Page 2 - Newsletter (New Provisions on Article 25 Income Tax Installment and Compliance Risk Management)

DDTC Newsletter Vol.02 | No.06 I October 2019 Page 2 of 5

New Provisions on Article 25 Income Tax Installment and
Compliance Risk Management

The Assertion of the Article 25 Income In addition, net income as the calculation basis of Article 25
Tax Installment Mechanism Income Tax installment for those three taxpayers denotes
as a commercial net income. Three components that are
not included in commercial net income, as being stated
The Directorate General of Taxes (DGT) has issued a here, are foreign income, income that has been subject to
provision concerning the implementation of income
final income tax, and/or not as an object of income tax,
tax installment calculation (Income Tax Article 25) by and costs related to final income and/or not as an object
taxpayers with certain criteria. This is stated in Circular
of tax income which are carried out proportionally or
letter of the Director General of Taxes Number SE-25/ based on separate bookkeeping between final and non-
PJ/2019 (SE-25/PJ/2019). Accordingly, the issuance
final income, and also includes income that is not taxable
of this Circular Letter then revoked the former Circular object. Furthermore, the calculation basis of this type of
Letter of Director General of Taxes Number SE-77/
installment for banks as taxpayer, listed taxpayer, and
PJ/2010 concerning Supervision of the Implementation other taxpayers can be seen in Table 1 below.
of Article 25 Income Tax for Individual Taxpayer for
Certain Entrepreneur (SE-77/PJ/2010).
The second aspect is related to the assertion of the
net fiscal income which is the basis for the Article 25
This circular letter itself contains further instructions for
Income Tax Installment for State-Owned Enterprises
the implementation of the Minister of Finance Regulation Taxpayer and Local-Owned Enterprises Taxpayer. Net
No. 215/PMK.03/2018 concerning the calculation of
fiscal income for the two taxpayers as stated here is the
income tax installment in the current fiscal year that profit/loss according to the Work Plan and Corporate
must be paid by the new taxpayers, banks, State-Owned
Budget (Rencana Kerja dan Anggaran Perusahaan/RKAP)
Enterprises, Local-Owned Enterprises, listed taxpayer, in the relevant fiscal year which has been approved by
other taxpayers based on the provisions who are required the General Meeting of Shareholders (Rapat Umum
to make periodic financial report and individual taxpayer Pemegang Saham/RUPS) after the fiscal adjustment has
for certain entrepreneur (MoF Reg No. 215/2018).
been made following the calculation of the loss that can
be compensated. 1
Table 1 – Calculation Basis of Article 25 Income Tax Installment

No. Taxpayer Category Calculation Basis of Article 25 Income Tax Installment

1 Banks as Taxpayer. Commercial net income in the monthly financial statements in accordance with
the monthly reports submitted to the Financial Services Authority (Otoritas Jasa
Keuangan/OJK) or as published on the bank's website.
2 Listed taxpayer and other taxpayers Net commercial income in quarterly financial reports is in accordance with quarterly
who are required to make financial report submitted to the Indonesia Stock Exchange (Bursa Efek Indonesia/BEI) and/or
report. Financial Services Authority (OJK).
3 Other taxpayers who are not required to Refers to general provisions.
make monthly or quarterly report. 1

Source: SE-25/PJ/2019.

There are several aspects which are emphasized by The third aspect relates to the mechanism for the Article
the tax authorities in calculating Article 25 Income
25 Income Tax installment for taxpayers who are no
Tax installment through the regulation in which was longer meet the criteria as mentioned in Government
stipulated on 24 September 2019. The first aspect is
Regulation Number 23 of 2018 (Gov Reg No. 23/2018).
that tax authority need to look at the condition of the This third aspect also includes the provisions for
taxpayer which can affect the installment. This first
taxpayers who choose to be subjected to income tax
condition is primarily intended for banks as taxpayer, based on general provisions. The fourth aspect which
listed taxpayer, and other taxpayers that are required
is being emphasized is the installment mechanism for
to make financial report. Some of these include having a individual taxpayer for certain entrepreneur in which the
fiscal loss that can be compensated, publicly listed and
Article 25 Income Tax installment are set at 0.75% of the
obtain tariff deduction, net income deduction, and 50%
tariff deduction facilities.
1 Specifically for Listed Taxpayer and other taxpayers that do not have the
obligation to submit financial report for the fourth quarter, the installment of
Article 25 Income Tax for the January to the March tax period in the current
year is equal to the amount of the Installment of Article 25 Income Tax for the
last month of the previous fiscal year.