How to calculate PPh and PBB taxes with examples

How do you calculate PPh and PBB taxes? – Sinaumed’s, every Indonesian citizen is required to pay taxes, be it vehicle tax, residence tax, income tax, and others. However, do you know the meaning of the tax itself?

A. Definition of Tax

Tax in the Big Indonesian Dictionary (KBBI) means a mandatory levy, usually in the form of money that must be paid by residents as a mandatory contribution to the state or government in relation to income, ownership, purchase price of goods, and so on.

In simple terms, paying taxes can be interpreted as an obligation that must be carried out by citizens in an effort to finance the state and national development. All tax payment procedures must comply with existing laws and regulations.

Usually the type of tax that is often known by many people is the motor vehicle tax. Have you ever heard of income tax and land and building tax? The two taxes need to be known by many people, both understanding and how to calculate them. By knowing the two types of taxes, we will try to pay the taxes on time.

If you want to know about income tax and land and building tax, let’s take a look at these two taxes, starting from their definition to the formula and how to calculate them.

B. Definition of PPh and PBB

1. Income Tax (PPh)

Income Tax (Pajak Penghasilan or PPh) is a tax imposed on individuals or entities on income earned during a tax year. In this case, income is an economic capability that can be used to meet daily needs or increase wealth for both domestic and foreign sources. In simple terms, income can be interpreted as profit from a business, honorarium, salary, gifts, and so on.

2. Land and Building Tax (PBB)

If we own a plot of land or have a residence, the land and residence will be taxed. The tax imposed on land ownership or residence is called Land and Building Tax or commonly abbreviated as PBB.

At first this tax was a central tax, but since the emergence of Law No. 28 of 2009 concerning Regional Taxes and Regional Retribution (PDRD), rural and urban PBB have become regional taxes. However, for PBB on plantations, forestry, mining, they are still part of the central tax.

C. Subject to Income Tax and Land and Building Tax

“Tax subject” is a term in the tax law that is indicated for an individual (personal) or organization (group) based on the applicable tax law. The thing that needs to be underlined in “tax subject” is that a person or entity is a “tax subject” but not all of these people and entities are subject to tax.

In other words, “tax subject” will only be imposed on individuals who have met the taxpayer requirements. While the entities that are subject to taxpayers are Limited Liability Companies (PT), Limited Liability Companies, State-Owned Enterprises or regions with any name and in any form, partnerships, companies or other associations, firms, joint ventures, cooperative associations, and permanent establishments.

Basically, tax payments must be made if there is income earned in Indonesia. Thus, if a person or entity no longer earns income or income in Indonesia, then there is no need to pay taxes.

The conditions that are not subject to the taxpayer are as follows.

  • When you die;
  • When choosing to leave Indonesia forever;
  • When the legal entity is liquidated, the legal entity is no longer subject to taxpayers.

1. Subject of Income Tax (PPh)

Based on the Income Tax Law it is not clearly explained what is meant as an income tax subject, but in general income tax subjects are divided into three groups, namely:

  • Individuals and inheritance that have not been divided into a unit to replace those who are entitled;
  • Entities consisting of Limited Liability Companies (PT), Limited Liability Companies, State or Regional Owned Enterprises in whatever name and form, associations, corporations or other associations, firms, partners, cooperative associations, and other business entities;
  • A permanent establishment (BUT) is a business carried out by a person who does not reside in Indonesia or is in Indonesia for no more than 183 days within a 12 month period or an entity that is not established and is not domiciled in Indonesia. The bodies referred to include management positions, company branches, representative offices, workshops, office buildings, and workshops.
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Domestic tax subjects will be taxed on income obtained from Indonesia, meanwhile, foreign tax subjects will be taxed based on income sourced from Indonesia.

Domestic tax subjects will be taxed based on net income or net income at general rates, while foreign tax subjects will be taxed based on gross income or gross income at comparable tax rates.

Domestic tax subjects are required to notify the Annual Tax Return (SPT Tahunan) as a medium for calculating the tax payable, while foreign tax subjects are not required to notify the Annual Tax Return because their tax obligations have been fulfilled through final withholding taxes.

