Tariff Reduction of ITA 25 is Effective As of April 2020 Tax Period
Monday, 27 April 2020
The Government issued a technical rule to calculate Corporate Income Tax (PPh Badan) using the lower new tariff, which is 22% for regular corporate taxpayers and 19% for corporate taxpayers listed on the Indonesia Stock Exchange (IDX). The new tarrif provision can already be used as a basis for calculating corporate income tax starting the April 2020 tax period, with a deposit limit no later than 15 May, 2020.
This determination is contained in the Regulation of the Director General of Taxes (Perdirjen) Number PER-08 / PJ / 2020 concerning Calculation of Income Tax Installments for the Current Tax Year in connection with the Adjustment of Income Tax Rate of Corporate Taxpayer. This regulation is a technical regulation from Government Regulation in Lieu of Law (Perppu) No. 1 of 2020, which is issued and valid as of 31 March 2020.
Income tax tariff reduction of corporate taxpayer is conducted through two steps. The first step, the previous rate of Income Tax Article (ITA) 25 is lowered to 22% for the fiscal years of 2020 and 2021. While starting from 2022 onward, the prevailing tariff is even lower, which is 20%.
As for companies that have traded at least 40% of their shares on the Indonesia Stock Exchange, the income tax rate is 3%, lower than the general applicable rate. Thus, the income tax rate for companies listed on the stock market will be 19% in 2020 and 2021, and will drop to 17% from 2022 onward.
Although it is effective from 2020, the new tariff provisions can only be used to calculate ITA 25 starting the April 2020 tax period, or after the 2019 Annual Income Tax Return. While for the January, February and March 2020 tax periods still continue to use the applicable rates as in the Income Tax Law (UU PPh), which is 25%. With this provision, taxpayers who entering the stock exchange in 2019 get a 5% reduction in income tax facility, the calculation of ITA 25 installment of 2020 uses the new rate. The following is an example of calculating ITA 25 installment based on Perppu Number 1 of 2020 and the Regulation of the Director General of Taxes (Perdirjen) number PER-08 / PJ / 2020.
Company A whose bookkeeping use a calendar year, has calculated the installments of ITA 25 are as follows:
| Description | 2019 Tax Year (IDR) |
| Gross Income | 52.000.000.000 |
| Nett Income | 6.600.000.000 |
| Loss Compensation | 1.500.000.000 |
| Taxable Income (PKP) | 5.100.000.000 |
| Income Tax Payable (PPh Terutang):(25%XPKP) | 1.275.000.000 |
| Tax Credit | 75.000.000 |
| ITA 25 Installment (December 2019) | 80.000.000 |
Thus, the installments of January and February tax periods are equal to IDR 80.000.000. As for the March 2020 tax period, which uses a rate of 25%, the calculation is as follows:
| Description | Amount (IDR) |
| Nett Income | 6.600.000.000 |
| Loss Compensation | 1.500.000.000 |
| Taxable Income (PKP) | 5.100.000.000 |
| Income Tax Payable:(25%XPKP) | 1.275.000.000 |
| Tax Credit | 75.000.000 |
| Basic Installment of ITA 25 | 1.200.000.000 |
| Installment of ITA 25 (March 2020) | 100.000.000 |
Meanwhile, for the April tax period following the tariff adjustment to 22%, the calculation will be as follows:
| Description | Amount (IDR) |
| Nett Income | 6.600.000.000 |
| Loss Compensation | 1.500.000.000 |
| Taxable Income (PKP) | 5.100.000.000 |
| Income Tax Payable:(22%XPKP) | 1.122.000.000 |
| Deducted :Tax Credit | 75.000.000 |
| Basic Installment of ITA 25 | 1.047.000.000 |
| ITA 25 Installment (March 2020) | 87.250.000 |
