Types of Taxes in Indonesia Complete from Center to Region

Kapanlagi.com - To be a good Indonesian citizen, you also need to know the types of taxes that are one of the obligations that must be fulfilled. Taxes themselves are mandatory levies based on the Law that must be paid by the Taxpayer to the state. Its use is to finance the central and regional government spending for the welfare of the people. In other words, tax money is used for public interest and not for personal interest.

You should also know that in general, taxes in Indonesia are divided into central taxes and regional taxes. Central taxes are taxes managed by the central government and partly managed by the Directorate General of Taxes - Ministry of Finance. Meanwhile, regional taxes are managed by the Regional Government at the provincial and district/city levels. Now, as taxpayers, you may still be confused and unaware of the tax system in Indonesia. To enhance your knowledge about taxes, here are the types of taxes in Indonesia along with a complete explanation.

1. Income Tax (PPh)

(credit: freepik)

The first type of tax is income tax, which is a type of central tax. This tax is imposed on individuals or entities on income received or obtained in a tax year. Income refers to any additional economic ability received or obtained by the taxpayer, whether from Indonesia or from outside Indonesia, which can be used for consumption or to increase the wealth of the taxpayer in any form. Income tax itself can be in the form of business, salary, honorarium, gifts, and so on.

2. Value Added Tax (PPN)

Furthermore, value-added tax is also a type of central tax. PPN is a tax imposed on the consumption of Taxable Goods or Taxable Services within the Customs Area (within the territory of Indonesia). Individuals, companies, and governments that consume Taxable Goods or Taxable Services are subject to PPN. Basically, every goods and services are Taxable Goods or Taxable Services, unless otherwise specified by the PPN Law. In Indonesia, the rate of PPN is 10% for goods traded domestically, and 0% for exports.

3. Sales Tax on Luxury Goods (PPnBM)

(credit: freepik)

In addition to VAT, the consumption of certain taxable goods classified as luxury goods is also subject to PPnBM. The term luxury taxable goods refers to:

- Goods that are not basic necessities; or

- Goods consumed by certain communities; or

- Generally, goods consumed by high-income communities; or

- Goods consumed to show status; or

- If consumed, it can damage the health and morals of society, as well as disrupt public order.

4. Stamp Duty

Furthermore, another type of tax that you need to know is stamp duty. Stamp duty is a type of tax imposed on the utilization of documents, such as agreements, notarial deeds, payment receipts, securities, and securities, which contain a certain amount of money or a specific nominal amount according to the provisions.

For letters and notarial deeds and Land Deed Makers, the stamp duty is generally Rp6,000. Letters containing money, if the value is less than Rp250,000, there is no stamp duty, between Rp250,000 - Rp1,000,000, a stamp duty of Rp3,000 is imposed, and above Rp1,000,000, there is a stamp duty of Rp6,000.

5. Land and Building Tax

(credit: freepik)

Land and building tax is a tax managed by the central Directorate General of Taxes for plantations, forestry, and mining. As for buildings in rural and urban areas, they are managed by the local government, thus falling under local taxes.

Starting from January 1, 2014, rural and urban land and building tax became a local tax. Plantation, forestry, and mining land and building tax still remain under the central tax.

6. Local Taxes

As explained earlier, besides central taxes, there are also local taxes. Provincial tax is a type of tax managed by the provincial government, including Vehicle Tax which includes annual motor vehicle tax, 5-year motor vehicle tax, ownership transfer fees, and so on, Surface Water Tax, and Cigarette Tax.

Then there is also District/City Tax, which is a type of tax managed by the second-level local government, namely districts or cities. It includes hotel tax, entertainment tax, restaurant tax, advertisement tax, parking tax, groundwater tax, and so on.

Those are the various types of taxes, from central taxes to local taxes. Hopefully, this can increase your knowledge. Hopefully, it is beneficial.

(kpl/dtm)