2. Subject to Land and Building Tax (PBB)

A person or entity that is required to pay Land and Building Tax (PBB) in accordance with the provisions of the PBB Act can be referred to as a PBB subject. PBB tax is imposed on subjects who already own buildings or get benefits from the land (land). Based on the Agrarian Law, the rights to land and buildings in PBB are property rights, building use rights, usufructuary rights, usufructuary rights, and management rights.

However, in several cases where the building or land is used it is not clear who owns it and the PBB has not been paid, the Director General of Taxes has the authority to determine and stipulate who is the tax subject who will be responsible in order to be able to pay off the tax debt.

What is done when the Director General of Taxes determines the tax subject is to carry out research into the field, which is followed by determining the tax subject for buildings or land whose owners are unknown.

The selection of PBB subjects to pay taxes or pay off tax debts even though they do not have rights over the building or land used, has been stated in Law Number 12 of 1994.

However, if the subject that has been stipulated by the Director General of Taxes has objections, then the tax subject can file an objection by writing a statement stating that the PBB subject is not a person or entity that has to pay the PBB in question.

The thing that needs to be underlined when making PBB payments is that the status of ownership rights to land and buildings has nothing to do with the PBB payment process. This is because the appointment of a person or entity by the Director General of Taxes is not proof of ownership of land and building rights.

D. Objects of Income Tax and Land and Building Tax

1. Objects of Income Tax (PPh)

Income or income derived from work is a tax object. Income or income has a very broad meaning so that Law Number 36 of 2008 was made in which the object of income tax is contained in articles 21, 22, 23 and 26.

However, there are several types of income that are not part of the income tax object. The following are types of income that are not part of the income tax object.

  • Inheritance
  • Other income as contained in the income tax law.
  • Aid or donations such as zakat and religious donations.
  • Grant funds as long as they are not related to ownership, work effort, or control between related parties.
  • Reimbursement or compensation related to work or services in the form of enjoyment from the Taxpayer or the Government, if given by a non-Taxpayer or certain Taxpayer will become Income).

2. Objects of Land and Building Tax (PBB)

The objects of Land and Building Tax are immovable objects. In simple terms, the surface of the earth which includes land, deep waters, and seas. Meanwhile, a building is a construction built on land/water with implanted or patented techniques. As for those included in the category of buildings as follows:

  • Toll road;
  • Swimming pool;
  • Environmental roads that become an integral part of the building complex;
  • fancy fence;
  • Sports venues;
  • Dock;
  • luxurious garden;
  • Oil, water and gas refineries;
  • Other facilities that provide benefits.

As for those that are not included in PBB objects as follows:

  • Land or buildings designated for public purposes, such as worship, health, education, culture, social, and others.
  • Land or buildings used for public burials of ancient relics, museums, and so on.
  • Land or buildings used by diplomatic missions or consulates. This is done so that the RI representative buildings abroad are also not subject to PBB fees.
  • Land that is part of a protected forest, nature reserve, national park, and so on.
  • Land and buildings used by representatives of international organizations determined by the Minister of Finance.

E. Formulas and Methods for Calculating PPh

In calculating income tax, it is necessary to carry out several stages. In order to make it easier to understand each stage, a case example will be given.

1. Calculate net income

All income earned during one year of work is gross income. Therefore, to calculate income tax, one year’s net income is required.

Net income can be calculated by subtracting gross (gross) income from dependents such as credit, insurance, debt, and others. Example: 80,000,000 (gross) – 5,000,000 (dependents) = 75,000,000, then net income for one year is 75,000,000.

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2. Calculating Non-Taxable Income (PTKP)

If you have received net income for one year, the next step is to calculate Non-Taxable Income (PTKP). The purpose of calculating PTKP is to find Taxable Income (PKP).

PTKP already has a rate set by the Directorate General of Taxes. PTKP rates that need to be known are as follows:

IDR 54,000,000 for individual taxpayers.
Additional IDR 4,500,000 for married taxpayers.
Rp. 54,000,000 for the wife whose income is combined with the husband’s income.
Additional IDR 4,500,000 for each blood family member in a straight line and adopted children who are fully dependent, a maximum of 3 people for each family.

3. Calculating Taxable Income (PKP)

After getting the results of the PTKP calculation, the next step is to calculate the Taxable Income (PKP). To find out the amount of PKP, a reduction is made between net income and PTKP.

