TAX UPDATE
No.2 2022

TaxLaw

Regulation

Harmonization(Income Tax Law)
Law No. 7 year 2021 (“7/2021”)

On 29 October 2021, the Indonesia Government has issued the Law No 7 year 2021 regarding
the Tax Regulation Harmonization. This new tax law consist of 6 clusters as follows:
1)
2)
3)
4)
5)
6)

General Tax Provision (Ketentuan Umum dan Tata Cara Perpajakan)
Income Tax (Pajak Penghasilan)
VAT (Pajak Pertambahan Nilai)
Taxpayer Voluntary Discloure Program (Program Pengungkapan Sukarela Wajib Pajak)
Carbon Tax (Pajak Karbon)
Excise (Cukai)

The Income Tax Law has the key features as follows:
NoKey Features

Description
The BIK is generally taxable as the employees’ income, however, the BIK
can be deductible on the employer’s Corporate Income Tax calculation.

1

The Benefit in Kind(BIK) is taxable as
the employees’
income2

Non-Taxable
Income for
Individual withcertain gross income

The individual with certain gross income will not be taxed for the grossincome up to IDR 500 million.

3

Useful life ofpermanent building

The permanent building can be depreciated for 20 years OR based onthe actual useful life based on the taxpayer’s bookkeeping (if more than20 years).

There are some limited exception for BIK as non-taxable income:a) Food and beverages provided for all employeesb) BIK in certain areac) BIK provided by employer to carry out the workd) BIK financed by the State and/or Regional Budgete) Certain types of BIKs with certain threshold

The applicable tax rate for individual taxpayer’s taxable income is:4

Changes on
Individual Income
Tax rate

5Corporate Income
Tax rate•••••

5% : ≤ IDR 60 million15% : > IDR 60 million - ≤ IDR 250 million
25% : > IDR 250 million - ≤ IDR 500 million
30% : > IDR 500 million - ≤ IDR 5 billion
35% : ≥ IDR 5 billion

The Corporate Income Tax rate for 2022 onwards will remain 22%
instead of reduced to 20%.

TAX UPDATE
No.2 2022

No6

Key Features

Description•

There are several transfer pricing methods can be used to redetermine the income and/or expense to calculate the taxable
income:a) Comparable uncontrolled price methodb) Resale price methodc) Cost-plus methodd) Other method, e.g.
1) Profit split method
2) Transactional net margin method
3) Comparable uncontrolled transaction method
4) Tangible asset and intangible asset valuation
5) Business valuation•If the taxpayer reports the profit too low compared to the othertaxpayers in the similar industries or reporting unreasonable losses
although the taxpayer has been in the commercial operation for 5years, the DGT can benchmark the financial performance with thesimilar comparable companies.

•The difference between related party transaction value and the arm’s
length value will deemed as dividend which subject to tax.

Transfer Pricing on
related party
transactions

For additional information, please contact us:

PT Sakura Mitra Perdana
Nishihara Kenta Director nishihara@sakura-id.com
Mihara Azusa Director mihara@sakura-id.com
Menara Rajawali Lt. 8,Jl. Dr. Ide Anak Agung Gde Agung,Kuningan Timur, Jakarta Selatan 12950
Phone: +62 21 2902 3417 / 18 / 19
Fax : +62 21 2902 3410
https://sakura-id.com/
This Tax Update was created by our partner SSJK.

SSJK Consulting
The Boulevard Office, UG D-2
Jl. Fachrudin Raya No. 5
Jakarta Pusat 10250
www.ssjkconsulting.com

The information in this document is intended for general information only based on our understanding of theinterpretation of those provisions. There is no guarantee the Tax Office will have the same view from thoseexpressed in this document. When specific problems occur in practice, it is suggested to obtain appropriate advice
from the tax advisor.
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