Indonesia Advisory

The standard GST rate in Singapore is 7%. The exportation of goods and
the provision of international services are zero-rated. The sale and
rental of residential properties and specified financial services are
exempt from GST.

Goods and Services Tax (GST) is a broad base consumption tax aimed at
taxing the final consumer of the goods and services. The supply of
goods and services made in the ordinary course of business in
Singapore by a GST registered person is subject to GST. The
importation of goods into Singapore is also subject to GST.

Persons carrying on businesses making taxable supplies are required to
register for GST if their annual turnover (retroactive or prospective)
is more than S$1m. A GST registered person (GST taxpayer) has to
charge GST on his supplies (Output GST) and pay GST on his purchases
(Input GST). The GST taxpayer has to file a monthly or quarterly GST
return to declare the Output GST collected and the Input GST incurred.
He will pay (or claim) the difference (after netting the Output GST
against the Input GST) together with the GST return.

GST Registration – A person is required to be registered if the total
annual value of his/ her taxable supplies exceeds SGD 1 million.
Companies may apply for voluntary registration even if turnover is
less than SGD 1 million. However, once registered, the taxpayer must
remain registered for at least 2 years.

Filing and payment of GST – A registered taxable person is required to
furnish a tax return to the Comptroller not later than 1 month after
the end of each 3-month accounting period. The amount of tax payable
for the accounting period to which the return relates should be made
together with the submission of the tax return.

Source : http://www.taxrates.cc

The standard corporate tax rate in Singapore is 17%.

A partial tax exemption is given on first S$300,000 of the chargeable
income (CI). Under this scheme, 75% of the first S$10,000 of CI is tax
exempt and 50% of the next S$290,000 of CI is tax exempt:

Income Exemption Exempt amount
First $10,000 @ 75% $7,500
Next $290,000 @ 50% $145,000
Total $300,000 $152,500

The exemption does not apply to Singapore dividends received by
companies enjoying a concessionary tax rate granted by a tax incentive
and income of a non-resident company subject to a final withholding
tax rate.

Qualifying newly Singapore-incorporated companies may enjoy a separate
tax exemption scheme for its first three consecutive years of
assessment. This scheme allows qualifying new companies to enjoy a tax
exemption on the first S$100,000 of CI and on 50% of the next
S$200,000 of CI:

Income Exemption Exempt amount
First $100,000 @ 100% $100,000
Next $200,000 @ 50% $100,000
Total $300,000 $200,000

Resident and non-resident companies are taxed on income accruing in or
derived from Singapore as well as on foreign income remitted (actual
or deemed) into Singapore. Remittance of foreign income (dividends,
branch profits, services income) may be tax exempt when remitted by a
resident company under certain conditions. A company is tax resident
in Singapore if the management and control of its business is
exercised in Singapore.

The tax year, referred to as the year of assessment (YA), runs from 1
January to 31 December of each year. Income for the YA is computed
based on the income derived in the preceding calendar year (known as
the basis year) from all sources. For a trade, business, profession or
vocation with a non-31 December accounting year end, the Inland
Revenue Authority of Singapore (IRAS) normally accepts the accounting
year as the basis year instead of the calendar year. Under such
circumstances, tax is assessed for each YA on the income for the
accounting year preceding that YA.

A company is required to provide an estimate of its CI within three
months after the end of its financial year. The estimated tax payable
can be paid via instalments. The number of instalments available
depends on when the estimated CI is filed within the three-month
window period and on the method of filing. The annual corporate income
tax return must be filed by 30 November of the YA. After the
submission of the tax return, IRAS will issue a notice of assessment
to collect any tax shortfall. The tax payment has to be paid within
one month after the date of issue of the notice of assessment.

STAMP DUTY

Stamp duty is levied on legal instruments relating to the sale,
mortgage or lease of immovable property and the sale or mortgage of
stocks and shares.

DETERMINATION OF TAXABLE INCOME

Singapore-incorporated companies are required to prepare their
financial accounts according to Singapore Financial Reporting
Standards (FRSs). The FRSs are closely modelled on the International
Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards
Board (IASB). The accounting profits are adjusted in accordance with
Singapore tax rules to arrive at the taxable income.

Companies are required under FRS to prepare their financial accounts
according to their functional currency. Those with non-Singapore
dollar functional currency accounts are required to furnish their tax
computations to the IRAS in that functional currency. Expenses must be
incurred wholly and exclusively for the production of income in order
to be tax deductible unless specifically disallowed or restricted
(e.g. noncommercial motor vehicles, medical expenses, expenses of a
capital nature). Special rules apply to expenses incurred by
investment holding companies, companies that commence business
activities during the financial year and expenses incurred in respect
of foreign sourced income.

INTEREST DEDUCTIONS

Interest is deductible to the extent it relates to funds borrowed for
income-producing purposes. There are no thin capitalisation rules in
Singapore.

STOCK/INVENTORY

There is no prescribed valuation methodology under the domestic income
tax law. As such, IRAS will generally accept the valuation methodology
under FRS.

CAPITAL GAINS AND LOSSES

There is no separate capital gains tax regime in Singapore. Gains of a
capital nature are not subject to income tax. Similarly, expenses of a
capital nature are not deductible for income tax purposes. IRAS will
look at the facts and circumstances of the transaction to determine
whether the gain is capital in nature or a trading gain which is
subject to income tax.

DIVIDENDS

Dividends paid by Singapore companies are exempt from tax in the hands
of the shareholder from 1 January 2008. Foreign sourced dividends
remitted into Singapore may be tax-exempt under certain circumstances.

CAPITAL ALLOWANCE

Capital allowances, instead of accounting depreciation, are granted
for plant and machinery acquired and used in a trade or business. Most
plant and machinery qualify for three-year straight line tax
depreciation. Low cost items (costing not more than S$1,000 per item)
may be tax depreciated in full, subject to a total claim of S$30,000
for each YA. Certain equipment (such as computers, automation
equipment, pollution-control equipment, energy-saving equipment) may
qualify for 100% tax depreciation in the year of acquisition.
Industrial buildings used for qualifying purposes can claim an initial
allowance of 25% plus an annual allowance of 3%.

Current year unused capital allowances can be carried back (up to a
total of S$100,000 for both unused capital allowances and unused tax
losses) to the YA immediately preceding the YA in which the capital
allowance arose. The unused capital allowances can also be carried
forward indefinitely. The utilisation of unused capital allowances
carried back or carried forward is subject to the business continuity
test and the shareholding test. For the YA 2009 and YA 2010, the
unused capital allowances (together with unused losses) can be carried
back to the three YAs immediately preceding YA 2009 or YA 2010 and up
to a limit of S$200,000.

The business continuity test requires the business/trade for which the
capital allowances were granted to be carried on. The shareholding
test requires that there is no substantial change (no more than 50%)
in the ultimate shareholders and their respective shareholdings on
certain dates.

TAX LOSSES

Current year unused trade losses can be carried back (up to a total of
S$100,000 for both unused capital allowances and unused tax losses) to
the YA immediately preceding the YA in which the trade losses were
incurred up. The unused tax losses can also be carried forward
indefinitely. For the YA 2009 and YA 2010, the unused losses (together
with unused capital allowances) can be carried back to the three YAs
immediately preceding YA 2009 or YA 2010, as the case may be) and up
to a limit of S$200,000.

