Beruflich Dokumente
Kultur Dokumente
*P3B Have not prevailed but have been ratified by the central government of indonesia
1) To constitute a permanent establishment, no time test is required
Source : http://www.pajakonline.com/engine/learning/view.php?id=369
TAX IMPLICATION FOR PASSING THROUGH THE TIME TEST
Within time test period the foreign tax payer which have an Income as mentioned below must be withhold by Income
tax art 26 (Income tax law No. 36 year 2008) with 20% rate;
dividend;
Interest including premiums, discounts and rewards in connection with debt repayment guarantees;
royalties, rent and other income related to the use of assets;
rewards in connection with services, jobs and activities;
prizes and awards;
pension and other periodic payments;
swap premiums and other hedging transactions; and / or
profit due to debt relief.
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 a foreign taxpayer other than a permanent establishment in Indonesia, and
insurance premiums paid to foreign insurance companies are deducted by 20% tax (twenty percent) of the
estimated net income.
The income from the sale or transfer of shares as referred to in Article 18 paragraph (3c) is deducted by a tax of 20%
(twenty percent) of the estimated net income.
Furthermore regarding to the tax treaty agreement this 20% rate can be deduct to maximum 0% (as stipulate in Tax
Treaty agreement) if the foreign tax payer can provide the DGT1 form or COR/COD as mentioned in DGT’s regulation
No. PER-62/PJ/2009 as changed last time in DGT’s regulation No. PER - 25/PJ/2018,
TAX IMPLICATION FOR PASSING THROUGH THE TIME TEST
When the time test period has exceeded time test period the foreign tax payer
must be registered as permanent establish, this means all of Tax Treatment will
be treated same as local tax payer.
The tax liabilities such as :
Annual Tax Liabilities :
Paid and Reporting the Annual Income Tax Return
Monthly tax liabilities :
Withhold income tax return art 21 for salary paid to employee
Withhold income tax return art 23 for Interest/royalty, services and rent
Withhold income tax return art 25 for Annual income tax return installment
Withhold income tax return art 26 for income or salary paid to foreign tax
payer
withhold income tax return art 4(2) for Final tax such as land or building,
construction service etc.
TAX IMPLICATION FOR PASSING THROUGH THE TIME TEST
When the tax payer refuse to be registered as Local Tax Payer :
Tax Risk on consumer side :
1. If the vendor was independent party, The tax auditor may do
the correction with the withholding tax art 26 if the rate was
following the tax treaty facility (for example 0%). The tax auditor
will claimed that the transaction must be imposed by local
withholding tax rate (for example art 23 service with 4% rate or
art 4(2) 4% or 6% rate for construction services).
2. If the vendor was related party, the tax auditor may claimed
that the subsidiary in Indonesia must burden all of complex Tax
Liabilities which must be paid by related party.
TAX IMPLICATION FOR PASSING THROUGH THE TIME TEST
When the tax payer refuse to be registered as Local Tax Payer :
Tax Risk on vendor side :
1. If the vendor was independent party, the tax auditor may
blacklist the vendor as foreign tax payer. This mean the tax
treaty facility rate cannot be applied to this vendor.
2. If the vendor was related party, the consolidated income from
subsidiary Indonesia will be decrease due to the non deductible
tax expense burden by subsidiary in Indonesia.