Loan Services (Online Loans), also known as Fintech Peer to Peer (P2P) Lending or Fintech Lending, is an online borrowing facility or method.

Borrowing is said to be easier and faster than applying for loans offline through official or conventional institutions such as banks, cooperatives, and other credit services because borrowers do not need to use collateral, there is no survey process by the lender, and only uses internet access. There is even a process in place that allows funds to be disbursed to the borrower in less than 24 hours. This can assist small entrepreneurs or MSMEs in need of capital to grow their businesses. Furthermore, P2P Fintech can provide education and health loan funds based on the standards of their respective needs.

Peer-to-peer lending Fintech companies in Indonesia are rapidly expanding. The applications available are also quite diverse, including KoinWorks, Modalku, Akseleran, and others. However, if the general public wishes to use P2P Lending services, ensure that the fintech company is registered/licensed with the Financial Services Authority (OJK), as this ensures that the business and credit processes have been verified and are under direct supervision of the OJK. As a result, the public does not need to be concerned about the legality and security of P2P lending, as it will not be abused by irresponsible parties.

Peer-to-peer lending is also available in traditional and Islamic forms. The sharia difference is the use of the contract that was mutually agreed upon at the start of the transaction. Furthermore, there is no burdensome interest, which is replaced by profit sharing, and the risk is shared by all parties.

Then, what tax treatment can be obtained from the fintech platform itself? Starting on May 1, 2022, the government will officially collect taxes under Minister of Finance Regulation (PMK) Number 69/PMK.03/2022 concerning Income Tax and Value Added Tax on Financial Technology Implementation, which was issued and stipulated on March 30, 2022.

One of the key provisions in the PMK is that interest income received or obtained by lenders through lending and borrowing service providers may be subject to income tax deductions under Article 23 or Article 26. If the taxpayer is a Foreign Tax Subject other than a permanent establishment, the withholding rate is subject to Article 23 Income Tax, which is 15% of the gross amount on interest, or PPh Article 26 of 20% of the gross amount on interest, or in accordance with the provisions in the agreement to avoid double taxation.

Furthermore, lending and borrowing services may be subject to Value Added Tax (VAT) if Taxable Services, namely services for placing funds, providing loans, or financing to loan recipients, are provided by fintech companies with a Tax Imposition Basis in the form of compensation, namely a fee, commissions, or other rewards in the name and in any form received by the Borrowing Service User.

The examples below show how to calculate PPh Articles 23 and 26.

PT Q applied for a Rp. 100 million loan through PT R, a fintech company that already has an OJK permit.

PT Q's loan was financed by PT S for Rp. 30 million and A Inc. (an American corporation) for Rp. 70 million. In the meantime, the loan must be paid back within 36 months. The monthly interest that PT Q must pay is IDR 2 million, or 2% of the total loan submitted.

PT R charges the borrower (PT Q) an administration fee of IDR 2 million and 0.1 percent of the total loan interest paid to the lender (PT S and A Inc.)

  1. PT Q does not deduct income taxes on interest payments made to PT S and A Inc. via PT R.
  2. The total amount of interest paid to PT S and A Inc. via PT R:
  1. 30,000,000/100,000,000 x Rp2,000,000 = Rp600,0000.00 PT S
  2. (70.000.000/100.000.000) x Rp2,000,000 = Rp1,400,0000.00 A Inc.
  1. PT R is required to deduct the following amounts from loan interest payments:
  1. Income Tax Article 23 of the PT S: 15% x 600,000 = IDR 90.000,00
  2. Article 26 Income Tax to A Inc.: 20% x 1,400,000 = IDR 280,000.00
  1. If PT S makes a loan to a borrower other than PT Q through PT R, PT R can make one proof of deduction on PT S's behalf for all interest income received by PT S in the same tax period. The same is true for A Inc.
  2. The administration fee income received by PT R from PT Q, PT S, and A Inc. is not subject to Income Tax withholding but must still be reported in PT R's Annual SPT.

This is an example of calculating the withholding of Article 23 Income Tax or Article 26 Income Tax for income recipients or creditors who provide loans via Fintech P2P Lending companies. With the passage of PMK 69/PMK.03/2022, it is hoped that borrowers, lenders, and fintech companies will be able to carry out their tax rights and obligations correctly.



*) This article is the author's personal opinion and does not reflect the author's agency's position.