Example: 75,000,000 – 54,000,000 (not married) = 19,000,000, then the PKP obtained is 19,000,000.

4. Calculating Income Tax (PPh)

If you have received a PKP, the next step is to calculate income tax. To calculate income tax, it is necessary to know the amount (percent) that has been determined by the Directorate General of Taxes. The following is the calculation of the amount of income tax that must be paid for one year.

Taxable income up to IDR 50,000,000.00 (fifty million rupiah) is subject to a 5% (five percent) rate

Taxable income of more than IDR 50,000,000.00 (fifty million rupiah) to IDR 250,000,000.00 (two hundred fifty million rupiah) is subject to a 15% (fifteen percent) rate

Taxable income of more than IDR 250,000,000.00 (two hundred fifty million rupiah) up to IDR 500,000,000.00 (five hundred million rupiah) is subject to a rate of 25% (twenty five percent)

Taxable income of more than IDR 500,000,000.00 (five hundred million rupiah) is subject to a 30% (thirty percent) rate.

Example: 19,000,000 x 5% (under 50,000,000) = 950,000, then the income tax that must be paid for one year is 950,000.

5. Case examples of calculating Income Tax

Bagus is a father who already has one wife and one child. He earns 96,000,000 per month and has a dependent of 4,000,000 per month. Here’s how to find income taxes.

a) Net income = (gross income – dependents)

= 96,000,000 – 4,000,000
= 92,000,000

b) PTKP (1 wife and 1 child)
54,000,000 + 4,500,000 + 4,500,000
= 63,000,000

c) PKP (net income – PTKP)
92,000,000 – 63,000,000
= 29,000,000

d) PPh (PKP x PPh Percentage)
29,000,000 x 5%
= 1,450,000

Then the income tax that Bagus has to pay is 1,450,000.

F. Formulas and how to calculate PBB

Basically calculating Land and Building Tax (PBB) is tricky. As for how to calculate the PBB, it requires the Selling Value of Tax Objects (NJOP). NJOP can be said as a reference or reference to find out the market price or average price when you want to sell or buy land or buildings.

Actually there are many aspects that affect the NJOP of the earth, such as geographical location, environmental conditions, benefits, and so on. while the NJOP on buildings is determined or influenced by the materials used in the building, location, environmental conditions, and others.

Things that need to be considered when calculating the amount of land and building tax that must be paid are the Value of Taxable Objects (NJOP), Selling Value of Non-Taxable Objects (NJOTKP), and Selling Value of Taxable Objects (NJKP).

To calculate PBB, NJKP is needed. NJKP can be obtained from 20% multiplied by NJOP. After getting the NJKP, the next step is to use the formula commonly used to calculate PBB, which is NJKP multiplied by 0.5%.

G. Case Example of Calculating Land and Building Tax

Pak Bagyo wants to pay the land and building tax and he has a building of 100 square meters and a land area of ​​150 square meters. The price of land in Pak Bagyo’s area is around 4,000,000 per meter, while the price of the building is around 5,000,000. Here’s how to calculate PBB.

a) Land
150 x 4,000,000 = 600,000,000

b) Building
100 x 5,000,000 = 500,000,000

After getting the total value of land and buildings, then look for the NJOP

c) NJOP
600,000,000 + 500,000,000 = 1,100,000,000

d) NJKP
20% x 1,100,000,000 = 220,000,000

e) PBB
0.5% x 220,000,000 = 1,100,000
Then the PBB that must be paid by Mr. Bagyo is 1,100,000

H. Conclusion

Taxes are state revenues that are used to build the country and finance the country. Therefore, as a good citizen it is appropriate to pay taxes on time.

Income Tax and Land and Building Tax are two types of taxes in Indonesia. The two taxes have a different way of calculating either the formula or the percentage of tax that must be paid. Not only is the way of calculating them different, the two taxes also have differences in terms of “tax subject” and “tax object.”

To find out more about Income Tax and Land and Building Tax, you can read these two book recommendations. By reading these two books we will not be confused about calculating Income Tax and Land and Building Tax as well as increasing the desire to pay taxes on time.

Book Recommendations & Related Articles

1. Principles of Tax Law

2. Class XII SMK/MAK Tax Administration

3. Taxes & Funding of Indonesian Civilization

Author : Restu Nasik Kamaluddin