The Witholding Income Tax Art. 26

by dudi on Jan.28, 2008, under Pajak Internasional, Pajak Penghasilan

Indonesian Income Tax Law adopts source principle to levy income tax for non resident tax payer. By this principle the income which be earned by non resident individual or entity tax payer will be taxed by Indonesian authority. The engagement of this principle is done trough witholding tax mecanism which called Income Tax Article 26. The name is based on the article in Indonesian Income Tax Law which rule this matter.

The rate of this witholding tax is 20 (twenty) percent based on gross income received or accrued by non resident taxpayer. But if this taxpayer is a resident of a country that Indonesia has tax treaty, so the rate is based on the tax treaty between

Indonesia and this country. The definition of income which is object of this witholding tax is also must be based on the tax treaty.

The withholding tax under this provision is obliged to be carried out by a government entity, a resident taxable person, organizer of activities, permanent establishment or the representative office of a foreign company who make payment to a non-resident Taxpayers other than a permanent establishment in Indonesia, at a rate of 20% (twenty percent) of the gross amount.

The types of income on which withholding must be done can be categorized into:

Income derived from capital in the form of dividend, interest including premium, discount, premium swap with respect to interest swap and compensation for a guarantee loan, royalties, rent and other income related to the use of property;
Compensation for services, employment and activities;
Gift and rewards in whatever name or form;
Pensions and other periodic payment.

Under this provision, for instance, a resident taxable person who pays royalty of Rp100,000,000.00 to a non-resident Taxpayer is obliged to withhold tax of 20% (twenty percent) of Rp100,000,000.00.

Another example, a foreign athlete who participates marathon in Indonesia and wins a cash prize is subject to withholding tax of 20% (twenty percent).

Completely, the Income Tax Art. 26 rate based on tax treaty is presented by this table below.

Income Tax Art. 26

NO.	COUNTRY	INTEREST	ROYALTIES	PORTFOLIO DIVIDEN	SUBSTANTIAL HOLDING DIVIDEN	BRANCH PROFIT TAX
1	Algeria	15%	15%	15%	15%	10%
2	Australia	10%	15%	15%	15%	15%
3	Austria	10%	10%	15%	10%	12%
4	Bangladesh	10%	10%	15%	10%	10%
5	Belgium	10%	10%	15%	10%	10%
6	Brunei Darussalam	10%	15%	15%	15%	10%
7	Bulgaria	10%	10%	15%	15%	15%
8	Canada	10%	10%	15%	10%	15%
9	Czech	12,50%	10%	10%	10%	10%
10	China	10%	15%	0,2	10%	15%
11	Denmark	10%	15%	15%	15%	15%
12	Egypt	15%	15%	15%	10%	15%
13	Finland	10%	10%	15%	10%	10%
14	France	15%	15%	1%5	10%	10%
15	Germany	10%	0,15	0,15	0,15	10%
16	Hungary	15%	10%	10%	10%	10%
17	India	10%	15%	15%	10%	0,12
18	Italy	10%	10%	15%	10%	10%
19	Japan	10%	10%	10%	10%	10%
20	Jordan	10%	10%	10%	10%	N/A
21	Korea, Republic of	10%	10%	10%	10%	10%
22	Korea, Democratic People?s Republic of	10%	20%	10%	10%	10%
23	Kuwait	5%	0,125	15%	10%	10%
24	Kanada	10%	12,50%	15%	10%	10%
25	Malaysia	15%	10%	10%	0,05	10%
26	Mexico	10%	10%	10%	10%	10%
27	Mongolia	10%	10%	10%	10%	10%
28	Netherlands	10%	10%	10%	10%	10%
29	New Zealand	10%	15%	15%	15%	N/A
30	Norway	10%	15%	15%	15%	15%
31	Pakistan	15%	15%	15%	10%	10%
32	Philippines	15%	0,15	0,2	0,15	0,2
33	Poland	10%	15%	15%	10%	10%
34	Romania	12,50%	12,5%/15 %	15%	0,125	0,125
35	Russia	15%	10%	10%	10%	10%
36	Saudi Arabia *	N/A	N/A	N/A	N/A	N/A
37	Seychelles	10%	10%	10%	10%	N/A
38	Singapore	10%	10%	10%	10%	15%
39	Slovak	10%	15%	15%	10%	15%
40	South Africa	10%	15%	10%	10%	10%
41	Spain	10%	10%	0,15	10%	10%
42	Sri Lanka	15%	10%	0,15	10%	10%
43	Sudan	15%	15%	15%	15%	10%
44	Spanyol	10%	10%	10%	10%	10%
45	Switzerland	10%	15%	15%	0,15	15%
46	Syria	10%	15%/20%	15%	10%	15%
47	Taipei / Taiwan	10%	0,125	15%	10%	10%
48	Thailand	RI = 15% THAI = 10%/25%	15%	20%	15%	Sesuai UU Domestik
49	Tunisia	12%	15%	12%	12%	12%
50	Turkey	10%	10%	15%	10%	10%
51	UAE (United Arab Emirates)	5%	5%	10%	10%	5%
52	Ukraine	10%	10%	10%	12%	12%
53	United Kingdom	10%	10%	15%	10%	0,15
54	United States of America	10%	0,05	0,05	10%	0,05
55	Uzbekistan	10%	10%	15%	10%	10%
56	Venezuela	10%	20%	15%	10%	10%
57	Vietnam	15%	15%	15%	15%	10%

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2 Comments for this entry

eni
June 30th, 2009 on 12:04 pm
Selamat siang P’ dudi, saya mau menanyakan pajak – pajak untuk negara lain, contoh kasus : saya melakukan penjualan dan pengiriman barang dari singapura dikirim ke Brunei darusalam, pajak – pajak apa saja yang harus dipenuhi dan saya dapat memperoleh informasi perpajakan negara lain di mana ya pa’??, sebelumnya saya ucapkan trimakasih

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Fay
December 22nd, 2008 on 10:41 am
mau sedikit tanya nih pak…
nama saya Ferry Eko Novianto. saya bekerja di panasonic indonesia tapi ditempatkan di singapura. saya belum ber NPWP. saya akan mendaftar NPWP pada saat pulang ke indonesia akhir tahun ini. yang saya tanyakan :
1. pada saat saya disingapura saya sudah dipotong pajak oleh perusaan saya bekerja. apakah nantinya pajak saya yang sudah diperhitungkan itu bisa diperhitungkan di indonesia?
2. bagaimana cara perhitungan pajak saya tersebut dengan penghasilan saya dalam 1 tahun +/- 400.000.000,- dengan status kawin beranak 2. pajak yang dipotong disingapura +/- Rp. 38.000.000,-

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