Did you know, the provisions regarding taxes can cover many things. Not only on a product, rental services are also included in the category of immovable goods subject to tax. In general, transactions carried out by the provider or provider of services with those who buy their services are subject to Income Tax (PPh) Article 23, where the tax contributes to state revenue. Well, in this article we will review the provisions of the imposition and how to easily calculate taxes on rental services in accordance with PPh 23.
Get to know Income Tax 23
Income Tax Article 23 or commonly referred to as PPh 23 is a tax deducted on income derived from capital, delivery of services, as well as gifts and awards, of course, in addition to the amount that has been deducted by Income Tax Article 21. Usually, PPh 23 is imposed when there is a transaction between two parties:
- Parties that act as sellers or service providers or income recipients will be subject to Income Tax 23.
- The party acting as the purchaser or service recipient or income earner will deduct and report it to the tax office.
In this case, not all parties can deduct or be subject to Income Tax 23 when receiving or performing services. Parties that can withhold Income Tax 23 include:
- Government
- Domestic corporate tax subjects
- Service user or activity organizer
- Representatives of overseas companies
- Permanent Establishment (BUT)
- Certain domestic individual taxpayers appointed by the Directorate General of Taxes (DGT) in accordance with KEP-50/PJ/1994, including:
- Accountants, architects, doctors, notaries, Land Deed Officials (PPAT), except for subdistrict heads, lawyers, and consultants doing independent work.
- Individuals who run a business and organize bookkeeping for payments in the form of rent
- Individual taxpayers who withhold Income Tax 23 on rent other than land and building
Meanwhile, the parties that can be subject to Income Tax 23 include:
- Domestic taxpayers
- Permanent Establishment (BUT)
Object of Income Tax 23
From the explanation above, KH Friend already knows who is allowed to make deductions and is subject to PPh 23 withholding. Then, what income will be subject to PPh 23? Reporting from the official website of the Directorate General of Taxes, the objects of PPh 23 are as follows:
- Dividends
- Flowers
- Royalties
- Gifts, awards, bonuses and the like other than to Individuals
- Rent and other income in connection with the use of property, except rent of land / and or buildings
- Fees in connection with engineering services, management services, construction services, consulting services, and other services other than those for which Income Tax 21 has been withheld.
In addition to the three services mentioned in point number 6, the government added 62 other types of services that are subject to Income Tax 23. This is stated in PMK No. 141/PMK.03/2015. Some of the services that are subject to Income Tax 23 include:
- Accounting, bookkeeping, and attestation of financial statements
- Labor and/or expert providers (outsourcing service)
- Creation of promotional films, advertisements, posters, photos, slides, clichés, banners, flyers, billboards, and folders.
- Internet installation including connection
- Cleanliness or cleaning service
- And others as stipulated in the Minister of Finance Regulation
What is the Income Tax Rate on Rental Services?
After knowing what objects and services can be subject to PPH 23, KH Friend must also understand how much the rate charged to taxpayers, especially rental services. Here is the explanation. The PPh 23 rate is imposed on the Tax Imposition Base (DPP) or gross amount of income. In PPh 23, there are two types of rates applied, namely 15 percent and 2 percent depending on the tax object. Well, specifically for rental services, the PPh 23 rate imposed is 2 percent of the gross amount if the recipient of the income has an NPWP. However, if not, it will be subject to 100% higher than the PPh 23 service rate, which is 4 percent. In this case, the gross amount referred to is all income paid, provided for payment, or payment is due. The gross amount imposed is also the transaction amount that has not been subject to Value Added Tax (VAT).
How to Easily Calculate Income Tax 23 on Rental Services
In order to understand more easily about how the calculation of Income Tax 23 on rental services, consider the illustration below.
- PT Dino conducts a family gathering and rents a bus from PT Saurus at a price per day of Rp3,330,000 and includes VAT. So, what is the total price that PT Dino needs to pay?
> Because the price given includes VAT, the first step is to find out the DPP of the price, how: DPP = 100/110 X Rp3,330,000 = Rp3 million VAT on vehicle rental = 11 percent x Rp3 million = Rp330,000
> After knowing the DPP and PPn on the vehicle rental, KH Friend needs to calculate PPh 23, how: PPh 23 = 2 percent x Rp3 million = Rp60 thousand
> After knowing all the taxes, the amount that needs to be paid by PT Dino is: Rental price = Rp3 million VAT = Rp330 thousand Income Tax 23 = Rp60 thousand Then what must be paid = Rp3 million + Rp330 thousand – Rp60 thousand = Rp3,270,000
Payment of Income Tax 23 on Rental Services
In its payment, Income Tax 23 on rental services is paid by the withholder through a Perception Bank that has been approved by the Ministry of Finance. Remember, the deadline for payment of Income Tax 23 on rental services is on the 10th of the following month. For example, if the withholder withholds Income Tax 23 on rental services at a rate of 2 percent on September 25, then the withholder must pay the Income Tax 23 on October 10. As for reporting, it is carried out by the withholder by filling out the Periodic Income Tax Return (SPT Masa PPh 23) with a due date of the 20th of the month following the month PPh 23 is payable.
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As proof that PPh 23 has been withheld, the withholder is also required to provide proof of withholding (first copy) that has been completed by the party subject to the tax. Then, proof of deduction (second copy) when e-Filing PPh 23.
KH Contact
So far, perhaps what is still commonly known is Income Tax 21 as the tax imposed. However, by understanding the provisions of Income Tax 23 above, your understanding of everything related to taxes derived from rental services will be more complete. Therefore, the provisions of Income Tax 23 are important to know. Because, this income tax applies to KH Friend as a provider or buyer of rental services. Well, to manage PPh 23 on rental services more easily, KH Pals can contact Kontrak Hukum. As a trusted digital legal platform in Indonesia, we present various types of services and features to simplify tax affairs, from reporting to payment of Periodic and Annual Tax Returns. For more information, please visit KH’s service page – finance & tax. If you have further questions regarding taxation or other business needs, do not hesitate to consult with us at Ask KH and via Direct Message (DM) to Instagram @kontrakhukum.