The carry back/forward of tax losses is subject to the same
shareholding test for the carry back/forward of unused capital
allowances.

TAX INCENTIVES

Singapore has a comprehensive list of tax incentives and development
schemes to attract investments and to assist investors in expanding
their businesses. Highlights of key incentives and schemes are
summarised below.

The Regional and International Headquarters Awards encourages
companies to use Singapore as a regional or global base. A customized
package of tax incentives (such as Pioneer Incentive, Development and
Expansion Incentive, Investment Allowances) and grants will be given
to qualifying companies.

The Pioneer Incentive encourages the introduction and growth of new
industries in Singapore. A pioneer enterprise is granted full income
tax exemption on its qualifying profits for up to 15 years.

Investors undertaking projects that will generate significant economic
benefits for Singapore may apply for the Development and Expansion
Incentive. The incentive provides preferential income tax rates on all
qualifying profits above a pre-determined base, for a set period.

Companies investing into new equipment that introduces new technology
to the industry or contributes to its efficiency can apply for
Investment Allowances. This is a capital allowance given to partially
offset the costs of acquiring qualifying equipment within a set period
and is in addition to the normal tax depreciation.

The Approved Royalties Incentive encourages companies to transfer
their cutting edge technology and knowhow to Singapore by providing
full or partial withholding tax exemption for royalty payments or
technical assistance fees payable to non-residents. Investors looking
into developing or bringing new R&D capabilities can apply for the
Research Incentive scheme. The project should result in an increase of
hiring and training of research scientists and engineers in Singapore.
The scheme provides grants to partially offset the R&D project costs
incurred for manpower training, equipment investment, intellectual
property management and professional services.

The Local Enterprise Finance Scheme (LEFS) is designed to assist and
encourage companies (with at least 30% local ownership) to upgrade and
expand their operations. LEFS loans are available for factories,
machinery and working capital.

The Local Enterprise Technical Assistance Scheme (LETAS) encourages
and assists companies (with at least 30% local ownership) in seeking
external expertise to improve their operations. Generally, assistance
provided is up to 50% of the cost of engaging an external expert to
implement quality management and IT systems (e.g. ISO certification,
upgrading computer systems).

FOREIGN TAX RELIEF

Under Singapore's network of 60 comprehensive double tax treaties,
Singapore will grant a tax credit for foreign tax suffered in the
treaty country. The tax credit granted is limited to the lower of the
foreign tax suffered and the Singapore tax payable on that income.
Singapore also grants a unilateral tax credit for certain income
derived from countries that have not entered into tax treaties with
Singapore.

CORPORATE GROUPS

A corporate group (comprising of a Singapore-incorporated holding
company and its Singapore-incorporated subsidiaries) can transfer
current-year unused losses, unused capital allowances and unused
donations within companies in the group. There is a 75% ownership
requirement that need to be maintained to remain within the group.

RELATED PARTY TRANSACTIONS

IRAS issued transfer pricing guidelines for the first time in February
2006. The purpose of the guidelines is to give guidance on applying
the arm's length principle and the recommended preparation and
maintenance of documentation to demonstrate compliance with the arm's
length principle. In February 2009, IRAS issued a supplementary guide
to provide further guidance and application of the arm's length
principle to related party loans and related party services.

Singapore is now in the process of legislating the arm's length
principle for related party transactions in the domestic tax law. This
will give the IRAS the basis for making adjustments if it is of the
opinion that the arms length principle is not applied appropriately by
the taxpayer

WITHHOLDING TAX

Interest, fees, payments in connection with any loan or indebtedness: 15%
Royalty or other payment for the use of movable property: 10% (final tax)
Payment for the use or right to use scientific, technical, industrial
or commercial knowledge or information: 10% (final tax)
Technical assistance and service fees and management fees: Prevailing
corporate tax rate (20% for individuals)
Rent or other payments for the use of movable properties: 15% (final tax)
Time charter fees and voyage charter fees, bareboat charter fees: Nil to 3%
Directors' remuneration/directors' fees: 20%

There is no withholding tax on dividends.

Source : http://www.taxrates.cc

Resident individuals deriving employment income and rental income is subject to
Singapore personal income tax at progressive rates up to 20%, based on
the following progressive rates.

Singapore Personal Income Tax Rates for resident individuals:

Chargeable Income Tax Rate Gross Tax Payable ($)
First $20,000 0% 0
Next $10,000 3.50% 350
First $30,000 - 350
Next $10,000 5.50% 550
First $40,000 - 900
Next $40,000 8.50% 3,400
First $80,000 - 4,300
Next $80,000 14% 11,200
First $160,000 - 15,500
Next $160,000 17% 27,200
First $320,000 - 42,700
Above $320,000 20%

Singapore Personal Income Tax Rates for non-resident individuals:
Employment income of non-residents are taxed at a 15% tax rate or
resident rate, whichever gives rise to a higher tax amount. All other
income of nonresidents sourced in Singapore, including directors' fees
and consultants' fees, is taxed at a flat rate of 20%. A nonresident
individual (other than a director) exercising a short-term employment
in Singapore for not more than 60 days may be exempt from tax in
Singapore.

A Singapore citizen is considered tax resident if the individual
normally resides in Singapore except for temporary absences that are
consistent with the claim to be a resident. A foreigner is considered
resident in Singapore if the individual is physically present or
exercises a Singapore employment for 183 days or more during the basis
year.

Non-resident individuals exercising an employment in Singapore are
subject to income tax depending on the number of days in Singapore.
Employment income derived from short term employment (not more than 60
days) is exempt from Singapore income tax for the non-resident
employee. This exemption does not apply to non-resident company
directors, non-resident public entertainers or non-resident
professionals including foreign experts, foreign speakers, queen's
counsels, consultants, trainers, coaches etc. Nonresident employees
exercising an employment in Singapore for a period of 61 - 182 days
will be taxed at the higher of 15% (without personal tax reliefs) or
the progressive resident rates (with personal tax reliefs).
Non-residents deriving rental income are taxed at 20%.

Dividend income from Singapore companies, interest income from
savings, current or fixed deposit accounts with approved banks or
finance companies in Singapore and foreign-sourced income are tax-
exempt for individuals (regardless of residency).

Filing status – Each individual is required to file a separate tax
return, including married couples living together.

Taxable income – Income includes gains or profits from a trade or
profession and earnings from employment (including the value of
employer-provided food, clothing or housing and allowances other than
for subsistence, transport, travel or entertainment).

Capital gains – Singapore does not tax capital gains.

Tax Deductions and allowances – Personal reliefs and tax rebates are
granted only to resident individuals. Personal reliefs may be deducted
against assessable income to ascertain chargeable income on which tax
is then computed. Tax rebates are deducted from the tax payable to
determine the final tax liability of the individual.

Other taxes on individuals:

Capital duty – No
Stamp duty – Same as for companies.
Capital acquisitions tax – No
Net wealth/net worth tax – No

Real property tax – Property tax, levied on all immovable property in
Singapore, is payable annually by the owner at the beginning of the
year. Immovable property includes Housing Development Board flats,
houses, offices, factories, shops and land. The annual property tax is
calculated based on a percentage of the gross annual value of the
property as determined by the property tax department. The property
tax is 4% for owner-occupied residential property and 10% for other
property. A property tax exemption for land under certain development
may be granted for certain cases.

