Independent Personal Services Illegible for 0.5% Final Income Tax

JAKARTA, DDTCNews - Taxpayers need to understand that several conditions prevent them from utilising the final Income Tax rate of 0.5%. This is regulated in Gov. Reg. 55/2022 (revokes Gov. Reg. 23/2018).

Article 56 of Gov. Reg. 55/2022 states that excluded as business income subject to final Income Tax is income received or accrued by individual taxpayers from services in connection with independent personal services.

“Services in connection with independent personal services ... include professionals who perform independent personal services, consisting of lawyers, accountants, architects, doctors, consultants, notaries, conveyancers, appraisers and actuaries,” reads Article 56 paragraph (4) subparagraph a of Gov. Reg. 55/2022, quoted on Tuesday (24/1/2023).

Next, other services related to independent personal services that are not eligible for the 0.5% final Income Tax are musicians, presenters, singers, comedians, film stars, soap opera stars, commercial stars, directors, film crews, photo models, models, playwrights and dancers.

Further, the exclusion from the utilisation of MSME final Income Tax also applies to sportsmen, advisors, teachers, trainers, public speakers, extension workers and moderators.

Other services also include authors, researchers, translators, advertising agencies, project supervisors or managers, intermediaries, salespeople, insurance agents, and distributors of multilevel marketing (MLM) or direct selling companies and other similar activities.

Sample Case

Gov. Reg. 55/2022 provides sample cases of services related to independent personal services not eligible for the 0.5% MSME final Income Tax. Below is an example:

Mr. A has expertise as a piano player. If Mr. A teaches piano for and on his own behalf to accrue income that is not bound by an employment relationship, Mr. A supplies services in connection with independent personal services. 

Mr. A’s income from teaching piano is excluded from business income subject to final Income Tax pursuant to Gov. Reg. 55/2022. 

However, if Mr. A owns a piano course business and employs other people, the business income does not constitute service income in connection with independent personal services. (sap)