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PRESIDENT OF
THE REPUBLIC OF INDONESIA
GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA
NUMBER 51 OF 2008
CONCERNING
INCOME TAX ON INCOME FROM CONTRUCTION SERVICES BUSINESS
WITH THE BLESSINGS OF THE ONE AND ONLY GOD
THE PRESIDENT OF THE REPUBLIC OF INDONESIA,
Considering
a.
:
Whereas in the event of simplifying the application of Income Tax on
income from construction services business and facilitating as well as
decreasing administration work for Taxpayer, Income Tax on income
from construction services business needs to be rearranged;
b.
Whereas based on the consideration as stated in letter a and in the
event of implementing the stipulations in Article 4 paragraph (2) Law
No. 7 of 1983 concerning Income Tax as has been amended several
times, lastly with Law No.17 of 2000 concerning Third Amendment on
Law No.7 of 1983 concerning Income Tax, a Government Regulation
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PRESIDENT OF
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concerning Income Tax on Income from Construction Services
business is necessary;
With reference to
1.
:
Article 5 paragraph (2) of the 1945 Constitution of the Republic of
Indonesia;
2.
Law No.7 of 1983 concerning Income Tax (State Gazette of the
Republic of Indonesia of 1983 No.50, Supplement to State Gazette of
Republic of Indonesia No. 3263) as several times amended, lastly by
Law No. 7 of 2000 concerning Third Amendment on Law No.7 of 1983
concerning Income Tax (State Gazette of the Republic of Indonesia of
2000 No.127, Supplement to State Gazette of the Republic of
Indonesia No. 3985)
DECIDES,
To determine
:
GOVERNMENT
INCOME
TAX
REGULATION
ON
CONCERNING
INCOME
CONSTRUCTION SERVICES BUSINESS
Article 1
In this Government Regulation:
FROM
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PRESIDENT OF
THE REPUBLIC OF INDONESIA
1.
Income Tax, hereinafter to be referred to as PPh Law is Law No.7 of
1983 concerning Income Tax as several times amended, lastly by Law
No. 7 of 2000 concerning Third Amendment on Law No.7 of 1983
concerning Income Tax.
2.
Construction services are construction works engineering services,
construction works implementation services, and construction works
monitoring consultation services.
3.
Construction works constitute a total of or a part of planning and/or
implementation,
as
well
as
monitoring
activities
that
include
respectively architectural, civil, mechanical, electrical, and environment
layout activities and their equipment/accoutrements to realize a
building or other physical form.
4.
Construction engineering constitutes services rendered by a person or
an institution considered as a professional expert in the construction
engineering services sector, who is able to realize work in the form of
planning documents of other physical constructions.
5.
Construction implementation constitues services rendered by a person
or an institution considered as a professional expert in the construction
implementation sector, who is able to conduct activities to realize a
plan to establish a building or other physical form, including integrated
construction works, which is a combination of service functions in the
merged model of engineering, procurement, and construction, and also
the combined model of designing and constructing.
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PRESIDENT OF
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6.
Construction monitoring constitutes services rendered by a person or
an institution considered as a professional expert in construction
monitoring work, who is able to implement monitoring work since the
beginning of implementation of construction work until it is completed
and handed over.
7.
Service users are persons or institutions, including permanent business
entities that require construction services.
8.
Service providers are persons or institutions, including permanent
business entities, business activities of which provide construction
services, whether as construction engineers, construction conductors,
and construction supervisors, or any of their subs.
9.
Value of construction services contract constitutes value stated within a
construction services contract as a whole.
Article 2
Income Tax, nature of which is absolute, is imposed on income from
construction services business.
Article 3
(1)
Income Tax tariff for construction service business shall be as follows:
a.
2% (two percent) for construction implementation carried out by
Service Providers qualified as Small Enterprises;
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PRESIDENT OF
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b.
4% (four percent) for construction implementation carried out by
Service Providers with no business qualifications;
c.
