Income Taxes Literature Review 1. Definition of taxes
24 Subject to tax based on net income.
The tax rate used is the general tariff rate of Income Tax Law Article 17.
Obligation to submit tax returns SPT. Tax rate used is the rate worth tariff
Income Tax Law Article 26. Not required to submit tax returns SPT.
Based on the explanation above regarding the subject of domestic taxes and foreign tax subject, that it is clear that, for payers in the country,
subject to income tax whether received or obtained from Indonesia and outside Indonesia, in accordance with the principle of nationality, while
WPs foreign taxable only on income derived from sources of income in Indonesia, according to the principle source. For an individual who is the
subject of taxes in the country and abroad is an individual who resides in Indonesia counted since its presence in Indonesia for 183 one hundred
and eighty-three days within a period of 12 twelve months may be taxed as a subject of domestic taxes in accordance with the principle of domicile.
For more details, this included in the Personal category as the subject of taxes is as follows:
a. Employees in general, namely an individual who did the work under an employment agreement or agreements either written or unwritten,
including those that do the work in the office of the country or state owned enterprises and state owned areas;
b. Permanent employees, i.e. an individual who works at the employers who receive salary or earn a certain amount on a regular basis,
including commissioners, commissioners, and members of the
25 supervisory board who regularly participate directly manage the
companys activities; c. Employees separated, i.e. an individual who works at the employers
who only receive benefits if the individual in question worked; d. Employees with WP status abroad that is an individual who does not
reside in Indonesia or are in Indonesia for not more than 183 days within a period of 12 months who receive or earn a salary, honorarium
and other benefits related to employment, services, and activities; e. Pension recipients, the individuals or their heirs who receive or obtain
compensation for work performed in the past, including private persons or their heirs who receive Old Age Savings or Retirement
Allowances; f. Honorarium Recipient, the individuals who receive or obtain
compensation in connection with, positions or activities that do; g. The recipient of wages, i.e. individuals who receive daily wages, weekly
wages, piece rate, or wage unit; From what has been described above, it can be concluded that the
subject of taxes is the all-income persons or entities in Indonesia, both as an Indonesian citizen who earn income abroad either individually or in the
form of the body. While that does not include tax subjects that first is the
representatives of foreign countries. Second is The official representatives of the diplomatic and consular or other officials from foreign countries,
26 and those who assisted to those who work in and live with them, provided
that; No citizen of Indonesia and in Indonesia does not receive or obtain other income outside his office in Indonesia and The States concerned to
provide reciprocal treatment. Third is International organizations referred to in the decision of the Minister of Finance Number 574KMK.042000
dated 26 December 2000 as last amended by Decree of the Minister of Finance Number 243KMK.032003 dated 4 June 2003, provided that
Indonesia is a member organization and not conducting business or other activities to earn income from Indonesia other than lending to the
government whose funds come from contributions of members. Last is The official representatives of international organizations as
referred to in the Decree of the Minister of Finance Number 574KMK.042000 dated 26 December 2000 as last amended by Decree of
the Minister of Finance Number 243KMK.032003 dated 4 June 2003, provided that No citizen Indonesia, Not conducting business or doing any
activity or other work to earn income in Indonesia. According to Article 4 paragraph 1 states that the object the income
tax is earn. Income is any additional economic capability received or accrued by taxpayers, whether they come from Indonesia and outside
Indonesia, which can be used for consumption or increase the wealth of Taxpayer, with the name and in any form.
What is included in the definition of income is: a. Replacement or compensation with regard to employment or services
27 Received or accrued, including salaries, wages, honoraria,
commissions, bonuses, gratuities, pensions, or compensation in other forms, unless otherwise provided in this Act;
b. Gifts from the lottery or work or activities, and awards; c. Operating income;
d. Gains from the sale or transfer of property including; 1 Gain due to transfer of property to the company, partnership and
other agencies in lieu of shares or equity participation. 2 Gains derived by the company, partnerships and other entities for
the Transfer of property to shareholders, partners, or members. 3 Gain in liquidation, merger, consolidation, expansion, split, or Take
over attempt. 4 Gain in the transfer of property in the form of grants, aid or
donation, except given to blood relatives in a straight line one degree, and religious bodies or agencies of education or social
agencies or small businesses, including cooperatives established by the Minister of Finance, as long as there is no correlation with
business, occupation, possession, or control between the parties concerned.
