Types of Taxes in Indonesia – Basically a country needs income or income that is used to develop the country. Income that can be obtained from taxes, levies, community donations, loans, profits from state companies, and others.
However, usually the main source of state revenue is taxes. In other words, if a country does not have a good taxation system then developments and activities will be difficult to realize or implement.
Obstructed developments such as schools, health centers, hospitals, roads, and others. While activities that are hampered, such as sports activities, socio-cultural activities, and other activities.
Tax revenue in a country is not only used for development and state activities, but taxes are also budgeted to provide a sense of security and comfort to the community in the form of services provided by the government to the community. The sense of security and comfort felt by citizens can help the country’s economic growth so that a country’s income will run without obstacles.
After knowing that taxes are very important for the development of a country, as a good citizen, it is appropriate to pay taxes on time.
To get used to paying taxes on time, you can start by paying taxes on your residence (house). Residence (house) is included in the type of Land and Building Tax. After paying the land and building tax, other taxes need to be paid as well. Did you know that in Indonesia there are various types of taxes. Check out the types of taxes in Indonesia as follows.
A. Types of Taxes
After knowing that it is important for the progress and growth of the country, especially Indonesia. The next thing to know is the types of taxes that must be paid by taxpayer participants.
In Indonesia, the types of taxes are classified into three parts or groups, namely, the collection agency, according to its nature, and the target or object. Consider the three classifications of types of taxes as follows:
1. Types of Taxes Based on Collecting Agencies
In Indonesia there are five types of taxes that need to be known and paid, including Income Tax (PPh), Value Added Tax (VAT), Sales Tax on Luxury Goods (PPn BM), Stamp Duty, Land and Building Tax (PBB), and Land and Building Rights Acquisition Fee (BPHTB).
a. Income Tax (PPh)
Income earned for one year and imposed on individuals or entities is called Income Tax (PPh). The “income” in question is economic ability that can be used to meet daily needs or increase wealth, both from within the country and abroad.
In simple terms, income can be interpreted as profit from a business, honorarium, salary, gifts, and so on. To help Sinaumed’s better understand how to calculate, deposit, and report the correct income tax, you can get the book Income Tax Theory, Cases, and Practices at sinaumedia!
Income tax subjects are divided into two, namely domestic tax subjects and foreign tax subjects. The following is an explanation of domestic tax subjects and foreign tax subjects.
As for those included in domestic tax subjects as follows:
- A person who resides in Indonesia or is in Indonesia for more than 183 days within a 12 month period. It could also be someone who is in Indonesia in one tax year and intends to stay in Indonesia.
- Agency established and domiciled in Indonesia.
- Inheritance that is still full or has not been divided into one unit to replace the rightful.
While those included in foreign tax subjects are as follows:
- A person who resides in Indonesia or is in Indonesia for no more than 183 days within a 12 month period.
- Entities that are not established and domiciled in Indonesia that carry out business or carry out business activities through a Permanent Business Entity (BUT) in Indonesia.
- A person who does not reside in Indonesia or is present in Indonesia for no more than 183 days within a 12 month period.
- Entities that are not established and domiciled in Indonesia that can get income or income from Indonesia not from business or carrying out activities through a PE in Indonesia.
Basically, a domestic tax subject is someone who has resided in Indonesia for more than 183 days (not necessarily consecutively) within a period of 12 months since his arrival. Meanwhile, a foreign tax subject is someone who does not reside in Indonesia, but has been in Indonesia for less than 183 days in a span of 12 months.
Tax objects subject to PPh on income are in the form of:
- Interest on deposits and other savings.
- Income from transactions in shares and other securities on the stock exchange.
- Income from the transfer of assets in the form of land or buildings.
- Other incomes that are subject to tax in accordance with government regulations.
b. Value Added Tax (VAT)
This tax is often there when doing shopping transactions or eating at restaurants. However, not everyone knows about Value Added Tax (VAT).
