PAJAK PENGHASILAN PASAL 26

(PPh PASAL 26)

INTRODUCTION

- Article 26 of Income Tax regulates deductions

from income originating in Indonesia that are
received or obtained by abroad taxpayers (both
individuals and entities) in addition to the
permanent establishment. -
- Taxpayers: abroad taxpayers (both individuals
and entities) other than permanent businesses
that receive or earn income.
OBJECT AND TARIFF INCOME TAX ARTICLE 26

1. dividend;
2. interest includes premiums, discounts, and rewards in connection with
debt repayment guarantees (Premium occurs when letters, bonds are
sold above their nominal value, discounts occur when bonds are
purchased below their nominal value).
3. Royalty, rent and other income related to the use of assets;
4. rewards in connection with services, jobs and activities;
5. prizes and awards;
6. pension and other periodic payments;
7. Prim swap (price difference of one currency that becomes more
expensive to buy) and other hedging transactions;
8. profit due to debt relief.

INCOME TAX ARTICLE 26 = 20% X GROSS INCOME

OBJECT AND TARIFF INCOME TAX ARTICLE 26

20% rate of estimated net income:

1. For income from the sale or transfer of property in
Indonesia, except as provided for in Article 4
paragraph (2), which is received or obtained by LN
Taxpayers other than BUT in Indonesia.
2. A insurance scheme paid to foreign insurance
companies.
3. Income from the sale or transfer of shares as referred
to in Article 18 paragraph (3c).

Article 26 Income Tax = 20% of Estimated Net Income

Note: Estimated Net Income is set by the Minister of

Finance
OBJECT AND TARIFF

Taxable income after tax from

a permanent establishment in Indonesia is taxed
amounting to 20% (twenty percent), except income
it was reinvested in Indonesia.

Article 26 Income Tax = PKP BUT - Payable Income Tax X

20%
Example :
• Taxable income of the firm Rp17.500.000.000,00
• Income tax :
25% x Rp17.500.000.000,00 Rp 4.375.000.000,00 (-)
• Taxable income after income tax Rp13.125.000.000,00
— Income tax according to article 26:
—
20% x Rp13.125.000.000 = Rp2.626.000.000,00

If after-tax income is Rp. 13,125,000,000.00

it is reinvested in Indonesia in accordance with or
based on the Minister of Finance Regulation, on this income
no tax deduction.
TERMS OF REINVESTMENT

• Done in the form of equity participation in a

company established and domiciled in Indonesia
as the founder or founding participant.
• Replanting is carried out in the current tax
year or no later than the next tax year.
• Do not divert the replanting at least within 2
years after the company where the planting is
done is commercially produced.
 PROPERTIES OF THE TAX WITHHOLDING
Withholding of Article 26 of Income Tax is final, except:
• Withholding income from head office from business or
activity, selling goods or providing services in Indonesia
similar to those carried out or carried out by permanent
firm in Indonesia.
• Withholding income as referred to in Article 26 of Income
Tax received or obtained by the head office, insofar as
there is an effective relationship between permanent firm
and assets or activities that provide intended income.
• Withholding income received or obtained by an individual
or foreign entity that has changed its status to become a
state taxpayer or permanent firm
TAX WITHHOLDER
Withholding Article 26 Income Tax must be carried out by:
1. Government Agency
2. Domestic Tax Subjects
3. Activity Organizer
4. Permanent Form of Business
5. Representatives of other foreign companies
6. Buyer appointed as cutter of Income Tax Article 26
EXAMPLE OF CUTTING CALCULATION OF Income Tax ARTICLE 26

Mike is a foreign employee at the company PT. Dira Consult. Mike lives less
than 183 days. Mike is already married, has a child. In April 2009, Mike earned
a salary of US $ 5,000 a month. The prevailing exchange rate is Rp. 10,500, -
per US% 1, -.

Calculation of Income Tax Article 26:

Gross income in the form of a month's salary:
5,000 x Rp. 10,500, - Rp. 52,500,000, -
Application of rates:
20% x Rp. 52,500,000, - Rp. 10,500,000, -

Article 26 of Income Tax for Mike's salary in April 2009 was Rp. 10,500,000, -
EXAMPLE OF CUTTING CALCULATION OF Income Tax ARTICLE 26

PT Polan (agency) pays royalties to companies abroad with an amount of

Rp100,000,000. The amount of Income Tax Article 26 that must be deducted by
PT Polan: IDR 100,000,000 20% = IDR 20,000,000

The Ministry of Health pays experts from Mexico Rp. US $ 10,000, - (exchange
rate at the time of payment of IDR 10,000 / US $ 1, -)
PPh Article 26 is = (10,000 x 10,000) x 20% = Rp. 20,000,000, -