Summary Answer

Domestic Corporate Taxpayers can still apply other facilities to calculate their Corporate Income Tax as long as the gross income does not exceed a certain amount. For taxpayers who have a gross turnover of less than IDR50M in one fiscal year, they get a facility in the form of a reduction in the corporate income tax rate in accordance with Article 31E, namely a 50% reduction in the rate for taxable income from the gross turnover up to IDR4.8M. This facility is not an option so that taxpayers who have a gross turnover of up to IDR50M, the Corporate Income Tax rate can follow the provisions of Article 31E of the Income Tax Law. However, this facility cannot be utilized simultaneously (in the same tax year) with the final Income Tax facility in Government Regulation No. 55 Year 2022.

Full Review

Thank you Mrs. Aisyah for your inquiry. As stipulated in Government Regulation No. 55 Year 2022 (“PP-55/2022“), income from business received or obtained by domestic taxpayers with gross turnover not exceeding IDR4.8M in one fiscal year can use the 0.5% final income tax facility. However, the use of this facility has a time limit. For individual taxpayers, the maximum time limit for facility utilization is 7 years. For corporate taxpayers in the form of cooperatives, CVs or firms, the maximum is 4 years. Meanwhile, for corporate taxpayers in the form of PT, the maximum period is 3 years. After the deadline, taxpayers can no longer utilize the PP-55/2022 final income tax facility.

Domestic Corporate Taxpayers can still apply other facilities to calculate their Corporate Income Tax as long as the gross income does not exceed a certain amount. Article 31E of Law No. 7 Year 1983 on Income Tax until Law No. 7 Year 2021 on Harmonization of Tax Regulations (“Income Tax Law”) provides relief for taxpayers to calculate Corporate Income Tax, namely by providing a 50% rate reduction facility for Corporate Taxpayers who have a turnover of not more than IDR50M in one tax year.

“Article 31E

(1) Domestic corporate taxpayers with gross turnover of up to Rp.50,000,000,000.00 (fifty billion rupiah) shall receive facilities in the form of a rate reduction of 50% (fifty percent) of the rates as referred to in Article 17 paragraph (1) letter b and paragraph (2a) imposed on the Taxable Income of the portion of gross turnover up to Rp.4,800,000,000.00 (four billion eight hundred million rupiah).”

– Article 31E of Income Tax Law

For taxpayers who have a gross turnover of less than IDR50M in one fiscal year, get a rate reduction facility of 50% for taxable income from the gross turnover up to IDR4.8M. The definition of gross turnover referred to in Article 31E is emphasized by Director General of Taxes Circular Letter No. SE-02/PJ/2015 as follows..:

“Gross turnover as referred to in Article 31E paragraph (1) of the Income Tax Law is all income received and/or obtained from business activities and from outside business activities, after deducting returns and sales deductions and cash deductions in the relevant Tax Year, before deducting costs to obtain, collect and maintain income, both originating from Indonesia and from outside Indonesia, including:

1) income subject to final Income Tax;

2) income subject to non-final Income Tax; and

3) income that is exempted from tax object.”

– Letter F number 1 point d of Circular Letter of Director General of Taxes No. SE-02/PJ/2015

Based on Article 17 paragraph (1) letter b of the Income Tax Law, the Corporate Income Tax rate applicable starting in 2022 is 22%.

“(1) The tax rate applied to Taxable Income for:

Domestic corporate taxpayers and permanent establishment shall be 22% (twenty-two percent) which shall come into effect in fiscal year 2022.”

– Article 17 paragraph (1) letter b of Income Tax Law

Referring to Ms. Aisyah’s case study, PT ABC’s gross turnover is still below IDR 4.8M, so all taxable income obtained from the gross turnover gets a rate reduction facility of 50% of the Corporate Income Tax rate.

In accordance with the provisions, the gross turnover that obtains a reduction facility is only up to Rp 4.8 M. So in this case, it is necessary to calculate the value of the gross circulation ratio that gets the facility then multiplied by the taxable income. Through this calculation, a value of Rp480,000,000 is obtained as the amount of taxable income that obtains the facility.

Furthermore, taxpayers calculate the amount of taxable income from the part of gross circulation that does not obtain facilities by reducing the total gross circulation and the amount of taxable income that obtains facilities.

Finally, taxpayers calculate the corporate income tax payable through 2 methods, namely taxable income that obtains a rate reduction facility in accordance with Article 31E of the Income Tax Law and taxable income at a normal rate in accordance with Article 17.

Taxpayers who wish to use the rate reduction facility in accordance with Article 31E of the Income Tax Law do not need to submit an application in advance to the DGT. This rate reduction facility is carried out on a self-assessment basis by attaching the Calculation Sheet for the Income Tax Rate Reduction Facility for Corporate Taxpayers when submitting the Corporate Income Tax Return. This facility is not an option so that taxpayers who have gross revenue up to IDR50M, their Corporate Income Tax rate can follow the provisions of Article 31E of the Income Tax Law.

Another case is if the corporate taxpayer has been approved to use the final income tax facility in PP-55/2022, then it cannot simultaneously use the Article 31E Income Tax Law facility. Thus, corporate taxpayers who have a gross turnover of not more than IDR 4.8M can choose to use the PP-55/2022 final income tax facility or the Article 31E Income Tax Law tariff reduction facility. For corporate taxpayers who have passed the deadline for using the PP-55/2022 final income tax facility, for the 4th year onwards, taxpayers can use the Article 31E Income Tax Law tariff as long as their gross turnover does not exceed IDR 50M.