Inheritance/estate tax –Estate duty has been abolished for deaths
occurring on or after 15 February 2008.

Social security contributions – Only employees who are Singapore
citizens or Singapore permanent residents are required to contribute
to the CPF at a rate of 20%. Graduated rates may apply for the first 3
years when the employee first attains permanent residence.

Singapore Tax year – Singapore tax year is the calendar year

Filing and payment of tax – An individual is required to file his/her
Singapore tax return in respect of income from the preceding year by
15 April of the following year.

Penalties – Penalties apply for late filing or failure to file.

Source : http://www.taxrates.cc

Service tax and sales tax are currently the two major types of
consumption taxes imposed on certain prescribed goods and services.

The rate of Sales Tax: 5%-10%
The rate of Service tax: 5%.

The Malaysian government has intended to widen the scope of indirect
taxes by proposing to introduce Goods and Services Tax (GST). However,
this move has been put on hold indefinitely.

SERVICE TAX

Service tax is a single stage tax applicable to certain prescribed
goods and services in Malaysia. The tax also applies to professional
and consultancy services as prescribed by the Malaysian customs
authorities. The rate of service tax currently is fixed at 5% of the
price, charge, or premium of the taxable goods or services prescribed.

Professional services provided by a company to companies within the
same group will be exempted from service tax, subject to terms and
conditions.

Generally, the imposition of service tax is subject to a specific
threshold based on an annual turnover ranging from RM150,000 to
RM500,000, subject to the types of taxable services and taxable
person. The threshold would not apply for certain prescribed
professional and consultancy services.

It is proposed that with effect from 1 January 2010, service tax be
imposed on credit cards and charge cards including those issued free
of charge as follows:
- RM50 per year on the principal card
- RM25 per year on the supplementary cards.

SALES TAX

Sales tax is a single stage tax imposed on taxable goods manufactured
locally and/or imported. "Taxable goods" means goods of a class or
kind not for the time being exempted from sales tax. Generally, all
exports are exempted from sales tax.

Manufacturers of taxable goods are required to register with the
custom authorities and to levy, charge and collect the tax from their
customers. For imported goods, sales tax is collected from the
importer upon the release of taxable goods from customs control.

Sales tax is an ad valorem and can be computed based on the value of taxable
goods sold, used, disposed of, or imported.

Sales tax is imposed on certain imported and locally manufactured
goods under the Sales Tax Act 1972. The tax rate ranges from 5 - 10%
for majority of the goods except for food preparations other than
alcoholic and non-alcoholic compound preparations (other than those of
heading No. 33.02) used for making beverages. Sales tax is also
imposed on petroleum and petroleum products according to specific
rates.

http://www.taxrates.cc

The standard corporate tax rate in Malaysia is 25%, while resident
small and medium-sized companies (i.e. companies capitalised at MYR
2.5 million or less and not part of a group having a company exceeding
the above capitalisation threshold) are taxed at 20% on the first MYR
500,000, with the balance taxed at the 25% corporate tax rate:

- Company with paid up capital not more than RM2.5 million
. On first RM500,000
20%
. Subsequent Balance
25%

- Company with paid up capital more than RM2.5 million 25%

Residence – A corporation is resident in Malaysia if its management
and control are exercised in Malaysia.

Basis – Corporations are taxed on income derived from Malaysia.
Foreign-source income is not taxable unless the corporation is
carrying on a business in the banking, insurance, air transport or
shipping sectors.

Taxable income – Taxable income comprises all earnings derived from
Malaysia, including gains or profits from a trade or business,
dividends, interest, rents, royalties, premiums or other earnings.

Taxation of dividends – As from assessment year 2008, Malaysian
companies are transitioning to the single tier system (STS) and
phasing out the imputation system. Corporations in Malaysia have until
31 December 2013 to adopt the STS. Dividends received under the
imputation system are taxable with a credit available for underlying
corporate tax paid. Dividends paid by companies using the STS are not
taxable.

Capital gains – Capital gains are not taxed in Malaysia, except for
gains derived from the disposal of real property or on the alienation
of shares in a real property company (RPC). The real property gains
tax, which applied to such gains, had been suspended since 1 April
2007, but is reinstated at a rate of 5% as from 1 January 2010.

Losses – While losses can only be carried back for assessment years
2009 and 2010, they may be carried forward indefinitely (except where
there is a substantial change in corporate ownership of a dormant
company).

Surtax – No

Alternative minimum tax – A Labuan offshore company may elect to pay
MYR 20,000 or to be taxed at 3% of the audited accounting profit.

Foreign tax credit – Foreign tax paid may be credited against
Malaysian tax on the same profits (limited to 50% of foreign tax in
the absence of a tax treaty), but the credit is limited to the amount
of Malaysian tax payable on the foreign income.

Participation exemption – No, but foreignsource income is not taxable
and local dividends do not attract further tax or are tax exempt.

Holding company regime – An investment holding company (IHC) is a
company whose activities consist mainly of the holding of investments
and that derives not less than 80% of its gross income, other than
gross income from a source consisting of a business of holding of an
investment, from such investments. Generally, only expenses falling
within the definition of "permitted expenses" in the tax legislation
would qualify for tax deduction in respect of an IHC.

Tax Incentives – A wide range of incentives are available for certain
industries, such as manufacturing, IT services, biotechnology, Islamic
finance, energy conservation and environment protection. Available
incentives include: tax holidays of up to 10 years (pioneer status);
investment tax allowances (i.e. 100% allowance on capital investments
made up to 10 years); accelerated capital allowances; double
deductions; and reinvestment allowances (i.e. 60% allowance on capital
investments made in connection with approved projects).

Withholding tax:

Dividends – Malaysia does not levy withholding tax on dividends.

Interest – A withholding tax of 15% applies to interest paid to
nonresidents, which may be reduced under an applicable tax treaty.

Royalties – A withholding tax of 10% applies to royalties paid to
nonresidents, which may be reduced under an applicable tax treaty.

Other – A withholding tax of 10% applies to rentals of movable
property, technical fees for services rendered in Malaysia and certain
one-time income paid to nonresidents, which may be reduced under
applicable tax treaties.

Branch remittance tax – No

Other taxes on corporations:

Capital duty – Capital duty is levied at rates ranging from MYR 1,000
to MYR 70,000.

Payroll tax – Tax on employment income is withheld by the employer
under a pay as you earn (PAYE) scheme and remitted to the tax
authorities.

Real property tax – Individual states in Malaysia levy "quit" rent and
assessments at varying rates.

Social security – Employers and employees are required to make social
security contributions to the Social Security Organisation (SOSCO).
Generally, an employer contributes 1%-1.25% of an employee's
remuneration. Employers and employees also must contribute to the
Employees Provident Fund (EPF) at the rate of 12% and 8% of the
employee's remuneration, respectively.

Stamp duty – Stamp duty is levied at varying rates between 1% to 3% of
the transacted value of property transfers and 0.3% on share
transaction documents.

