Friend KH is a business person who conducts export-import activities? If yes, then you are required to understand the income tax provisions contained in PPh 22. PPh 22 is an income tax imposed on certain business entities, such as government-owned and private enterprises that carry out trading activities, especially export-import, and re-import. So, how much is the PPh 22 rate charged for these export-import activities? How to calculate it? Check out the full review in the following article!
What is Income Tax Article (ITA) 22?
Income Tax Article or later abbreviated with the term PPh is a tax charged on an income. In relation to Income Tax 22, according to Income Tax Law No. 36 of 2008, Income Tax 22 is a form of tax withholding or collection carried out by one party against the taxpayer and related to an export-import and re-import activity.
Object of Income Tax 22
Law No. 36 of 2008 states that the tax object of ITA 22 is goods that are considered to benefit both parties, both buyers and sellers of these goods. Based on the Minister of Finance Regulation (PMK) regarding the collection of Income Tax 22, the tax object is divided into:
Export-Import of Goods
As already mentioned, export-import activities carried out by an exporter that can be subject to Income Tax 22 are in the form of commodity goods. Where these commodity goods can be in the form of coal mines, metal minerals, and non-metal minerals.
Payment for Purchase of Goods (Object of PPh 22 Treasurer)
Payment for the purchase of goods made by the government treasurer and the Budget User Authorization (KPA) as the tax collector:
- Central Government
- Local Government
- Government agencies or institutions
- Other state institutions
Payment for Purchase of Goods for SOEs
ITA 22 is also imposed on payments for the purchase of goods and materials for State-Owned Enterprises (SOEs) for their business activities.
Sales of Produce to Distributors
Income tax 22 is charged on the sale of production to distributors engaged in business:
- Cement industry
- Paper industry
- Steel industry
- Is an upstream industry
- Automotive industry
- Pharmaceutical industry
Motor Vehicle Sales
Income tax 22 can also be imposed on domestic motorized sales. Where the sale is made by:
- Sole Agent of Brand Holder (ATPM)
- Brand Holder Agent (APM)
- General importer of motor vehicles
Oil and Gas Sales
Income tax 22 is imposed on the sale of oil and gas by producers or importers. The sales of oil and gas include fuel oil, fuel gas, and lubricants.
Purchase of Materials from Wholesalers
Income Tax 22 is imposed on the purchase of materials from a wholesaler for industrial or export purposes. Where the purchase of these materials is carried out by industries and exporters engaged in the sector:
- Forestry
- Plantation
- Agriculture
- Livestock
- Fisheries
Sales of Highly Luxurious Goods
Income Tax 22 can also be imposed on the sale of goods classified as very luxurious and carried out by corporate taxpayers. Goods classified as very luxurious that are the object of Income Tax 22 include:
- Private airplanes and private helicopters
- Cruise ships, yachts, and the like
- House and its land, with a selling price or transfer price of more than IDR 30 billion or a building area of more than 400 square meters
- Apartments, condominiums and the like, with a selling or transfer price of more than IDR 30 billion or a building area of more than 150 square meters
- Four-wheeled motorized vehicles for the transportation of less than 10 people in the form of sedans, jeeps, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), minibuses and the like, with a selling price of more than IDR 2 billion or with a cylinder capacity of more than 3,000cc.
- Two- and three-wheeled motorized vehicles, with a selling price of more than IDR 300 million or with a cylinder capacity of more than 250cc
What is the rate of Income Tax 22?
Talking about the imposition rate of PPh 22, it is divided into two criteria, namely the general rate and the special rate. For the general rate, the calculation is 1.5 percent of the purchase price of goods excluding Value Added Tax (VAT) and is not final. Furthermore, for special rates, it consists of the following types:
Income tax rates of 2.5 percent and 7.5 percent on imports
This PPh 22 rate is for income tax on imported goods with the following details:
- Importers using an Importer Identification Number (API) = 2.5 percent x import value;
- Non-API importers = 7.5 percent x import value;
- Non-controlled importers = 7.5 percent x auction selling price
Income Tax 22 rate of 1.5 percent on purchases
This rate is based on the purchase price of goods excluding VAT and is not final for purchases of goods made by DJPB, Government Treasurer, BUMN/BUMD.
Income tax rate 22 on sales of certain products
The rate of PPh 22 on the sale of this production is determined based on the decision of the Directorate General of Taxes which is calculated from the Tax Imposition Base (DPP) and is not final, including:
- Cement = 0.25% x DPP VAT
- Paper = 0.1% x DPP VAT
- Automotive = 0.45% x DPP VAT
- Steel = 0.3% x DPP VAT
- All types of drugs: 0.3% x DPP VAT
Income Tax Article 22 on oil and gas production
The imposition of Income Tax 22 from the production or delivery of goods by producers/importers of fuel oil, gas, and lubricants is:
- 0.25 percent of sales excluding VAT for sales to public filling stations that sell fuel purchased from Pertamina or Pertamina’s subsidiaries;
- 0.3% of sales excluding VAT for sales to public refueling stations that sell fuel oil purchased other than from Pertamina or a subsidiary of Pertamina;
- 0.3% of sales excluding VAT for sales to parties purchased from Pertamina or other than Pertamina or Pertamina’s subsidiaries;
- 0.3% of sales excluding VAT for fuel gas; and
- 0.3% of sales excluding VAT for lubricants
Article 22 Income Tax rate of 0.25 percent on the purchase of materials for industry
This rate is on the purchase price excluding VAT on the purchase of materials for industrial or export purposes from intermediary traders, including:
- Purchase of forestry, plantation, agriculture, livestock, and fishery products that have not gone through the manufacturing industry process.