VAT is a tax imposed on the purchase of Taxable Goods or Use of Taxable Services within the Customs Area (within the territory of Indonesia). Every purchase of Taxable Goods or the use of Taxable Services will be subject to VAT, be it an individual, entity, government, and others.
This tax is also protected by an applicable law, and Sinaumed’s can learn about this through the Book of Value Added Tax Laws (VAT) below.
c. Sales Tax on Luxury Goods (PPn BM)
Each luxury item will be subject to Taxable Goods and classified into the type of Sales tax on Luxury Goods (PPn BM). Check out the categories of goods that are classified as luxury so that the items we have are classified as luxury goods or not. The following is a category of luxury goods.
- These goods are only owned by people with high income.
- These items are only used to determine social status.
- These goods are not part of basic needs
- If it is used it can damage the health and morale of the community and can disrupt the comfort and order of society.
d. Land and Building Tax (PBB)
If we own land or use land and own buildings, we must be subject to Land and Building Tax (PBB). Initially, PBB was included in the central tax, but on 1 January 2014, rural and urban PBB was included in regional taxes, except for plantation, forestry and mining PBB, which was still included in the central tax.
PBB itself is an objective tax that is imposed on land and buildings, where the taxpayers are individuals or entities that actually have benefits from the land or buildings, which is discussed further in the book Land and Building Tax at a Practical Level, Edition 2 .
The taxes obtained by the Regional Government, whether Provincial or Regency/City, include:
- Hotel Tax
- Restaurant tax
- Entertainment Tax
- Advertisement tax
- Non-Metal and Rock Mineral Tax
- Vehicle tax
- Taxes on the Process of Transferring Motorized Vehicles
- Motor Vehicle Fuel Tax
- Cigarette Tax
- Surface Water Tax
- Groundwater Tax
- Street Lighting Tax
- Parking Tax
e. Stamp Duty
Stamp duty is a tax that is imposed on making documents, such as notarial deeds, agreements, securities, and payment receipts. Stamp duty is printed and issued by the government. You can learn how to calculate stamp duty yourself through the material in the book How to Calculate Pbb Sector p3, Other Sectors, and Stamp Duty.
However, sometimes there are certain letters or documents that were not required to use stamps at first, but turn into having to use stamps. Examples of these documents are documents used as evidence in court.
f. Land and Building Rights Acquisition Fee (BPHTB)
Fees for Acquisition of Land and Building Rights or commonly abbreviated as BPHTB. BPHTB itself is a tax imposed on the receipt of land or building rights.
It is the same as with the PBB that BPHTB is run by the central government, but all BPHTB revenues are handed over to and run by regional governments, be they provincial or district/city and must comply with the applicable provisions.
Tax subjects at BPHTB are individuals or entities that obtain land and building rights. Based on the BPHTB Law, the tax subject is obliged to pay taxes on the land and building.
Receipt of land and building rights is the object of Land and Building Rights Acquisition Fees. Acceptance of land and building rights includes several things, including:
- Transfer of rights caused by sale and purchase transactions, exchanges, inheritance, grants, testamentary grants, business expansion, business consolidation, business combinations, entry into companies or other legal entities, separation of rights resulting in transfers, appointment of buyers in auctions, and implementation judge’s decision that has permanent legal force.
- Granting of new rights due to continuation of rights and beyond the release of rights.
2. Types of Tax according to their nature
The types of taxes, if categorized based on their nature, are divided into two, namely Direct Taxes and Indirect Taxes.
a. Direct Tax
Direct tax is a type of tax where the tax burden must be borne by a taxpayer and does not give the tax burden to other people such as income tax.
b. Indirect Tax
Indirect tax is a type of tax where the tax burden can be transferred or charged to other parties, examples of this type of tax are VAT, Sales Tax on Luxury Goods.
The tax burden in Indirect Taxes can be transferred from the seller to the buyer because the transfer is in the same direction from the producer to the consumer, so the transfer is called forward shifting . However, if the transfer of the tax burden is opposite then it is called backward shifting .
