Having an Income Over IDR 5 Billion, Thousands of People are Subject to a 35% Income Tax Rate

JAKARTA. The Directorate General of Taxes (DGT) stated that there were 1,119 people with an income of more than IDR 5 billion or the so-called High Wealth Individual (HWI) group or thr high-income groups. Therefore, they must be included in the group of taxpayers who are subject to a 35% Income Tax rate.

This group of income tax rates for individuals is the highest layer set by the government in Law (UU) Number 7 of 2021 on Harmonization of Tax Regulations (HPP).

Based on this rule, there are five layers of taxable income rates in one year. The lowest layer for income of IDR 60 million and below in one year is subject to a 5% rate.

Read: Layer Added, Income Above IDR 5 Billion is a Subject to 35% Income Tax Rate

Second, for layers above IDR 60 million to IDR 250 million, a 15% tariff is imposed. Third, income above IDR 250 million to IDR 500 million is subject to a 30% income tax rate and finally, for income above IDR 5 billion is subject to a 35% rate.

Quoting Bisnis.com, the imposition of 35% income tax rate for taxpayers earning above IDR 5 billion is carried out to bost income tax revenue, especially from individual taxpayers who are non-employee or entrepreneurs.

Low Contribution

For the record, the realization of provisional tax revenue in 2022 is IDR 1,716.8 trillion or 115.6% of the target set and an increase of 34.3% compared to the realization in 2021.

Of that amount, the realization of personal income tax only contributed 0.7% of total tax revenue. Not only was the contribution low, its performance also decreased compared to individual income tax revenue in 2021 or experienced a growth of minus 6.29%.

This was due to the Voluntary Disclosure Program (VDP) which shifted the payment of Individual Income Tax to Final Income Tax.