WITHHOLDING TAX

Withholding is an alternative method to pay tax beside self-assessment. Under the provision of income tax law, certain types of income are subject to withholding tax by withholding agent.

The income, which is subject to withholding tax is categorized as follows:

	Object	Withholding agent
Article 4 paragraph (2) (final tax)	Interest income on deposits and other savings, income from transaction of shares and other securities at the stock exchange, and income from the alienation of property in the form of land and or building and other specific income stipulated by government regulation	Bank, stock Exchange institution, others
Article 15 (final tax)	Income derived by an airline company, and shipping company	Airline and shipping company
Article 21	Remuneration in whatever from derived by individual resident taxpayers in respect of employment, services rendered, or any other similar activities:	Payer of such remuneration
Article 22	Payment for supply of goods paid by government treasurer	Government treasurer
Article 23	Dividends, interest, royalties, rent, compensation for services, paid to resident taxpayer	Payer of such income
Article 26	Dividends, interest, royalties, rent, compensation for services, object	Withholding agent
	Pensions, paid to non resident taxpayer

When do I have to file Article 21 (remuneration to individuals) withholding tax return?

Similar to VAT return, Article 21 return should be filed by 20th day after the Taxable Period (i.e. month) ended.

When do I have to pay Article 21 withholding tax?

The payment of Article 21 tax should be settled not later than 10 (ten) days from the due date of a tax or the end of a Taxable Period (i.e. month).

Do I have to tax returns for Article 23 and 26 withholding taxes as well?

Yes. If you incur payments, which are subject to Article 23 and/or Article 26 withholding tax, a tax return should be filed not later than 20 (twenty) days from the due date of a tax or the of a Taxable Period (i.e. month).

When is the due date for payment of Article 22, 23, 26, and final tax?

In general, the due date of payment is the 10th day after the due date of or the end of a Taxable Period (i.e. month).

Article 22 withholding tax for importation goods should be paid at the same time with the payment of import duty. If the import duty is deferred or exempted, the payment for Article 22 tax should be made at end of the import documentation’s process.

Is there any tax obligation if I transfer the right of land and or building?

The transferor of land and/or building has an obligation to deposit income tax amounting 5% of the gross sales/transfer value.

This 5% tax is treated as a final tax if the seller is an individual.

If the transferor is a corporation, the 5% tax paid can be used as a tax credit in its annual corporate tax return.