Transfer tax – No, except for stamp duty.

Other – Equity requirements have been substantially relaxed as from 2009.

Anti-avoidance rules:

Transfer pricing – Transfer pricing rules are imminent and guidelines
have been issued by the tax authorities. Taxpayers can request an
advance pricing agreement.

Thin capitalisation – There are no specific thin cap rules, but
legislation has been amended to allow for such rules.

Controlled foreign companies – No
Disclosure requirements – Yes

Administration and compliance:

Malaysia Tax year – Fiscal year (i.e. generally the accounting year).

Consolidated tax returns – Consolidation is not permitted as each
company is required to file a separate tax return. However, subject to
certain conditions, 70% of a company's adjusted loss may be used to
set off profits of a related entity.

Tax Filing requirements – Malaysia imposes a self-assessment tax
regime. Advance corporate tax is payable in 12 monthly instalments. A
tax return must be filed within 7 months of the company's year end.

Penalties – Penalties at various rates apply for failure to comply.

Rulings – Taxpayers may request an advance ruling on the tax treatment
of a specific transaction. Public rulings also are issued.

Source : http://tax-rates.cc

Malaysia individual income tax rates are progressive, up to 26%.
Individuals who do not meet residence requirements are taxed at a flat
rate of 26%.

Taxable Income RM Tax Rate Tax Payable RM
on the first 2,500 0% 0
on the next 2,500 1% 25
on the first 5,000 25
on the next 5,000 3% 150
on the first 10,000 175
on the next 10,000 3% 300
on the first 20,000 475
on the next 15,000 7% 1,050
on the first 35,000 1,525
on the next 15,000 12% 1,800
on the first 50,000 3,325
on the next 20,000 19% 3,800
on the first 70,000 7,125
on the next 30,000 24% 7,200
on the first 100,000 14,325
on the next 50,000 26% 13,000
on the first 150,000 27,325
on the next 100,000 26% 26,000
on 250,000 53,325
Above 250,000 26%

Basis – Individuals are taxed on income derived from Malaysia.
Foreign-source income is not taxable in Malaysia.

Residence – An individual is considered tax resident if he/she is in
Malaysia for 182 days or more in a calendar year. Alternatively,
residence may be established by physical presence in Malaysia for a
mere day if it can be linked to a period of residence of at least 182
consecutive days in an adjoining year.

Tax Filing status – A married couple living together may opt to file a
joint or separate assessment.

Taxable income – Resident individuals are taxed at progressive rates
ranging from 0% to 26%. Employment income includes most employment
benefits whether in cash or in kind.

Capital gains – Capital gains are not taxed in Malaysia, except for
gains derived from the disposal of real property or on the alienation
of shares in a real property company. The real property gains tax,
which applied to such gains, had been suspended since 1 April 2007,
but is reinstated at a rate of 5% as from 1 January 2010.

Tax Deductions and tax allowances – Various allowances and personal
deductions are available.

Other taxes on individuals:

Capital duty – No

Stamp duty – Stamp duty is levied at varying rates between 1% to 3% of
the transacted value of property transfers and 0.3% on share
transaction documents.

Capital acquisitions tax – No

Real property tax – Individual states in Malaysia levy "quit" rent and
assessment at varying rates.

Inheritance/estate tax – No
Net wealth/net worth tax – No

Social security – Employees are required to make contributions to the
EPF at a rate of 8% of remuneration and may contribute a nominal
amount to the Social Security Organisation (SOCSO).

Administration and compliance:

Malaysia tax year – Malaysia tax year is the calendar year

Tax Filing and Tax payment – Tax on employment income is withheld by
the employer under a pay as you earn (PAYE) scheme and remitted to the
tax authorities. Malaysia imposes a self-assessment regime. An
individual deriving employment income or business income must file a
tax return and settle any balance owed by 30 April or 30 June
respectively in the following calendar year.

Penalties – Penalties at various rates apply for failure to comply

Source : http://www.taxrates.cc

Indonesia company tax rate is 25%.

A company will be considered taxable in Indonesia if it has a presence
and conducts business in that country. Resolution of this question
depends on whether the entity has a 'permanent establishment' in
Indonesia. This term is widely defined to include a place of
management, branch, representative office, office building, agent,
factory or workshop, construction or mining site. Where such a
presence exists, the permanent establishment is taxable on its
worldwide income. Where similar businesses as that carried on by the
permanent establishment are conducted in Indonesia, care must be taken
to ensure that the 'force of attraction' principle does not result in
that business income being taxed in the permanent establishment.

Company tax is payable by monthly instalments. The collection of tax
from interest, royalties, rentals and dividends, professional service
fees, technical and management service fees, construction service
fees, installation service fees, repair and maintenance service fees
is by way of withholding tax. Where the recipient is a tax resident of
Indonesia, the tax withheld is taken into account in determining the
company's final tax liability (except for tax of interest from bank
and space rentals which are treated as final tax). Where the recipient
is not a resident, the tax withheld represents a final tax.

Under the Income Tax Law No. 36 Year 2008, which took effect from 1
January 2010, corporations are taxed at single rate of 25%.
Corporations with an annual gross income up to Rp 50 billion are
entitled to a tax discount of 50% of the standard rate on taxable
income derived from the portion of gross income up to Rp 4.8 billion.

As for public companies, corporate tax deduction at 5% will be granted
when meeting the following requirements:
1. Minimum listing requirement is 40%
2. The minimum public ownership is 300 individuals where each
individual holds less than five percent of the paid-in shares
3. The above two conditions must be fulfilled at least in six months
(183 days) in a tax year.

Residence – A company is a resident if it is established or domiciled
in Indonesia.

Basis – Resident companies are taxed on worldwide income. Nonresident
companies are taxed only on income sourced in Indonesia, including
income attributable to permanent establishments in the country.

Taxable income – Taxable net income is defined as assessable income
less taxdeductible expenses.

Taxation of dividends – Dividends paid by a domestic corporate
taxpayer to a resident are subject to a 15% withholding tax and the
payment represents an advance payment of tax liability. See also
"Participation exemption".

Capital gains – Capital gains are taxable as ordinary income, and
capital losses are taxdeductible.

Losses – Losses may be carried forward for 5 years following the year
the loss was incurred (this period may be extended to 10 years for
selected industries and for operations in remote areas). Losses cannot
be carried back.

Surtax – No
Alternative minimum tax – No

Foreign tax credit – Resident companies deriving income from foreign
sources are entitled to a unilateral tax credit with respect to
foreign tax paid on the income. The credit is limited to the amount of
Indonesian tax otherwise payable on the relevant foreign income.

Participation exemption – Dividends received or derived by a resident
company from a participation in another Indonesian limited liability
company are exempt from tax if the recipient holds at least 25% of the
shares of the payor and the dividends are from retained earnings.

Holding company regime – No

Tax Incentives – Tax incentives are available to entities with capital
investments in certain approved industry sectors, or those operating
in certain geographic locations. Incentives include a 30% tax
investment allowance (5% per year), accelerated depreciation, the
carryforward of losses up to 10 years and a reduced withholding tax of
10% on dividends paid to nonresidents. An income tax reduction of 5%
may be available to companies listed on the Indonesian stock exchange
if certain conditions are satisfied.