3. Types of Tax Based on Target or Object
Classification of types of taxes based on the target or object is divided into two, namely Subjective Tax and Objective Tax.
a. Subjective Tax
Taxes that pay attention to the conditions or circumstances of the taxpayer are called subjective taxes.
When determining Subjective Tax, objective reasons are needed that correlate with the material situation and are commonly referred to as “carrying styles”. Bearing style is the ability of taxpayers to bear taxes after deducting the minimum cost of living.
In the “bearing style” there are two elements, first, the subjective element, second, the objective element. The subjective element of “pikul style” includes all needs, especially material needs in addition to moral and spiritual. While the objective elements include income or income, wealth, and spending or spending.
b. Objective Tax
Objective tax is a tax that tends to examine or pay attention to objects that give rise to the obligation to pay taxes first, after that look for the tax subject either from an individual or an entity. In simple terms, objective tax can be interpreted as a tax that pays more attention to the condition of the object. An example of an objective tax is Value Added Tax.
Tax collection or collection system
The importance of a system in taxation so that tax collectors and taxpayers get security and comfort when making tax payments. The tax collection system is divided into four, including:
1. Official Assessment System
The Official Assessment System is a tax collection system in which tax officials are given the authority to determine the amount owed by taxpayers. In 1984 and reforms in taxation, this tax collection system was no longer used or no longer valid. One example of a tax from this tax collection system is Land and Building Tax (PBB).
The characteristics of this tax collection system, namely, (1) the tax official calculates the tax owed, (2) the taxpayer is passive, (3) to find out the debt of the taxpayer, he must wait for a tax assessment letter made by the tax official.
2. Self Assessment System
In this tax collection system, taxpayer participants are given the authority to self-calculate, self-report, and pay their own payable taxes. Income Tax (PPh) is one example of a tax from the Self Assessment System tax collection system .
This collection system has the characteristics, namely, (1) Taxpayers can calculate their own payable taxes, (2) By reporting and paying the taxes to be paid, the Taxpayers are active, (3) the government or tax officials do not need to issue an assessment letter tax at any time except in certain cases, such as taxpayers who are late to report or pay tax owed and there is tax that should be paid but has not been paid.
3. Withholding System
In the Withholding System tax collection system, third parties are given the authority to cut and collect the amount of tax owed by taxpayers. The purpose of this third party is a party other than the government (tax officials) and taxpayers.
The characteristics of the Withholding System tax collection system , namely, (1) tax officers and taxpayers are not active. The point is that tax officers and taxpayers do not need to calculate the amount of tax, (2) the amount of tax is calculated by the company or entity because in this tax system the company is a third party.
4. Semiself Assessment System
In this tax collection system, the amount of tax owed is on both sides. In simple terms, this tax collection system gives authority to taxpayers and tax officers.
There are several characteristics in this tax collection system, namely, (1) Taxpayers and tax officers are given the authority to determine the amount of tax, (2) Taxpayers and tax officials are active because both parties calculate the amount of tax.
In Indonesia, the tax collection systems that are often used are the Self Assessment System and the Withholding System . Even though the Taxpayer has paid taxes, it does not mean that the Taxpayer does not get a re-examination by the tax officer. In other words, the Directorate General of Taxes or the tax officer will examine or check the Taxpayer if an error is found in paying taxes.
With so many terms in taxation, the Tax Dictionary book is here to help its readers better understand terms and their meanings in the fields of taxation, accounting, customs and excise, to tax courts.
Tax is one of the main income or income owned by every country, especially Indonesia. Taxes can build a country and provide a sense of security to the public or citizens. Therefore, don’t be late in paying taxes so that the growth of the Indonesian state runs smoothly too.
There are three types of tax classification, namely, tax based on the collection agency, tax according to its nature, and tax based on the target or object. In Indonesia, the tax system used is the Self Assessment System and the Withholding System.