e. Refunds of tax payments that have been charged as an expense; f. Interest, including premiums, discounts and other benefits for loan
repayment guarantees;
28 g. Dividends, by whatever name and form, including dividends from
insurance companies to policyholders, and the distribution of cooperative effort;
h. Royalty; i. Rental and other income in connection with the use of property;
j. Acceptance or obtaining periodic payments; k. Benefits Due to debt relief, except to a certain amount determined by
government regulation; l. Foreign exchange gains from foreign currency;
m. Difference from revaluation of assets; n. Insurance premiums;
o. Contributions received or obtained from part association consisting of the taxpayer are engaged in business or professional services;
p. Wealth net additional income derived from that has not been taxed. Income can be grouped into four namely Income from
employment in employment and independent work, such as salary, honorarium, income from the profession of experts. Income comes from a
business or an activity. Income from capital or the use of property, such as rent, interest, dividends, royalties, gains from the sale of unused property,
and so forth. Other income, i.e. income that can not be classified into one of three income groups above, such as Gains due to debt relief; Foreign
exchange gains due to foreign currency; Difference from revaluation of assets; Prize sweepstakes.
29 For taxpayers is the country which became taxable income is
good income coming from Indonesia and outside Indonesia. Whereas for foreign taxpayers, who becomes a taxable income only income comes
from Indonesia alone. While that does not include a taxable income in accordance with
the provisions of Article 4 paragraph 3 of the Income Tax Act are: a. Aid donations, including alms received by the agency alms charity or
institution established or approved by the government and is entitled to alms recipients;
b. The property gift received by family incest in a straight line one degree, and by religious bodies or agencies or educational charities or small
businesses, including cooperatives established by the Minister of Finance, as long as there are no relationships with business,
employment, ownership, or mastery between the parties concerned; c. Heritage;
d. Assets including cash deposits received by the agency as an exchange for shares or capital;
e. Replacement or compensation in connection with work or services received or acquired in kind and or enjoyment of the taxpayer or the
government; f. Payment of an insurance company to an individual in connection with
health insurance, accident insurance, life insurance, endowment insurance, insurance and scholarships;
30 g. Dividends or share of profits received or accrued by a limited liability
company as a Taxpayer, cooperatives, state enterprises, or enterprises, from investments in other business entity established and domiciled in
Indonesia with the following requirements are Dividends from retained earnings reserve. For limited companies, SOEs and enterprises that
receive the lowest dividend of 25 twenty five percent of the paid up capital and must have an active business outside the ownership of
these shares; h. Contributions received or accrued pension fund which establishment
was approved by the Minister of Finance, be paid by the employer or employee;
i. Income from capital invested by pension funds as referred to in number 7, in specific areas determined by the Minister of Finance;
j. Equity in net income received or accrued by a member of a limited partnership whose capital is not divided into shares, partnership,
association, firm, and the joint venture; k. Interest received or accrued by a member of a limited partnership
whose capital is not divided into shares, partnership, association, firm, and joint venture;
l. Interest received or accrued bond mutual fund companies during the first 5 years since the founding of the company or business
administration;
31 m. Income received or accrued by venture capital firms for a share of
income from agency business partner, founded and run a business or activity in Indonesia, provided that such business partner agencies: a
small, medium, or which carries on business in the business sectors determined by the decision of the Minister of Finance and its shares are
not traded on stock exchanges in Indonesia. The obligation to submit and report annual tax return SPT is a
means for taxpayers to report on matters relating to tax obligations. SPT must be filled in correctly, completely, and clearly in the Indonesian
language using Latin letters and Arabic numbers, the currency of rupiah and sign and submit it to the Tax Office KPP and any other place determined
by the Directorate General of Taxation. Function returns for taxpayers income tax is as a means to report and
account for calculating the amount of tax actually owed and to report on: a. Payment or repayment of tax which has been implemented alone and or
through the withholding or collection of other parties within one 1 tax year or the tax year;
b. Income subject to income tax and or subject to tax; c. Property and liability;
d. Payment of the cutter or collector of tax cuts or individuals or other entities within one 1 the tax period in accordance with the provisions of
taxation legislation in force.
