Referring to the Finance Minister Regulation No. 136/PMK.03/2011 dated August 19 2011, the Income Tax Law (Law No. 7 Year 1983 as lastly amended with Law No. 36 Year 2008) is also prevailed on Shariah Banking. In other words, any income in whatever name and form received or obtained by Shariah Banking is also subject to Income Tax.
Income Tax treatments on bonus, profit sharing, and profit margin received or obtained by Shariah Banking is similar to those upon interest. On the other hand, other income received or obtained by Shariah Banking except those derived from Shariah Banking Facility User Customers are subject to Income Tax in accordance with the provisions regulating transactions between Shariah Banking and the Customer.
The Finance Minister Regulation No.136/PMK.03/2011 also regulates the Income Tax aspect on income received or obtained by Saving Customers and Investor Customers. Similar to bonus, profit sharing and profit margin received or obtained by Shariah Banking, Income Tax treatment on income received or obtained by Saving or Investor Customers from Shariah Banking shall also comply with Income Tax provisions upon interest. Other income received or obtained by Investor Customers other than from investment is subject to Income Tax referring to the Income Tax Law provisions. Deductible expenses of Shariah Banking are similar to those of other businesses, which shall comply with Article 6 and 9 of the Income Tax Law. The amount expensed shall be agreed upon according to Shariah Principle. In case of financing with contract of Ijarah Muntahiyah Bittamlik, it is only the depreciation expense which is not deductible. In case there is asset transfer or lease to comply with Shariah Principle conducted by Shariah Banking, the following provisions are prevailed: a. Asset transfer transaction from a third party is not included in the definition of asset transfer as stated in Income Tax Law; b. The asset transfer is considered as direct asset transfer from a third party to a banking facility user customer, which is subject to Income Tax referring to the prevailing tax regulations.