3% (three percent) for construction implementation carried out
by Service Providers, other than Service Providers stated in
letters a & b;
d.
4% (four percent) for construction engineering or construction
monitoring carried out by service providers with business
qualifications; and
e.
6% (Six percent) for construction engineering or construction
monitoring carried out by Service Providers with no business
qualifications.
(2)
In the event that Service Providers are Permanent business entities,
the income tax tariff, as stated in paragraph (1) does not include
Income Tax on the remaining profit of Permanent business entities
after final Income Tax.
Article 4
Tax, in accordance with the stipulation as stated in Article 26 paragraph (4) of
PPh Law or in accordance with the stipulations within the Agreement to Avoid
Double Taxing, is applicable on the remaining profit of Permanent business
entities after final Income Tax as stated in Article 3 paragraph (2).
Article 5
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PRESIDENT OF
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(1)
Final income tax, as stated in Article 2:
a.
is deducted by Service Users at the time of payment, in the
event that the Service Users are tax deductors; or
b.
is paid by the Services Providers themselves, in the event that
service users are not tax deductors.
(2)
The amount of Income Tax deducted or paid as stated in paragraph (1)
is:
a.
Total payments, excluding Value Added Tax, multiplied by the
Income Tax tariff as stated in Article 3 paragraph (1); or
b.
Total receipt of payments, excluding Value Added Tax,
multiplied by the Income Tax tariff as stated in Article 3
paragraph (1) in the event such Income Tax is paid by the
Service Providers themselves.
(3)
The total payments or the total receipt of payments as stated in
paragraph (2) constitute parts of the Contract Value of Construction
Services.
Article 6
(1)
In the event that there is a difference between the owed Income Tax
based on the Contract Value of Construction Services and Income Tax
based on payments that have been deducted or paid as stated in
Article 5 paragraph (1), such difference shall be paid by the Service
Providers.
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PRESIDENT OF
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(2)
In the event that the Contract Value of Construction Services is not fully
paid by Service Providers, no final Income Tax shall be owed on the
unpaid amount of Contract Value of Construction Services, provided
that the unpaid Contract Value of Construction Services is recorded as
Uncollectibles / Non Performing Receivables.
(3)
Uncollectibles / Non Performing Receivables as stated in paragraph (2)
constitute accounts receivable that obviously cannot be collected as
stated in Article 6 paragraph (1) letter h of PPh Laws.
(4)
In the event the Accounts Receivable that obviously cannot be
collected as stated in paragraph (3) can be collected, final Income Tax
shall remain applicable.
Article 7
(1)
Tax paid or owed offshore on income from offshore received or
acquired by Service Providers can be credited against owed tax based
on the stipulations in the PPh Law.
(2)
Tariff based on the general stipulations of PPh Law is applicable on
other income received or acquired by Service Providers from other
than Construction Service business.
(3)
Profit or loss from difference in foreign exchange from Construction
Service business activities is included in the calculation of Contract
Value of Construction Service, on which final Income Tax is applicable.
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PRESIDENT OF
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Article 8
Service Providers are obligated to conduct a separate record on expenses
incurred from the income received or acquired from business activities other
than Construction Service business.
Article 9
Further stipulations concerning procedures of collection, deduction, payment,
report, and administration of Income Tax on income from Construction
Service business is regulated by or based on the Regulations of Minister of
Finance.
Article 10
(1)
The following is arranged for contracts signed before 1 January 2008:
a.
For payment of contract or part of contract until 31 December
2008, application of Income Tax is based on Government
Regulation No.140 of 2000 concerning Income Tax on Income
from Construction Service Business.
b.
For payment of contract or part of contract after 31 December
2008, application of Income Tax is based on this Government
Regulation.
(2)
The remaining losses from Construction Service business until
Fiscal Year of 2008 can only be compensated until Fiscal Year of
2008.
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PRESIDENT OF
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Article 11
By the time this Government Regulations is effective, Government Regulation
No.140 of 2000 concerning Tax Income on Income from Construction Service
Business is revoked and stated as null and void.