32 Individual taxpayers each year must report income received or
obtained during one year. Income reported is any additional economic capability in the form of taxpayer’s money and the form of goods in
accordance with article 4 paragraph 1 of Act KUP. If there is a net income that has not been reported in previous years, it can be reported by organizing
includes in the SPT have been reported. Required to submit annual tax returns are:
a. Individual taxpayers who receive or earn income from business activities and or independent;
b. Individual taxpayers who receive or obtain income from capital and others;
c. Employees who receive or earn income other than in connection with work, service or activity and or who earn income in relation to
employment, services or activities of more than one employer; d. Authorization for an undivided inheritance;
e. State officials, civil servants, members of the Armed Forces and employees of state-owned companies;
f. Indonesian citizen who works in a foreign country representatives and representatives of international organizations;
g. Foreigners residing in Indonesia for more than 183 days within a period of 12 months or person in a tax year are in Indonesia and have the
intention to reside in Indonesia;
33 h. Each husband and wife is taxed separately in terms of income; Husband
and wife have lived apart. Required in writing by the husband and wife under the separation agreement and property income in this case
husband and wife must have tax ID. Income Tax Act of 2008 requires public and private employees
whose income above PTKP must have a Taxpayer Identification Number TIN. As a consequence because they have a TIN to report income in the
Personal Income Tax Return a year. Excluded from the obligation to submit annual tax returns:
a. Individual taxpayers who are exempt from the obligation to submit the income tax returns and annual tax section 25 income taxes. PMK
183KMK.032007; individual taxpayer in a tax year to receive or obtain net income does not exceed non taxable income referred to in
Article 7 third law changes the income tax 1984; b. Individual taxpayers who are exempt from the obligation to submit
income tax returns the article 25 but must submit annual income tax returns. PMK 183KMK.032007: an individual taxpayer who does
not carry on business or not doing the job free. In accordance with PER-81PJ2007 and PER-8PJ.2008 PER-
161PJ.2007 changes can be explained that for the Personal Income Tax Annual tax return since tax year 2007 and subsequent years there were two
types of namely SPT 1770 is intended for individual taxpayers who carry on business and or independent. SPT 1770 S is intended for individual
34 taxpayers who do not conduct business activities and independent. SPT 1770
SS is intended for individual taxpayers who have income from one employer with gross income not exceeding USD 48 million a year.
Table 2.2 SPT 1770
Code Form Name
Description 1770
SPT WP
Personal Income
Tax
Main SPT 1770-1
Page 1 Page 2
The calculation of net income for tax payer doing
bookkeeping The calculation of net income
for taxpayers who use the norm calculation of net
income, earnings from investment
Attachment -1
1770-II
Sign cutting and collection of income tax by another party,
the income tax paid by the government, net income and
taxes on income paid or deducted or payable abroad.
Attachment
–II
1770-III
Other Income already subjected to final tax,
imposed its own tax, and income subject to tax not
included. Attachment
–III
1770-IV
List assets
and liabilities
lists Attachment
–IV
Table 2.3 SPT 1770 S
Name Description
Personal Income Tax
Annual Return SPT
Main SPT
Income related to employment, net income in another country, a list of deductions or tax
collection by other parties and the Income Tax borne by the government
Attachment
I
List assets and liabilities lists
Attachment
II
35 On SPT 1770 SS consist only of parent annual corporate tax returns
for individuals. While the attachment of Personal Income Tax Annual tax return is as follows:
a. Balance sheet and income statement if using bookkeeping; b. List the calculation of depreciation and or amortization of fiscal;
c. The calculation of compensation for losses in the event of any remaining losses in previous years can still be compensated;
d. Summary of monthly gross turnover if using norm calculation of net income;
e. SSP income tax article 29 of the under payment of tax, unless there is permission to move or postpone;
f. Special power of attorney if tax return not signed by the taxpayer, or in the case of a death certificate signed by the heirs;
g. Copy of Form 1721-A1 from the employer if private sector employees, including SOEs and enterprises;
h. Copy of Form 1721-A2 from the employer if civil servants, police, or State Officials;
i. Calculation of income tax by each party for married taxpayers with property separation agreement;
j. List of family structure that became taxpayer burden; k. Proof of payment of alms on income paid by the taxpayer to the Agency
alms Institution authorized the government.
36 The deadline for payment for the types of Personal annual tax
return is the 25
th
of the third month after the end of the year or the year of tax and reporting deadlines are no later than 3 months after the end of the tax
or the tax year. Tax payments made by several methods, namely pay tax due, through withholding and collection by other parties, through tax payments
abroad, and payment of other taxes. Implementation of tax payments to be School of payment using Tax Payment SSP that can be taken by at the Tax
Service Office KPP or the nearest KP4, or by other means through tax payments electronically e-payment.
Mail tax payments SSP is a letter by the taxpayer is used to make a payment or deposit of tax payable to the state treasury through the Office of
Payment Receipt. Payments Office is a post office or bank and State Owned or Bank Owned Enterprises Regional or other place of payment designated
by the finance minister as the recipient of payment or tax deposit.