REGULATION OF THE MINISTRY OF FINANCE NUMBER 164 YEAR 2023 (MoF 164/2023) REGARDING PROCEDURES FOR THE IMPOSITION OF INCOME TAX ON INCOME FROM BUSINESSES RECEIVED OR OBTAINED BY TAXPAYERS WHO HAVE CERTAIN GROSS TURNOVER AND REPORTING OBLIGATIONS TO BE RECOGNIZED AS A TAXABLE ENTREPRENEUR
This regulation aims to provide justice, legal certainty and convenience for Taxpayers or Entrepreneurs who have a certain gross turnover, so it is necessary to regulate procedures for implementing the imposition of Income Tax that are clear and easy for Taxpayers who have a certain gross turnover as well as adjustments to provisions regarding the time limit for business reporting obligations for entrepreneurs whose gross turnover and/or gross income exceed the Small Entrepreneur limit to be recognized as a Taxable Entrepreneur and the tax period to start exercising rights and fulfill obligations to collect, pay, and report the VAT (PPN) or VAT and Sales Tax on Luxury Goods (PPnBM).
There are 2 main rules regulated in Regulation MoF 164/2023, as follows:
I. Adjustment of Income Tax Regulations for Taxpayers with Certain Gross Income
- Domestic Taxpayers who receive or earn income from businesses with gross turnover not exceeding IDR 4,800,000,000.00 (four billion eight hundred million rupiah) in 1 (one) Tax Year, are subject to final Income Tax of 0.5 % within a certain period.
- Income from business that is subject to final Income Tax is not included:
- a. Income received or earned by individual taxpayers from services related to independent work;
- b. Income received or earned abroad for which tax is payable or has been paid abroad;
- c. Income that has been subject to final Income Tax with the provisions of separate tax laws and regulations; and
- d. Income that is exempted as a tax object.
- Taxpayers may choose to be subject to Income Tax based on the general provisions of Income Tax, for which Taxpayers are required to submit written notification to the Director General of Taxes through the Tax Service Office where the Taxpayer is registered no later than the end of the year. Income Tax based on the general provisions of Income Tax is levied starting in the following Tax Year.
Individual taxpayers who have a certain gross turnover of up to IDR 500,000,000.00 (five hundred million rupiah) in 1 (one) tax year is not subject to income tax.
- Final Income Tax can be paid by:
- a. The taxpayer himself/herself; or
- b. Withheld or collected by the Income Tax Withholding Agent or Collector, if the Taxpayer carries out a transaction with a party appointed as the Income Tax Withholding Agent or Collector.
Exempted from the obligation to submit a Unification Income Tax Return, if in one month there is no obligation to pay Final Income Tax due to:
- a. Taxpayers do not have income from business;
- b. Taxpayers only carry out transactions where Income Tax is withheld or collected by the party appointed as Income Tax Withholding Agent or Collector; or
- c. The cumulative gross income from business since the first period of Tax Year has not exceeded IDR 500,000,000.00 (five hundred million rupiah).
- Individual Taxpayers must submit a statement letter replacing the Decision Letter to the Income Tax Withholding Agent or Collector stating that the gross income from the Taxpayer’s business when the Income Tax is withheld or collected does not exceed IDR 500,000,000.00 (five hundred million rupiah).
In the case of an individual Taxpayer who has submitted a statement letter and in fact has a gross income from business exceeding IDR 500,000,000.00 (five hundred million rupiah) in 1 (one) Tax Year, the Taxpayer is obliged to pay the Final Income Tax by himself/herself for the income that should be deducted or collected according to the month in which the transaction for the sales of goods or delivery of services occurred with the Income Tax Withholding Agent or Collector.
The statement letter must be made in accordance with the format listed in the Attachment that is an inseparable part of this regulation.
II.Relaxation of the deadline for recognize as Taxable Entrepreneur
- Entrepreneurs are required to report their business to be recognized as Taxable Entrepreneur if up to one month in the financial year the gross turnover and/or gross income exceed the small entrepreneur limitation, which is IDR 4,800,000,000.00 (four billion eight hundred million rupiah).
- The obligation to report a business to be recognized as a Taxable Entrepreneur is carried out no later than the end of the financial year when the gross turnover and/or gross income exceed the limits by submitting an application letter to be recognized as Taxable Entrepreneur.
- In the event that the Entrepreneur does not carry out the obligation to report his/her business to be recognized as a Taxable Entrepreneur, the Head of Tax Office or the Head of Tax Service Section, Counseling and Consultation can stipulate the Entrepreneur as a Taxable Entrepreneur ex officio.
- If the entrepreneur is late in reporting his/her business to be recognized as a Taxable Entrepreneur or the entrepreneur is recognized as a Taxable Entrepreneur ex officio, the entrepreneur is obliged to collect, pay and report the PPN or PPnBM payable starting from the tax period in which the Entrepreneur is recognized as a Taxable Entrepreneur.
- The implementation of the Taxable Entrepreneur rights and obligations for PPN and PPnBM which should be collected starting from the first Tax Period of the following financial year until before the Entrepreneur is recognized as a Taxable Entrepreneur, carried out through the submission of a monthly VAT Return.
- In the event that the Entrepreneur does not comply with the stipulation, the Director General of Taxes can issue a Tax Assessment Letter and/or Tax Collection Letter in accordance with the stipulation of laws and regulations of taxation.
This regulation was promulgated on December 29, 2023 and come into force on the date of its promulgation.
For further tax assistant please contact:
Rani Widianti
T. (+6221) 2222-0200
E. [email protected]
Alvina Octavia
T. (+6221) 2222-0200
E. [email protected]