Withholding tax:

Dividends – Dividends paid by a domestic corporate taxpayer to a
nonresident are subject to a 20% withholding tax, which is considered
a final tax. Tax treaties may reduce the rate, but to take advantage
of a reduced rate, the payee must obtain a certificate of tax domicile
from the tax authorities in its country of residence and be the
beneficial owner of the dividends. The withholding tax on dividends
paid to resident individuals is a 10% final tax.

Interest – Interest paid to nonresidents is subject to a 20%
withholding tax, unless the rate is reduced by an applicable tax
treaty. Interest paid by a domestic taxpayer to a resident is subject
to a 15% withholding tax and the payment represents an advance payment
of tax liability.

Royalties – A 20% withholding tax is imposed on royalties remitted
abroad, unless the rate is reduced under an applicable tax treaty and
the recipient submits a tax residence certificate from the tax
authorities of its country of residence. For tax purposes, royalties
refer to any charge for the use of property or know-how in Indonesia.

Royalties paid by a domestic taxpayer to a resident are subject to a
15% withholding tax and the payment represents an advance payment of
tax liability.

The withholding tax on domestic payments for technical, management and
consulting services and rentals (except for land and building rentals)
varies from 1.5% to 4.5%.

Branch profits tax – Permanent establishments are subject to a 20%
branch profits tax on after-tax profits. This rate may be reduced
under a tax treaty.

Other taxes on corporations:

Capital duty – No, but various registration fees apply.

Payroll tax – Employers are required to withhold, remit and report
income tax on employment income of their employees.

Real property tax – Land and building tax is payable annually on land,
buildings and permanent structures. The rate is typically not more
than 0.5% of the value of the property, although higher rates apply to
certain high-value housing and large estates.

Social security – Employers must contribute to Indonesia's social
security system if they employ 10 or more individuals or maintain a
payroll expense of IDR 1 million per month. The employer's
contribution rate for old-age compensation is 3.7%.

Stamp duty – Certain documents are subject to stamp duty at a nominal
amount of IDR 3,000 or IDR 6,000.

Transfer tax – A land and building transfer duty of 5% is payable when
a person or company obtains rights to land or a building with a value
greater than IDR 60 million. Certain exceptions/reductions apply,
including transfers in connection with a merger.

Other – Sales of shares listed on the Indonesian stock exchange are
subject to a final tax of 0.1% of the transaction value; an additional
tax of 0.5% applies to the share value of founder shares at the time
of an initial public offering.

Anti-avoidance rules:

Transfer pricing – Related party transactions or dealings with
affiliated companies (including profit-sharing by multinational
companies) must be carried out in a "commercially justifiable way" and
on an arm's length basis. Documentation is required.

Thin capitalisation – Indonesia does not have specific rules on thin
capitalisation, but the general law authorises the Ministry of Finance
to determine the debt-to-equity ratio of companies for tax calculation
purposes.

Controlled foreign companies – The Ministry of Finance is authorised
to determine when a dividend is deemed to be derived from a foreign
company established in countries where an Indonesian resident taxpayer
holds at least 50% of the paid-up capital of the foreign company or,
together with other resident taxpayers, holds at least 50% of the
paid-up capital. This applies only if the foreign company does not
trade its shares on the stock exchange. If no dividends are declared
or derived from the offshore company, the resident taxpayer must
calculate and report the deemed dividend in its tax return; otherwise,
the Ministry of Finance will do so. The dividend is deemed to be
derived either in the fourth month following the deadline for filing
the tax return in the offshore country or 7 months after the offshore
company's tax year ends if the country does not have a specific tax
filing deadline.

Disclosure requirements – Taxpayers must provide certain information
regarding their transfer pricing transactions with related parties in
an attachment to their annual tax returns. The information will be
maintained by the tax authorities and may be tested by tax auditors in
the course of a tax audit.

Administration and compliance:

Tax year – The tax year is generally the calendar year. A corporate
taxpayer can elect to file a corporate tax return based on the book
year.

Consolidated tax returns – Consolidated returns are not permitted;
each company must file a separate return.

Tax Filing requirements – Tax collection operates under a
self-assessment system, with tax due on the 15th day of the calendar
month following the tax-assessment month. Tax returns (as opposed to
actual tax payment) must be filed by the 20th of the following month.
Annual corporate tax returns must be filed within 4 months of the end
of the book year, and annual employment income tax returns (filed by
the employer) must be filed by 31 March of the following year.

Penalties – Penalties vary depending on the situation, such as late
tax payment, late filing, tax underpayment and voluntary amendment of
returns. The most common penalty is 2% monthly interest on the tax
underpaid.

Rulings – The Minister of Finance and the Director General of Taxation
may issue rulings in certain cases, such as the determination of
debt-to-equity ratios or the tax effects of a proposed transaction.

Source : http://www.taxrates.cc

Indonesia individual Income Tax
Individual income tax (Pajak penghasilan) rates in Indonesia are
progressive up to 30%, as follows:

Taxable income (Rp) Tax Rate
0 – 50,000,000 0 + 5% on excess
50,000,001 – 250,000,000 2,500,000 + 15% on excess
250,000,001 – 500,000,000 32,500,000 + 25% on excess
Above 500,000,000 95,000,000 + 30% on excess

An additional 20% tax is imposed on the individuals, other than
non-tax residents, who do not posses tax identification number (NPWP).

ALLOWABLE TAX DEDUCTIONS

In determining the annual taxable income of an individual, the
following may be deducted from gross income:

- Occupational support: 5% of gross income, up to maximum of 6,000,000
- Pension: 5% of gross income, up to maximum of 2,400,000
- Non-taxable income:
. For the taxpayer 15,840,000
. Additional for a married taxpayer 1,320,000
. Additional for each lineal family member related by blood
marriage who is a full dependent up to a maximum of three 1,320,000
each

A married female employee is only allowed non-taxable income for
herself unless she has a certificate from the local authorities
stating that her husband does not work.

Non-resident individuals are subject to a final tax of 20% where the
payments represent compensation for work performed in Indonesian
regardless of where paid.

Lump sump pension payments and severance pay on individual residents
are subject to final tax on the gross amount at the following rates:

Taxable income Tax Rate
0 – 25,000,000 exempt/non taxable income
25,000,001 – 50,000,000 5% on excess
50,000,001 – 100,000,000 1,250,000 + 10% on excess
100,000,001 – 200,000,000 6,250,000 + 15% on excess
200,000,000 and above 21,250,000 + 25% on excess

However, pension payments made to non-resident individuals are taxed
under Article 26 of Income Tax Law at a rate of 20% on the gross
amount.

Where home leave or education costs are reimbursed, the amount of the
reimbursement is taxable in full on the employee.

Note that food and drink provided at the working area by the employer
to the employees are not subject to tax but deductible for the
employer.

Indonesians are taxed on their worldwide income. Non-residents are
only taxed on income derived from Indonesia. An individual will be a
resident of Indonesia if they are present in Indonesia for more than
183 days or reside in Indonesia during a fiscal year and intend to
stay in Indonesia. Certain tax treaties modify the above rules.

Filing status – The family is considered a single economic unit;
hence, joint filing is required. Separate filing is allowed only if
there is a pre-nuptial agreement between the husband and wife.

