GOVERNMENT OF THE REPUBLIC OF INDONESIA

REGULATION
NUMBER 9 OF 2022

CONCERNING

THE SECOND AMENDMENT TO GOVERNMENT REGULATION NUMBER 51

OF 2008 CONCERNING INCOME TAX ON INCOME FROM CONSTRUCTION
SERVICE BUSINESS

BY THE GRACE OF ALMIGHTY GOD

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering

a. that to provide legal certainty and ease in the imposition of Income Tax on income from
the construction services business as well as to maintain a conducive business
climate in the construction services sector, it is necessary to adjust the regulation of
Income Tax on income from the construction service business;

b. that based on the considerations referred to in letter a, it is necessary to stipulate a

Government Regulation concerning the Second Amendment to Government
Regulation Number 51 of 2008 concerning Income Tax on Income from Construction
Services Business;

In view of

1. Article 5 paragraph (2) of the 1945 Constitution of the Republic of Indonesia;

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 2. Law Number 7 of 1983 concerning Income Tax (State Gazette of the Republic of
Indonesia of 1983 Number 50, Supplement to the State Gazette of the Republic of
Indonesia Number 3263) as amended several times, last amended by Law Number 7 of
2021 concerning the Harmonization of Tax Regulations (State Gazette of the Republic
of Indonesia of 2021 Number 246, Supplement to the State Gazette of the Republic of
Indonesia Number 6736);

3. Government Regulation Number 51 of 2008 concerning Income Tax on Income from

Construction Service Business (State Gazette of the Republic of Indonesia of 2008
Number 109, Supplement to the State Gazette of the Republic of Indonesia Number
4881) as amended by Government Regulation Number 40 of 2009 concerning the
Amendment to Government Regulation Number 51 of 2008 concerning Income Tax on
Income from Construction Service Business (State Gazette of the Republic of
Indonesia of 2009 Number 83, Supplement to the State Gazette of the Republic of
Indonesia Number 5014);

HAS DECIDED:

To stipulate

GOVERNMENT REGULATION CONCERNING THE SECOND AMENDMENT TO GOVERNMENT

REGULATION NUMBER 51 OF 2008 CONCERNING INCOME TAX ON INCOME FROM
CONSTRUCTION SERVICE BUSINESS.

Article I

Several provisions of Government Regulation Number 51 of 2008 concerning Income Tax on

Income from Construction Service Business (State Gazette of the Republic of Indonesia of
2008 Number 109, Supplement to the State Gazette of the Republic of Indonesia Number
4881) as amended by Government Regulation Number 40 of 2009 concerning the
Amendment to Government Regulation Number 51 of 2008 concerning Income Tax on
Income from Construction Service Business (State Gazette of the Republic of Indonesia of
2009 Number 83, Supplement to the State Gazette of the Republic of Indonesia Number
5014) are amended, thereby, it reads as follows:

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 1. The provisions of Article 1 are amended, thereby, it reads as follows:

Article 1

Referred to herein this Government Regulation:

1. Income Tax Law, hereinafter referred to as the PPh Law, is Law Number 7 of 1983
concerning Income Tax as amended several times, last amended by Law Number
7 of 2021 concerning the Harmonization of Tax Regulations.

2. Construction Services are construction consulting and/or construction work

services.

3. Service User is an individual or entity, including a permanent establishment as

the owner or employer using Construction Services.

4. Service Provider is an individual or entity, including a permanent establishment as

the provider of Construction Services.

5. Contract Value of Construction Services is the value listed or should be listed in

the Construction Services contract as a whole.

2. The provisions of Article 2 are amended, thereby, it reads as follows:

Article 2

(1) Income from Construction Services business is subject to final Income Tax.

(2) The Construction Service Business referred to in paragraph (1) has the following
classifications:

a. construction consulting service business classification for the general

characteristics;

b. construction consulting service business classification for the specialist

characteristics;

c. construction work business classification for the general characteristics;

d. construction work business classification for the specialist characteristics;

and

e. integrated construction work business classification.

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 (3) The classification referred to in paragraph (2) is carried out pursuant to statutory
provisions.

(4) Construction Service business referred to in paragraph (1) is conducted through

activities in the form of the following services:

a. construction consulting;

b. construction work; and

c. integrated construction work.

(5) Construction consulting services referred to in paragraph (4) subparagraph a

cover all or part of the activities that include the review, planning, design,
supervision and management of the construction of a building.