Income Tax 22 rate of 0.5 percent on commodity imports
This tariff on import value applies to imports of several commodities such as wheat, soybeans, and wheat flour, by importers using APIs.
Income Tax 22 rate of 1.5 percent on mining commodity exports
This tariff of export value applies to the export of coal mining commodities, metal minerals, and non-metal minerals, according to the description of goods and tariff posts (HS/HarmonizedSystem) by exporters who are bound by mining entrepreneur cooperation agreements and Contracts of Work (KK).
Income Tax 22 rate of 0.45 percent on motor vehicle sales
This tariff applies to the sale of motor vehicles in the country by ATPM, APM, and general importers of motor vehicles, excluding heavy equipment.
Income tax rate 22 on luxury goods
In accordance with PMK 29/2019, the amount of Income Tax 22 levied when selling goods classified as very luxurious is:
- 1 percent for houses, apartments, condominiums and the like
- 5 percent for private aircraft and helicopters, yachts, 4-wheeled motor vehicles carrying less than 10 people and motor vehicles over 250 cc.
Example of Income Tax Calculation for Export-Import Activities
To better understand the provisions of Income Tax 22 according to the subject and object of tax, see the following calculation example:
- PT Abdi Jaya imported goods from Canada with an invoice price of US$500 thousand. Insurance costs paid abroad amounted to 3 percent of the invoice price and freight costs amounted to 5 percent of the invoice price.
Import duty (BM) of 10 percent and additional import duty of 6 percent. The tax rate at the time was IDR14,550 per US dollar.
> Invoice price = US$500 thousand
> Insurance Cost = 3 percent x US$500K = US$15K
> Freight Cost = 5 percent x US$500K = US$25K
> Total = US$540 thousand, in rupiah = IDR 7,857,000,000
> Import duty = 10 percent x Rp7,857,000,000 = Rp785,700,000
> Additional Import Duty = 6 percent x Rp7,857,000,000 = Rp471,420,000
> Total Import Value = IDR 9,114,120,000 Then, the calculation of Income Tax 22 if you have an API: Income Tax 22 = 2.5 percent x import value Income Tax 22 = 2.5 percent x Rp9,114,120,000 = Rp227,853,000 Calculation of Income Tax 22 if you do not have an API: Income tax 22 = 7.5 percent x import value Income tax 22 = 7.5 percent x Rp9,114,120,000 = Rp683,559,000
- PT Boga Raya imported wheat from Australia at an invoice price of US$250 thousand. Insurance costs are 2 percent of the invoice value and freight costs are 8 percent of the invoice value.
The import duty charged on these wheat imports was 7.5 percent and the additional import duty was 2.5 percent. The tax rate at the time was IDR14,220 per US dollar.
> Invoice Price = US$250K
> Insurance Cost = 2 percent x US$250K = US$5K
> Freight Cost = 8 percent x US$250K = US$20K
> Total = US$275 thousand, in rupiah = Rp3,910,000,000
> Import duty = 7.5 percent x Rp3,910,000,000 = Rp293,250,000
> Additional Import Duty = 2.5 percent x Rp3,910,000,000 = Rp97,750,000
> Import Value = IDR4,037,075,000 Thus, the amount of Income Tax 22 on wheat imports of PT Boga Raya, which also has an API, is: Income Tax 22 = 0.5 percent x IDR4,037,075,000 = IDR20,185,375
Contribution of Income Tax 22 as an Export-Import Tax
As is known, export-import is an activity that is very beneficial to the international trade sector, especially in meeting the needs of the country as well as obtaining profits to increase state treasury revenues. This export-import activity involves many parties, starting from exporters and importers, then banks and transportation and/or expedition companies, to those who have authority over the flow, namely the Directorate General of Customs and Excise and the Directorate of Foreign Trade. In this situation, taxation is one aspect that participates in contributing to the ongoing export-import activities. This can be seen from the benefits of taxation, ranging from income, value added, to the purchase of luxury goods. The existence of taxation aspects in export-import can certainly make these activities more organized. In addition, we can also see from the development of export-import in Indonesia today, which shows a very good side.
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Not only that, the taxation aspect will also help productive activities in every international trade transaction, such as raw/auxiliary materials that continue to encourage and/or assist business expansion.
KH Contact
Well, to facilitate tax management in international trade or export-import transactions, KH pals can contact Kontrak Hukum. We provide the most complete, easy, and affordable financial and tax services, making it easier for KH Pals to avoid the hassle of managing taxation, as well as avoiding errors in calculations. For more information, please visit KH services – finance & tax page. If you have further questions regarding taxation or other business needs, please do not hesitate to consult with us at Ask KH and via Direct Message (DM) to Instagram @kontrakhukum.