Article 12
This Government Regulation is effective since 1 January 2008.
For the information of all concerned, it is ordered that the promulgation of this
government regulation be placed in the State Gazette of the Republic of
Indonesia
Stipulated in Jakarta
On 20 July 2008
PRESIDENT OF REPUBLIC OF INDONESIA
(signature)
DR. H. SUSILO BAMBANG YUDHOYONO
Promulgated in Jakarta
On 23 July 2008
MINISTER OF LAW AND HUMAN RIGHTS
OF THE REPUBLIC OF INDONESIA
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PRESIDENT OF
THE REPUBLIC OF INDONESIA
(signature)
ANDI MATTALATTA
STATE GAZETTE OF REPUBLIC OF INDONESIA OF 2008 NUMBER 109
Copy issued as original
STATE SECRETARY OF THE REPUBLIC OF INDONESIA
Head of Laws and Regulations
Economy and Industry Sector
(stamped and signed)
SETIO SAPTO NUGROHO
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PRESIDENT OF
THE REPUBLIC OF INDONESIA
EXPLANATION OF
GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA
NUMBER 51 OF 2008
CONCERNING
INCOME TAX ON INCOME FROM CONTRUCTION SERVICES BUSINESS
I.
GENERAL
For the condition of Construction Service business to develop in accordance
with economic development, it needs its own regulations concerning
application of taxes on income from Construction Service business, which is
by applying final tax. Such regulation is intended to provide facilitation and
simplicity in calculating the application of Income Tax, thus not adding to the
administrative burden of taxpayers or the Directorate General of Taxes, and
also to provide Taxpayers, who are active in Construction Service business
sector, with legal certainty in meeting their tax obligations.
In the event of providing such regulations, and based on the stipulation in
Article 4 paragraph (2) of Law No.7 of 1983 concerning Income Tax as
several times amended, lastly by Law No. 7 of 2000 concerning Third
Amendment on Law No.7 of 1983 concerning Income Tax, which regulates
that stipulations concerning application of taxes on certain income are
regulated by Government Regulations, therefore it is necessary to rearrange
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PRESIDENT OF
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application of Income Tax on income from Construction Service business with
Government Regulation as the replacement of Government Regulation
No.140 of 2000 concerning Tax Income on Income from Construction Service
Business.
This Government Regulation regulates the tariff of Income Tax, nature of
which is absolute, on Construction Service business and the obligations of tax
deductors to deduct Income Tax on income from Construction Service
business received by Service Providers.
II.
ARTICLE BY ARTICLE
Article 1
Self-explanatory
Article 2
Self-explanatory
Article 3
Paragraph (1)
Letter a
“Business qualification” is stratification stipulated based
on certification issued by the Construction Service
Development Institution.
Letter b
Self-explanatory
Letter c
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PRESIDENT OF
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“Service Providers other than Service Providers as stated
in letters a and b” are, among others, Service Providers
with medium business qualifications or large business
qualifications.
Letter d
Self-explanatory
Paragraph (2)
Self-explanatory
Article 4
Self-explanatory
Article 5
Paragraph (1)
Letter a
Tax deductors are Government institutions, domestic
institution Tax Subjects, Permanent business entities, or
private persons appointed by the Director General of
Taxes as Income Tax Deductors
Letter b
“Non tax deductors” are international institutions that are
neither Tax Subjects nor representatives of foreign
countries
Paragraph (2)
Self-explanatory
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PRESIDENT OF
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Paragraph (3)
Self-explanatory
Article 6
Self-explanatory
Article 7
Self-explanatory
Article 8
Self-explanatory
Article 9
Self-explanatory
Article 10
Self-explanatory
Article 11
Self-explanatory
Article 12
Self-explanatory
SUPPLEMENT TO STATE GAZETTE OF REPUBLIC OF INDONESIA
NUMBER 4881