Article 23 Income Tax

The objects of Article 23 Income Tax consist of:

  1. Dividends;
  2. Interest;
  3. Royalties;
  4. Prizes, awards, bonuses, and the like other than those given to Individuals;
  5. Rents and other incomes from the utilization of properties, except for the lease of lands and/or buildings;
  6. Compensations in connection with engineering services, management services, construction services, consulting services, and services other than those from which Article 21 Income Tax has been withheld.

 

If you pay a dividend to a Limited Liability Company as a Domestic Taxpayer, cooperative, State-Owned Enterprise, or Regional-Owned Enterprise with less than 25% shareholding, what you have to do is:

 

  1. Withhold Article 23 Income Tax at a rate of 15% when dividend is made available for payment and issue a withholding Article 23 Income Tax receipt using Article 23 Income Tax e-bupot application;
  2. Pay Income Tax by first creating a billing code with MAP Code 411124 and Payment Type Code 101. The payment must be made no later than the 10th day of the following month;
  3. File Article 23 Income Tax using Article 23 Income Tax e-bupot application by logging into pajak.go.id webpage or to an Application Service Provider no later than the 20th day of the following month.

 

If you borrow funds and pay interest to the fund owner, what you have to do is:

  1. Withhold Article 23 Income Tax at 15% of the gross interest amount and issue a withholding Article 23 Income Tax receipt using Article 23 Income Tax e-bupot application;
  2. Pay Income Tax by first creating a billing code with MAP Code 411124 and Payment Type Code 102. The payment must be made no later than the 10th day of the following month;
  3. File Article 23 Income Tax using Article 23 Income Tax e-bupot application by logging into pajak.go.id webpage or to an Application Service Provider no later than the 20th day of the following month.

 

If you pay a royalty to a royalty recipient, what you have to do is:

  1. Withhold Article 23 Income Tax at 15% of the gross royalty amount and issue a withholding Article 23 Income Tax receipt using Article 23 Income Tax e-bupot application;
  2. Pay Income Tax by first creating a billing code with MAP Code 411124 and Payment Type Code 103. The payment must be made no later than the 10th day of the following month;
  3. File Article 23 Income Tax using Article 23 Income Tax e-bupot application by logging into pajak.go.id webpage or to an Application Service Provider no later than the 20th day of the following month.

 

If you use services of a Corporate Taxpayer, what you have to do is:

  1. Check whether the services used are classified as a type of services subject to Article 23 Income Tax under PMK-141/PMK.03/2015;
  2. Withhold Article 23 Income Tax at 2% of the gross service amount and issue a withholding Article 23 Income Tax receipt using Article 23 Income Tax e-bupot application;
  3. Pay Income Tax by first creating a billing code with MAP Code 411124 and Payment Type Code 104. The payment must be made no later than the 10th day of the following month;
  4. File Article 23 Income Tax using Article 23 Income Tax e-bupot application by logging into pajak.go.id webpage or to an Application Service Provider no later than the 20th day of the following month.

 

If you rent a property other than land and/or building, what you have to do is:

  1. Withhold Article 23 Income Tax at 2% of the gross rent amount and issue a withholding Article 23 Income Tax receipt using Article 23 Income Tax e-bupot application;
  2. Pay Income Tax by first creating a billing code with MAP Code 411124 and Payment Type Code 100. The payment must be made no later than the 10th day of the following month;
  3. File Article 23 Income Tax using Article 23 Income Tax e-bupot application by logging into pajak.go.id webpage or to an Application Service Provider no later than the 20th day of the following month.

Table 23 Income Tax Rate

No.

Description

Rate x Tax Basis

1

Dividends

15% x gross amount

 

(Including dividends by any name and in any form, including dividends from insurance companies given to policyholders)

If the income recipient does not have a Taxpayer Identification Number (TIN), the withholding rate will be 100% higher.

 

Excluded from dividends subject to withholding Article 23 Income Tax are:

As of 1 January 2009

 

 

Paid using Tax Payment Slip (SSP) no later than the 10th day of the following month.

 

Profits of cooperatives paid to members (because they are exempt from withholding Article 23 Income Tax under Article 23 paragraph (4) letter f of the Income Tax Law No. 36 of 2008);

Billing Code: 411124

 

Profits received by members of limited partnerships whose capital is not divided into shares, partnerships, associations, firms, and joint ventures, including participation unit holders of collective investment contracts (KIK) (because they are not Taxable Objects under Article 4 paragraph (3) letter i of the Income Tax Law No. 36 of 2008 and they are exempt from withholding Article 23 Income Tax under Article 23 paragraph (4) letter e of the Income Tax Law No. 36 of 2008);

Payment Type Code: 101

 

Dividends distributed to Individual Taxpayers because they are subject to Article 4(2) Income Tax;

Filed by the Withholding Agent using Article 23 Income Tax Return no later than the 20th day of the month immediately following the end of the Tax Period.

 

Dividends received by Domestic Corporate Taxpayers, cooperatives, State-Owned Enterprises, Regional-Owned Enterprises, provided that:

 

 

The dividends come from retained earnings; and

 

 

For dividend recipients, their shareholding in the entities generating dividends is at least 25% of the total paid-up capital;

 

 

(because they are not Taxable Objects under Article 4 paragraph (3) letter f of the Income Tax Law).

 

2

Interest

15% x gross amount

 

Excluded from interest subject to withholding Article 23 Income Tax are:

If the income recipient does not have a TIN, the withholding rate will be 100% higher.

 

 

As of 1 January 2009

 

If the incomes are paid/payable to Banks (because they are exempt from withholding Article 23 Income Tax under Article 23 paragraph (4) letter a of the Income Tax Law No. 36 of 2008);

Paid using Tax Payment Slip no later than the 10th day of the following month.

 

If the incomes are paid/payable to business entities for financial services functioning as loan and/or financing providers under the Regulation of the Minister of Finance (because they are exempt from withholding Article 23 Income Tax under Article 23 paragraph (4) letter h of the Income Tax Law No. 36 of 2008); Further provided in PMK 251/PMK.03/2008;

Billing Code: 411124

 

Interest on Time Deposits, Savings (received from Banks), and Bank Indonesia Certificate (SBI) Discounts because it is subject to withholding Article 4(2) Income Tax;

Payment Type Code: 102

 

Interest on bonds because it is subject to withholding Article 4(2) Income Tax;

Filed by the Withholding Agent using Article 23 Income Tax Return no later than the 20th day of the month immediately following the end of the Tax Period.

 

Interest on deposits paid by cooperatives to Individual members (Individual Taxpayers) because it is subject to withholding Article 4(2) Income Tax.