Taxable income – Taxable income of individuals includes profits from a
business, employment income and capital gains.

Capital gains – Capital gains derived by an individual are taxed as
income at the normal rates; gains on shares listed in Indonesia are
taxed at 0.1% (final tax) of the transaction value. (An additional tax
of 0.5% applies to the share value of founder shares at the time of an
initial public offering.) Gains on the disposal of land and/or
buildings are taxed at 5% (final tax) of the transaction value.

Source :http://www.taxrates.cc

Sunset policy applied by the Directorate General of Taxation has not enhanced compliance taxpayers significantly whereas the sanction elimination program would expire soon, Bisnis Indonesia Daily reported on Monday.

Director General of Taxation Darmin Nasution said that the government must take other measures, such as law enforcement to enhance the compliance.

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"Tax compliance contains a substance of enforcement. Compliance could be established if other institutions conduct and support the enforcement consistently,” he said in Jakarta last week.

Sunset policy constitutes a taxation facility governed in Law Number 28 Year 2007 regarding Taxation General Provisions and Procedures. The facility enables individual or corporate taxpayers to rectify their annual income tax returns in 2006 and previous years without facing administrative sanction.

In the meantime, State Minister for National Development Planning Paskah Suzetta expects the Directorate General of Taxation to extend the program as a compensation for the absence of additional fiscal stimulus next year.

“The sunset policy may be used to boost the real sector amid the liquidity crisis. In addition, the government would no longer provide stimulus funds for the real sector in the form of government-borne tax (DTP) worth Rp 10 trillion next year,” he said.

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Indonesia's president has issued a decree giving income tax incentives for investment in oil refineries and geothermal projects, according to a copy of the decree obtained by Reuters on Tuesday.

Indonesia, Asia's biggest importer of diesel and gasoline, is trying to push for more investment in oil refineries to cut imports of oil products. According to the decree, the government will offer tax allowances at 30 percent of capital investment for the first six years of the project.

"(The decree) is aimed at increasing investment activities to boost economic growth," it said.
The decree was signed by President Susilo Bambang Yudhoyono on Sept. 23 and came into effect immediately and will be evaluated in two years time, it said. "The tax allowances for oil refinery projects are aimed at also cutting oil product imports," Muhammad Lutfi, the head of Indonesia's investment agency, told Reuters.

Indonesian state oil and gas company PT Pertamina has nine refineries scattered around the archipelago with a combined capacity of around 1 million barrels per day (bpd). But it only supplies 70 percent of domestic oil product consumption and 30 percent comes from imports.
There have been severals new oil refineries project registered at investment agency in the past 15 years, but none of them have started construction.

The government has been trying to develop a refinery in Selayar island, south of Sulawesi, with a capacity of 220,000 barrels per day. Construction of new refineries has become more pressing in the past few years, as growing domestic demand forces Pertamina to import more fuel, straining the budget and weighing on the rupiah currency .

Indonesia has been struggling to maintain crude oil output as the country has failed to tap new oilfields fast enough as old ones become less productive.

While few analysts believe all of the half-dozen or so refineries mooted for Indonesia will be built, there appear to be more progress in joint ventures with Iran and China's Sinopec. Pertamina and an Iranian company have agreed to build 300,000 bpd oil refinery in Java island, although construction has not started.

China's Sinopec Corp also agreed in mid-2005 to help build a refinery in East Java with a capacity of up to 200,000 barrels per day (bpd), although negotiations have foundered since then. Saudi Aramco, Kuwait Petroleum Corp. and Malaysian state oil firm Petronas [PETR.UL] have also expressed interest in building plants in Indonesia.

The government has also given geothermal projects income tax incentive to increase power plant capacity.

Indonesia currently supplies just 850 MW of an estimated 27,000 MW potential from geothermal, or about 3 percent of its current power output. Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN) has a monopoly in the power sector and operates around 24,000 megawatts of capacity, but most of its plants are old, so daily output is far below capacity

Angsuran pajak dalam tahun pajak berjalan adalah Pajak Penghasilan Pasal 25 yang harus dibayar sendiri oleh Wajib Pajak yang bersangkutan setiap bulan, sebagaimana dimaksud dalam Pasal 25 Undang-undang Nomor 7 Tahun 1983 tentang Pajak Penghasilan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 17 Tahun 2000.

Hal-hal tertentu adalah :

• Wajib Pajak berhak atas kompensasi kerugian;
• Wajib Pajak memperoleh penghasilan tidak teratur;
• Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu disampaikan setelah lewat batas waktu yang ditentukan;
• Wajib Pajak diberikan perpanjangan jangka waktu penyampaian Surat Pemberitahuan Tahunan Pajak Penghasilan;
• Wajib Pajak membetulkan sendiri Surat Pemberitahuan Tahunan Pajak Penghasilan yang mengakibatkan angsuran bulanan lebih besar dari angsuran bulanan sebelum pembetulan;
• Terjadi perubahan keadaan usaha atau kegiatan Wajib Pajak.
  

Kompensasi kerugian adalah kompensasi kerugian fiskal berdasarkan Surat Pemberitahuan Tahunan, Surat Ketetapan Pajak, Surat Keputusan Keberatan, atau Putusan Banding, sesuai dengan ketentuan Pasal 6 ayat (2) atau Pasal 31A Undang-undang Nomor 7 Tahun 1983 tentang Pajak Penghasilan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 17 Tahun 2000.

Penghasilan teratur adalah penghasilan yang lazimnya diterima atau diperoleh secara berkala sekurang-kurangnya sekali dalam setiap tahun pajak, yang bersumber dari kegiatan usaha, pekerjaan bebas, pekerjaan, harta dan atau modal, kecuali penghasilan yang telah dikenakan Pajak Penghasilan yang bersifat final. Tidak termasuk dalam penghasilan teratur adalah keuntungan selisih kurs dari utang/piutang dalam mata uang asing dan keuntungan dari pengalihan harta (capital gain) sepanjang bukan merupakan penghasilan dari kegiatan usaha pokok, serta penghasilan lainnya yang bersifat insidentil.

Dalam Hal Wajib Pajak Berhak Atas Kompensasi Kerugian
Besarnya Pajak Penghasilan Pasal 25 dalam hal Wajib Pajak berhak atas kompensasi kerugian adalah sebesar Pajak Penghasilan yang dihitung berdasarkan penghasilan neto menurut Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu setelah dikurangi dengan kompensasi kerugian dikurangi dengan Pajak Penghasilan yang dipotong dan atau dipungut serta Pajak Penghasilan yang dibayar atau terutang di luar negeri yang boleh dikreditkan sesuai ketentuan Pasal 21, Pasal 22, Pasal 23, dan Pasal 24 Undang-undang Nomor 7 Tahun 1983 tentang Pajak Penghasilan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 17 Tahun 2000, dibagi 12 (dua belas) atau banyaknya bulan dalam bagian tahun pajak.
Dalam hal Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu menyatakan rugi (lebih bayar atau nihil), besarnya Pajak Penghasilan Pasal 25 adalah nihil.

