(2) Income Tax e-SPTapplication;
2. Pay Article 4(2) Income Tax by first creating a billing code (MAP Code-Payment Type Code 411128-409);
3. File Article 4(2) Income Tax e-SPT through djponline.pajak.go.id or an Application Services Provider.

If you pay a dividend to an Individual, what you have to do is:

1. Withhold Article 4(2) Income Tax at a rate of 10% when dividend is made available for payment and issue a withholding Article 4(2) Income Tax receipt using Article 4(2) Income Tax e-SPT application;
2. Pay Income Tax by first creating a billing code (MAP Code-Payment Type Code 411128-419). The payment must be made no later than the 10th day of the following month;
3. FileArticle 4(2) Income Tax using Income Tax e-SPT application on djponline.pajak.go.id or to an Application Service Provider no later than the 20th day of the following month.

If you receive a dividend, you have to make sure that you receive a withholding Article 4(2) Income Tax receipt. You should then keep and use the withholding tax receipt as a supporting document when filling out Appendix III to your Annual Individual Income Tax Return for the relevant Tax Year.

Any dividend income originating from within the country or abroad earned by an Individual or Corporate Taxpayer is exempt from tax, provided that the dividend is invested in Indonesia.

Specifically for a Corporate Taxpayer, there is an additional condition that the shares should not be traded on the Indonesia Stock Exchange prior to the Directorate General of Taxes (DGT) issuing a Notice of Tax Assessment for the dividend.

If the dividend and income after tax of a Permanent Establishment abroad invested in Indonesia are less than 30% of its total profit after tax, the following provisions apply:

1. The dividend and income after tax invested will be exempt from Income Tax;
2. The difference resulting from 20% of profit after tax minus dividend invested will be subject to Income Tax;
3. The remaining profit after tax minus dividend invested will not be subject to Income Tax.

If you as a lottery organizer awards a lottery prize to an event participant, what you have to do is:

1. Withhold Article 4(2) Income Tax at 25% of the lottery prize value. The lottery prize value is the amount of money or the market value if the prize given is of an in-kind nature, such as a car;
2. Issue a withholding Article 4(2) Income Tax receipt using Article 4(2) Income Tax e-SPT application;
3. Pay Income Tax by first creating a billing code (MAP Code-Payment Type Code 411128-405). The payment must be made no later than the 10th day of the following month;
4. File Article 4(2) Income Tax using Income Tax e-SPT application on djponline.pajak.go.id or to an Application Service Provider no later than the 20th day of the following month.

If you are a Taxpayer earning income from business of no more than Rp4,800,000,000 in a year in Fiscal Years 2017 and 2018, what you have to do is:

1. Choose to be subject to either non-final Article 25 Income Tax at the general Income Tax rate or final Income Tax at 0.5% of your monthly gross income per month;
2. If you choose to be subject to non-final Article 25 Income Tax at the general Income Tax rate, you have to submit a Statement Letter no later than the end of the Fiscal Year and you will be subject to Income Tax according to the Income Tax General Provisions starting from the following Fiscal Year;
3. If you choose to be subject to final Income Tax at 0.5% per month, you have to:

1. File an application for Government Regulation No. 23 (GR 23) Certificate to the Tax Office (KPP) where you are registered;
2. For subsequent transactions with a withholding agent, you can share a copy of the Certificate with the withholding agent to allow them to withhold the 0.5% final Income Tax;
3. Receive a copy of Tax Payment Slip from the withholding agent. You need to make sure that the Tax Payment Slip is made in your name and using your TIN as the recipient of income;
4. Calculate your gross income in a month and make sure that the amount of Income Tax paid is 0.5% of your gross income in that month;

4. If you use services of or purchase goods from a Taxpayer holding a GR 23 Certificate, you have to:

1. Create a billing code in the name and using the TIN of the recipient of income;
2. Provide a copy of the Tax Payment Slip to the recipient of income.

In accordance with the Regulation of the Minister of Finance Number 231/PMK.03/2019 of 2019, a Government Agency does not withhold any Article 4(2) Income Tax from the following transactions:

1. Payment or acknowledgment of land and/or building rental debt to a lodging services and accommodation provider;
2. Payment in part or in whole for a transfer of land and/or building to:

1. An individual having an income below the Non-Taxable Income transferring land and/or building with a gross amount of less than Rp60,000,000 (sixty million Rupiah) that is not an installment;
2. An individual or entity transferring property in the form of building in the context of performing a build-operate-transfer, build-transfer-operate, or utilization of state-owned asset in the form of land and/or building agreement; or
3. A non-tax subject individual or entity transferring property in the form of land and/or building.