0.5% Final Income Tax Payable in Transactions with Withholding Agents

JAKARTA, DDTCNews - Gov. Reg. 55/2022 stipulates that the final MSME Income Tax of 0.5% has to be settled using 2 mechanisms. First, self-remitted by taxpayers with a certain turnover. 

Second, withheld or collected by Income Tax withholding agents if the taxpayer concerned conducts transactions with the party appointed as a withholding agent. 

“The withholding or collection of Income Tax payable referred to in paragraph (1) subparagraph b must be performed by Income Tax withholding agents for every transaction with Taxpayers subject to final Income Tax pursuant to Gov. Reg. 55/2022”, reads Article 62 paragraph (3) of Gov. Reg. 55/2022, quoted on Thursday (26/1/2023). 

The Elucidation of Gov. Reg. 55/2022 presents a sample case of the calculation of the 0.5 final Income Tax payable when an MSME transacts with a withholding agent. The following is an example:

Cooperative A owns an electronic store business and fulfils the conditions to be subject to final Income Tax of 0.5% pursuant to Gov. Reg. 55/2022. 

In September 2023, Cooperative A accrues business income from selling electronic devices with a gross turnover of IDR80 million.

Of this amount, sales with a gross circulation of IDR60 million are made on 17 September 2023 to the DKI Jakarta Provincial Transportation Agency constituting a withholding agent. The remaining IDR20 million is accrued from the sales to individual buyers directly attending the store. 

It should be noted that Cooperative A has a certificate of Taxpayers subject to final Income Tax of 0.5% pursuant to Gov. Reg. 55/2022.

Final Income Tax payable for September 2023 is calculated as follows:

a. final Income Tax withheld by DKI Jakarta Transportation Agency: 

0.5% x IDR60 million = IDR300 thousand.

b. self-remitted final Income Tax: 

0.5% x IDR20 million = IDR100 thousand.

On another note, final Income Tax of 0.5% pursuant to Gov. Reg. 55/2022 (formerly regulated under Gov. Reg. 23/2018), may be utilised by individual taxpayers as well as corporate taxpayers in the form of cooperatives, limited partnerships, firms, limited liability companies or village-owned enterprises/joint village-owned enterprises. The 0.5% final Income Tax rate only applies to these types of taxpayers that receive turnover not exceeding IDR4.8 billion in 1 tax year.

Gov. Reg. 55/2022 also stipulates the threshold of non-taxable turnover of up to IDR500 million in 1 tax year. (sap)