(6) Construction work services referred to in paragraph (4) subparagraph b cover

activities that include the construction, operation, maintenance, demolition and
reconstruction of a building.

(7) Integrated construction work services referred to in paragraph (4) subparagraph

c cover the integration of construction work and construction consulting
services, including the integration of service functions in the integrated model of
planning, procurement and development as well as the integrated model of
planning and development.

3. The provisions of paragraph (1) of Article 3 are amended and between (1) and
paragraph (2), 1 (one) paragraph is inserted, namely paragraph (1a), thereby, Article 3
reads as follows:

Article 3

(1) Income Tax rates for Construction Service business referred to in Article 2 are as
follows:

a. 1.75% (one point seventy-five percent) for construction work carried out by
Service Providers that have small-scale business entity certificates or work
competency certificates for individual businesses;

b. 4% (four percent) for construction work carried out by Service Providers

that do not have business entity certificates or work competency
certificates for individual businesses;

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 c. 2.65% (two point sixty-five percent) for construction work performed by
Service Providers other than the Service Providers referred to in
subparagraph a and subparagraph b;

d. 2.65% (two point sixty-five percent) for integrated construction work carried
out by Service Providers that have business entity certificates;

e. 4% (four percent) for integrated construction work carried out by Service

Providers that do not have business entity certificates;

f. 3.5% (three point five percent) for construction consulting services carried
out by Service Providers that have business entity certificates or work
competency certificates for individual businesses; and

g. 6% (six percent) for construction consulting services performed by Service

Providers that do not have business entity certificates or work competency
certificates for individual businesses.

(1a) The imposition of final Income Tax on Service Providers that do not have
certificates as referred to in paragraph (1) subparagraph b, subparagraph e and
subparagraph g does not negate the obligation to have the certificates pursuant
to statutory provisions in the field of Construction Services.

(2) In the event that a Service Provider constitutes a permanent establishment, the
Income Tax rates referred to in paragraph (1), do not include Income Tax on the
residual profits of the permanent establishment after the final Income Tax.

4. The provisions of Article 7 paragraph (1) are deleted, thereby, Article 7 reads as
follows:

Article 7

(1) Deleted.

(2) Other income received or accrued by Service Providers from outside the
Construction Service business is subject to rates pursuant to the general
provisions of the Income Tax Law.

(3) Foreign exchange gains or losses from Construction Services business are
included in the calculation of the Contract Value of Construction Services subject
to final Income Tax.

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 5. Between Article 10C and Article 11, 1 (one) new article is inserted, namely Article 10D
which reads as follows:

Article 10D

(1) Implementation of the provisions on the final Income Tax referred to in Article 2
will be evaluated after 3 (three) Tax Years since this Government Regulation is
promulgated.

(2) The evaluation referred to in paragraph (1) is carried out by the minister who
administers government affairs in the field of finance.

(3) Based on the evaluation referred to in paragraph (2), income from the
Construction Services business may be subject to Income Tax pursuant to the
general provisions of Article 17 of the Income Tax Law.

Article II

1. To contracts signed before this Government regulation is promulgated, the following

provisions shall apply:

a. for the payment of a contract or part of a contract prior to the enactment of this
Government Regulation, Income Tax shall be imposed pursuant to Government
Regulation Number 51 of 2008 concerning Income Tax on Income from
Construction Service Business as amended by Government Regulation Number
40 of 2009 concerning the Amendment to Government Regulation Number 51
2008 concerning income tax on Income from Construction Service Business;

b. for the payment of a contract or part of a contract as of the enactment of this

Government Regulation, Income Tax shall be imposed pursuant to this
Government Regulation.

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 2. When this Government Regulation comes into force, all statutory provisions
constituting the implementing regulations of Government Regulation Number 51 of
2008 concerning Income Tax on Income from Construction Service Business (State
Gazette of the Republic of Indonesia of 2008 Number 109, Supplement to the State
Gazette of the Republic of Indonesia Number 4881) as amended by Government
Regulation Number 40 of 2009 concerning the Amendment to Government Regulation
Number 51 of 2008 concerning Income Tax on Income from Construction Service
Business (State Gazette of the Republic of Indonesia of 2009 Number 83, Supplement
to the State Gazette of the Republic of Indonesia Number 5014), are declared to
remain valid insofar as they do not contradict the provisions of this Government
Regulation.

