ARTICLE 23 INCOME TAX
I. Definition
Article 23 Income tax is tax withheld on income in whatever name and form which is source from capital, service rendered or other activities other than being withheld under Article 21 Income tax .
II. Withholding Agent of and Recipients of Income Withheld Under Article 23 Income Tax .
1. Withholders of Article 23 Income tax are as follows:
a. A Government body;
b. A Resident taxpayer;
c. An Organizer of Activities;
d. A Permanent Establishment;
e. A Representative of Non Resident taxpayer
f. An individual taxpayer who is appointed by head of district tax office as withholder namely:
1. individual taxpayer who carries an independent personal services namely, accountant, doctor, notary public, land title conveyance other than Camat (authorized local Government official), consultant, lawyer;
2. individual taxpayer who runs business and engages bookkeeping regarding to the rent payment;
2. Recipients of Income withheld under Article 23 Income tax are as follows:
a. A Resident taxpayer
b. A Permanent Establishment
III. Tax Rate and Tax Object of Article 23 Income Tax
1. 15% of the gross amount of :
a. dividend
b. interest including premiums, discounts and remuneration in connection with debt claims;
c. prizes and rewards other than being withheld under Article 21 Income tax (for examples, paid by such company, legal body and organizer of activities in respect of completion of work).
2. 15% final of the gross amount of interest saving which the amount is more than Rp 144.000 each month paid by a cooperative.
3. 15% of the estimated net income.
a. The estimated net income of rent and other income in connection with the use of asset other than land and/or building is 40% of the gross income excluding Value Added Tax and Tax on Luxury Goods which is received and earned by a resident taxpayer or a permanent establishment;
b. The estimated net income from services rendered is as follows:
- 40% of the gross amount of income derived from rendering of services namely, law firm consultant services and tax consultant services;
- 40% of the gross amount of income derived from rendering of services namely, accounting and bookkeeping service, and forest tree felling services;
- 10% of the gross amount of income excluded Value Added Tax and Tax on Luxury Goods derived from rendering of services namely, cleaning services, pest eradication and other services which are financed by the state or local budget.
IV. Exemption from Withholding Tax of Article 23
The exemption of withholding tax are as follows:
1. Income paid or payable to a bank;
2. Rent paid or payable in connection with finance lease agreement;
3. Dividend or a share of profits received or earned by a limited company as a resident taxpayer, cooperative, foundation or any similar kind of body, the state or local owned enterprises, through capital participation on a company established and domiciled in Indonesia.
4. Interest of bonds received or earned by an investment fund company.
5. A share of profits received or earned by a venture-capital company from a joint venture body established and running business or activities in Indonesia with the following requirements:
a. the said joint venture body is a small or medium sized firm engaged in certain types of business sectors determined by Minister of Finance;
b. the shares of the above said joint venture are not traded on the stock exchanges in Indonesia;
6. Surplus paid by a cooperative to its members;
7. The amount of interest saving paid by a cooperative to its members is less than Rp 144.000/month.
V. Timing of Tax Due, Deposit and Reporting of Article 23 Income Tax
1. Timing of Tax Due
Article 23 Income tax is due on the month in which payment is made or the income tax is payable.
2. Deposit
The deposit of Article 23 income tax is carried out by a withholder not later than 10 th day of the ensuing month
3. Reporting
A withholder is required to report of Article 23 income tax by using the monthly income tax return to district tax office in which the taxpayer registered not later than 20 th day of the ensuing month
VI. Receipt of Withholding Tax of Article 23
A withholder is required to give the withholding tax Article 23 receipt to individuals or legal bodies who are the recipients of income withheld under Article 23 income tax respectively.
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