Dalam Hal Wajib Pajak Memperoleh Penghasilan Tidak Teratur
Besarnya Pajak Penghasilan Pasal 25 dalam hal Wajib Pajak memperoleh penghasilan tidak teratur adalah sebesar Pajak Penghasilan yang dihitung dengan dasar penghitungan jumlah penghasilan neto menurut Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu setelah dikurangi dengan penghasilan tidak teratur yang dilaporkan dalam Surat Pemberitahuan Tahunan tersebut. dikurangi dengan Pajak Penghasilan yang dipotong dan atau dipungut serta Pajak Penghasilan yang dibayar atau terutang di luar negeri yang boleh dikreditkan sesuai ketentuan Pasal 21, Pasal 22, Pasal 23, dan Pasal 24 Undang-undang Nomor 7 Tahun 1983 tentang Pajak Penghasilan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 17 Tahun 2000, dibagi 12 (dua belas) atau banyaknya bulan dalam bagian tahun pajak.

Dalam Hal Surat Pemberitahuan Tahunan Pajak Penghasilan Tahun Pajak Yang Lalu Disampaikan Wajib Pajak Setelah Lewat Batas Waktu Yang Ditentukan
Dalam hal Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu disampaikan Wajib Pajak setelah lewat batas waktu yang ditentukan, besarnya Pajak Penghasilan Pasal 25 untuk bulan-bulan mulai batas waktu penyampaian Surat Pemberitahuan Tahunan sampai dengan bulan sebelum disampaikannya Surat Pemberitahuan Tahunan tersebut adalah sama dengan besarnya Pajak Penghasilan Pasal 25 bulan terakhir tahun pajak yang lalu dan bersifat sementara.

Setelah Wajib Pajak menyampaikan Surat Pemberitahuan Tahunan Pajak Penghasilan, besarnya Pajak Penghasilan Pasal 25 dihitung kembali berdasarkan Surat Pemberitahuan Tahunan tersebut dengan memperhatikan ketentuan di atas dan berlaku surut mulai bulan batas waktu penyampaian Surat Pemberitahuan Tahunan.

Apabila besarnya Pajak Penghasilan Pasal 25 ternyata lebih besar dari, atas kekurangan setoran Pajak Penghasilan Pasal 25 terutang bunga sesuai ketentuan Pasal 19 ayat (1) Undang-undang Nomor 6 Tahun 1983 tentang Ketentuan Umum dan Tata Cara Perpajakan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 16 Tahun 2000, untuk jangka waktu yang dihitung sejak jatuh tempo penyetoran Pajak Penghasilan Pasal 25 dari masing-masing bulan sampai dengan tanggal penyetoran.

Apabila besarnya Pajak Penghasilan Pasal 25 ternyata lebih kecil, atas kelebihan setoran Pajak Penghasilan Pasal 25 dapat dipindahbukukan ke Pajak Penghasilan Pasal 25 bulan-bulan berikut setelah penyampaian Surat Pemberitahuan Tahunan.

Dalam Hal Wajib Pajak Diberikan Perpanjangan Jangka Waktu Penyampaian Surat Pemberitahuan Tahunan Pajak Penghasilan
Dalam hal Wajib Pajak diberikan perpanjangan jangka waktu penyampaian Surat Pemberitahuan Tahunan Pajak Penghasilan, besarnya Pajak Penghasilan Pasal 25 untuk bulan-bulan mulai batas waktu penyampaian Surat Pemberitahuan Tahunan sampai dengan bulan sebelum disampaikannya Surat Pemberitahuan Tahunan tersebut adalah sama dengan besarnya Pajak Penghasilan Pasal 25 yang dihitung berdasarkan Surat Pemberitahuan Tahunan sementara yang disampaikan Wajib Pajak pada saat mengajukan permohonan ijin perpanjangan.
Setelah Wajib Pajak menyampaikan Surat Pemberitahuan Tahunan Pajak Penghasilan, besarnya Pajak Penghasilan Pasal 25 dihitung kembali berdasarkan Surat Pemberitahuan Tahunan tersebut dan berlaku surut mulai bulan batas waktu penyampaian Surat Pemberitahuan Tahunan.

Apabila besarnya Pajak Penghasilan Pasal 25 ternyata lebih besar, atas kekurangan setoran Pajak Penghasilan Pasal 25 terutang bunga sesuai ketentuan Pasal 19 ayat (1) Undang-undang Nomor 6 Tahun 1983 tentang Ketentuan Umum dan Tata Cara Perpajakan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 16 Tahun 2000, untuk jangka waktu yang dihitung sejak jatuh tempo penyetoran Pajak Penghasilan Pasal 25 dari masing-masing bulan sampai dengan tanggal penyetoran.

Apabila besarnya Pajak Penghasilan Pasal 25 ternyata lebih kecil, atas kelebihan setoran pajak Penghasilan Pasal 25 dapat dipindahbukukan ke Pajak Penghasilan Pasal 25 bulan-bulan berikut setelah penyampaian Surat Pemberitahuan Tahunan.

Dalam Hal WP Melakukan Pembetulan SPT
Dalam hal Wajib Pajak dalam tahun pajak berjalan membetulkan sendiri Surat Pemberitahuan Tahunan Pajak Penghasilan tahun pajak yang lalu, besarnya Pajak Penghasilan Pasal 25 dihitung kembali berdasarkan Surat Pemberitahuan Tahunan Pembetulan tersebut dan berlaku surut mulai bulan batas waktu penyampaian Surat Pemberitahuan Tahunan.

Apabila besarnya Pajak Penghasilan Pasal 25 setelah pembetulan Surat Pemberitahuan Tahunan ternyata lebih besar dari Pajak Penghasilan Pasal 25 sebelum dilakukan pembetulan, atas kekurangan setoran Pajak Penghasilan Pasal 25 terutang bunga sesuai ketentuan Pasal 19 ayat (1) Undang-undang Nomor 6 Tahun 1983 tentang Ketentuan Umum dan Tata Cara erpajakan sebagaimana telah diubah terakhir dengan Undang-undang Nomor 16 Tahun 2000, untuk jangka waktu yang dihitung sejak jatuh tempo penyetoran Pajak Penghasilan Pasal 25 dari

masing-masing bulan sampai dengan tanggal penyetoran.
Apabila besarnya Pajak Penghasilan Pasal 25 setelah pembetulan Surat Pemberitahuan Tahunan ternyata lebih kecil dari Pajak Penghasilan Pasal 25 sebelum dilakukan pembetulan, atas kelebihan setoran Pajak Penghasilan Pasal 25 dapat dipindahbukukan ke Pajak Penghasilan Pasal 25 bulan-bulan berikut setelah penyampaian Surat Pemberitahuan Tahunan Pembetulan.

Dalam Hal Terjadi Perubahan Keadaan Usaha Atau Kegiatan Wajib Pajak
Apabila sesudah 3 (tiga) bulan atau lebih berjalannya suatu tahun pajak, Wajib Pajak dapat menunjukkan bahwa Pajak Penghasilan yang akan terutang untuk tahun pajak tersebut kurang dari 75% (tujuh puluh lima persen) dari Pajak Penghasilan yang terutang yang menjadi dasar penghitungan besarnya Pajak Penghasilan Pasal 25, Wajib Pajak dapat mengajukan permohonan pengurangan besarnya Pajak Penghasilan Pasal 25 secara tertulis kepada Kepala Kantor Pelayanan Pajak tempat Wajib Pajak terdaftar.

