KH friends must be familiar with the words tax and retribution? Although both are paid to the government, taxes and levies turn out to be two different levies. So this time, Kontrak Hukum will discuss the differences between taxes and levies. Let’s see the discussion below!
Tax and Retribution
According to Law No. 28 of 2007, tax is defined as a mandatory contribution to the state owed by individuals or entities that are compelling based on law, with no direct reward and used for state purposes for the greatest prosperity of the people. Meanwhile, retribution is a local levy as payment for services or the granting of certain permits specifically provided and/or granted by the local government for the benefit of individuals or entities. If tax is compulsory and can be imposed, retribution is only required to be paid by certain individuals/bodies. In addition, when paid, the benefit felt by the taxpayer cannot be felt directly because the revenue from the tax is used, for example, to carry out development or public facilities. This is different from retribution where the benefit can be felt directly by the person/body paying. For example, when a trader in a market pays market retribution, he will get direct benefits in the form of provision and maintenance of market facilities, such as stalls and parking lots that can be used. Taxes are divided into two, namely central and local taxes. Central taxes are paid and managed by the central government while local taxes are managed by local governments. Central taxes consist of:
- Income Tax (PPh) : tax imposed on taxpayers with respect to income received or earned both from Indonesia and from abroad during one tax year.
- Value Added Tax (VAT): tax imposed on the sale or consumption of taxable goods and/or taxable services by individuals/bodies.
- Sales Tax on Luxury Goods (PPnBM) : a tax imposed when consuming luxury goods, such as when buying a car.
- Stamp Duty: tax on documents payable from the time the document is signed by the parties concerned, or the document is completed or delivered to another party if the document is only made by one party.
Meanwhile, local taxes are further divided into provincial taxes, such as motor vehicle tax, motor vehicle title transfer fee, and motor vehicle fuel tax and district/city taxes, such as hotel tax, restaurant tax, billboard tax, and entertainment tax. This is certainly different from retribution, which is not divided between central and local governments because retribution can only be collected and managed by local governments. However, retribution is divided into 3 objects, namely:
- General services, such as retribution for health services, waste/cleaning services, reimbursement of printing costs for ID cards and civil registration certificates, parking services, and market services.
- Business services, such as retribution for wholesale markets and/or shops, terminals, lodging places/villas, slaughterhouses, and recreation/sports venues.
- Certain licenses from the local government.
A further difference is that retribution is only payable within a certain period of time/ as long as the retribution payer utilizes certain services and licenses from the local government concerned. After the time period has expired, the retribution no longer needs to be paid, while in taxes, payments are made periodically, such as PBB and PPh which must be paid annually or VAT which is paid every time you buy certain goods.
KH Contact
Well Friend KH, that’s the explanation of the difference between taxes and levies. If you have questions about taxes and levies, business legality or other legal issues, don’t hesitate to contact Kontrak Hukum at the Tanya KH bonded link or through our social media at @kontrakhukum!