3. This Government Regulation comes into force as of the date of promulgation.

For public cognizance, this Government Regulation shall be promulgated by placement in

the Official Gazette of the Republic of Indonesia.

Stipulated in Jakarta
on 21 February 2022
PRESIDENT OF THE REPUBLIC OF INDONESIA,
signed
JOKO WIDODO

Promulgated in Jakarta
on 21 February 2022
MINISTER OF LAW AND HUMAN RIGHTS,
signed
YASONNA H. LAOLY

OFFICIAL GAZETTE OF THE REPUBLIC OF INDONESIA OF 2022 NUMBER 47

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 ELUCIDATION

OF

GOVERNMENT OF THE REPUBLIC OF INDONESIA REGULATION

NUMBER 9 OF 2022

CONCERNING

THE SECOND AMENDMENT TO GOVERNMENT REGULATION NUMBER 51

OF 2008 CONCERNING INCOME TAX ON INCOME FROM CONSTRUCTION
SERVICE BUSINESS

I. GENERAL

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 In most developing countries, efforts to increase construction capacity and capability
are essential, including efforts to improve cost and time efficiency and quality of
construction work. The construction sector also plays an important role in creating
jobs, encouraging investment, and supporting the mobility of goods and services. To
improve a more conducive construction business climate, it is necessary to support
tax administration policies in favour of the construction sector.

Corona Virus Disease 2019 (COVID-19), which has been declared a pandemic by the
World Health Organization, has had an impact on the decline in social, economic and
community activities in Indonesia, including the construction sector as an economic
business entrepreneur. Therefore, Government intervention is required through
adjustments to the provisions stipulated under Government Regulation Number 51 of
2008 concerning Income Tax on Income from Construction Service Business as
amended by Government Regulation Number 40 of 2009 concerning the Amendment
to Government Regulation Number 51 of 2008 concerning Income Tax on Income from
Construction Service Business, in the form of adjustments to the final Income Tax rate
on Construction Services. With the adjustments to the final Income Tax rates on
Construction Services, the Government expects that these policies may assist the
construction sector in addressing the impact of the COVID-19 pandemic, thereby, the
sustainability of business processes from upstream to downstream is maintained.

The policy of the final Income Tax rate application on Construction Services is, in
principle, aimed at providing ease and simplification for the construction sector
entrepreneurs to carry out their tax obligations. However, taking into account the
fairness and equality principles, the policy of the final Income Tax imposition needs to
be evaluated within a certain period. The evaluation results may be in the form of
Income Tax imposition pursuant to the general provisions under the Income Tax Law

II. ARTICLE BY ARTICLE

Article I
Number 1
Article 1
Sufficiently clear.
Number 2
Article 2
Paragraph (1)
Sufficiently clear.
Paragraph (2)
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 Sufficiently clear.
Paragraph (3)
“Statutory provisions” refer to, among others, statutory provisions
in the field of Construction Services and statutory provisions in
the field of electricity.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Sufficiently clear.
Paragraph (6)
Sufficiently clear.
Paragraph (7)
Sufficiently clear.
Number 3
Article 3
Paragraph (1)
“Business entity certificate“ refers to the proof of recognition of
the classification and qualification of the Construction Services
business capability, including results of the accreditation of
foreign Construction Services capability issued by:

a. business entity certification agencies established by a

business entity association accredited by the Ministry of
Public Works and Public Housing and recorded by
construction service development agencies;

b. business entity certification agencies that have been

accredited by the minister who administers government
affairs in the field of energy and mineral resources; or

c. the minister who administers government affairs in the

field of energy and mineral resources.

“Work competency certificates for individual businesses” refer to

the proof of recognition of the competence of construction
workers issued by professional certification agencies and
recorded by construction service development agencies.
Subparagraph a
Sufficiently clear.
Subparagraph b
Sufficiently clear.

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 Subparagraph c
“Service Providers other than the Service Providers referred
to in subparagraph a and subparagraph b” refer to, among
others, Service Providers that have medium-scale business
qualifications or large-scale business qualifications or
specialists.
Subparagraph d
Sufficiently clear.
Subparagraph e
Sufficiently clear.
Subparagraph f
Sufficiently clear.
Subparagraph g
Sufficiently clear.
Paragraph (1a)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Number 4
Article 7
Sufficiently clear.
Number 5
Article 10D
Sufficiently clear.
Article II
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6767

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