Pengajuan permohonan pengurangan besarnya Pajak Penghasilan Pasal 25 harus disertai dengan penghitungan besarnya Pajak Penghasilan yang akan terutang berdasarkan perkiraan penghasilan yang akan diterima atau diperoleh dan besarnya Pajak Penghasilan Pasal 25 untuk bulan-bulan yang tersisa dari tahun pajak yang bersangkutan.

Apabila dalam jangka waktu satu bulan sejak tanggal diterimanya surat permohonan Wajib Pajak, Kepala Kantor Pelayanan Pajak tidak memberikan keputusan, permohonan Wajib Pajak tersebut dianggap diterima dan Wajib Pajak dapat melakukan pembayaran Pajak Penghasilan Pasal 25 sesuai dengan penghitungannya untuk bulan-bulan yang tersisa dari tahun pajak yang bersangkutan.

Apabila dalam tahun pajak berjalan Wajib Pajak mengalami peningkatan usaha dan diperkirakan Pajak Penghasilan yang akan terutang untuk tahun pajak tersebut lebih dari 150% (seratus lima puluh persen) dari Pajak Penghasilan yang terutang yang menjadi dasar penghitungan besarnya Pajak Penghasilan Pasal 25, besarnya Pajak Penghasilan Pasal 25 untuk bulan-bulan yang tersisa dari tahun pajak yang bersangkutan harus dihitung kembali berdasarkan perkiraan kenaikan Pajak Penghasilan yang terutang tersebut oleh Wajib Pajak sendiri atau Kepala Kantor Pelayanan Pajak tempat Wajib Pajak terdaftar

Lets be registered! Encourage your Employee to have Tax Registration Number (NPWP)!

The changes of regulation that applies in 2009, will give many benefit of tax payer with NPWP.
Benefit of registering your self or employee to get tax registration number will be benefiting you the following:

1. No Fiscal of IDR 1,000,000, means no prepaid tax (or no fiscal cost) for company when sending the employee on overseas business trip. This will be helping you to avoid tax overpayment or can avoid expensing off the fiscal if you are in loss position when avoiding tax overpayment.
2. Personal Tax Payer can go overseas cheaper by Rp 1,000,000 (at NO more fiscal), meaning that going to Asean countries approximately at the same cost as going Bali or domestic trip.
3. For Employee who is getting their salary in Gross, meaning LOWER tax will be applied compare to ones without NPWP!! Lower TAX!!
4. For Employer, who is paying their employee based on Net Salary, meaning LOWER Tax Allowance (Lower Employment Cost!), same impact of employee with NPWP will be at Lower tax rate.

The above is part of summary from the Income Tax part 1.

Indonesia, like other countries is applying self assesment system, where Tax Payer given the FULL TRUST and RIGHTS to get Tax Number (NPWP), calculate income generated, calculate the tax payable, depositing the tax payable to State Treasury, and reporting the tax including our Assets and Liabilities.

The benefit of Sunset Policy

No sanction or interest of unpaid tax payable by submitting REVISION of your Annual Tax Return (SPT). The Revision, once again, the tax payer is given the trust to re-calculate and submitting the revision, without any audit moreover, if you are currently on Tax Audit process, the audit will be seezed immediately (as long as no result being issued) assuming you are reporting the re-calculation correctly.

The Revision of Tax Return, WILL NOT be used to determine other tax obligation incurred as impact of the revision, so tax payer is no need to carry more weights of previous years "tax sins" and move on being honest tax payer.

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To get benefit of Sunset Policy, a person MUST apply for getting Tax Number (NPWP) by coming direct to Tax Office, thru online registration at http://www.pajak.go.id/ then fill in the tax return and pay the tax payable. No tax fine and no sanction!

For Tax Payer who has been having NPWP before January 2008, do the revision, pay the tax payable, fill in and submit the Revision of tax returns LATEST 31st December 2008 to get benefit of Sunset Policy.

For those who is just applying NPWP, deadline of sunset policy is 31st March 2009.

For personal tax payer or corporate with NPWP, can make revisions of tax return before 2007 fiscal year!!, pay the tax payable revision, fill in and submit the revision of tax returns.

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Coming up next!
Indonesia Tax Regulation 2008 Changes!

There are many new benefit for Employer as well as for employee. Will be split to many articles!

This topics is to briefly discussing the calculation of general rule of tax in Indonesia:

• Indonesia operates a self-assessment taxation system which is similar to many other countries, this will be based on trust for tax payer to report their taxes. Only at some cases there will be audit conducted to check on the self-assesment result i.e. when tax payers admitting tax overpayment or loss result in their business.
• Tarrif is progressive to highest of 30% from the taxable income for corporate (3 layers)
• Tarrif is progressive to highest of 35% from the taxable income for individual tax (5 layers).
• For corporate tax : To calculate taxable income you have to review your expenses as not all expenses are deductible as per tax regulation. eg. benefit in kind (eg. apartment provided for expatriates, car expenses for personal for expatriate or local etc). This is not apply to individuals, no expenses need to be kept and reported as the non taxable income is fixed on yearly basis as per tax regulation.
• Anything received in cash or allowances should be considered as additional income to employee, but as this considered as allowance then the principle of taxable (in employee personal tax) and deductible (in company income tax) applies.
• Some examples of non deductible expenses (for corporate tax):

1. Benefit in kind - something that is given to anyone not as allowance (cash) but as benefit. This applies to any benefit that company pays on behallf of the employee, eg apartment rent, car rent, etc
2. Any tax penalties or other tax (not in form of tax allowances) is not operating expenses per tax.
3. Any vacation, airfaires for family (not paid in cash / not allowance)
4. Any other benefit that no treated as allowance or given not in cash, eg. staff insurance cost.

• Anyone whether a company or personal must pay tax installment (article 25-tax regulation), the installment is based on your previous year tax divided by 12 months. This assuming business model whereby anyones income will not be lessed than previous year. Taken into account (excluding any IRREGULAR income).
• Some services subject to withholding tax article 23, so if you pay suppliers or a suppliers of the positive list of service this withholding tax applies. eg. consultant fee subject to this tax, if you are a consultant, the party paying you will withhold tax of 15% x net income estimation as per Tax Circular Letter of Director General of Taxation. This changes from time to time.
• Indonesia has Tax Treaties with some countries. Tax Treaty is agreement between countries on how or what to tax or not to tax on some income to avoid double tax on the same subject. This is created as General Priciple of Tax is applies to any revenue/income generated from any source (meaning from anywhere in the word as well)
• How does this tax treaty works?
  To get benefit of this tax treaty the suppliers (income generator) must provide evidence from their respective Competent Authority - normally tax office where they are registered - a document called Certificate of Domicile. Without this document the payers should withhold 20% from the gross invoice amount of the service vendor, or if having the document at a lower % depend on the tax treaty.
  eg. 20% applies to all income paid to overseas service vendor, but should be lower to 15%/10% at some Tax Treaties if the document provided. Will be RISKY for the payer to just lower it down the % of tax without having the document because address of the vendor is not HARD evidence that they are resident in the country of their residence.