• Tax
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• November 23, 2023

What is PPH Article 23?
Income Tax Article 23 or PPh 23 is one type of income tax (PPH) in Indonesia. In short, ITA 23 is a tax imposed on income from capital, service participation, gifts, interest, dividends, royalties, or prizes and awards, other than those withheld under ITA 21. ITA 23 deductions are made by the income provider in connection with payments in the form of dividends, interest, royalties, rent, and services to taxpayers, and Permanent Establishments (BUT).

What are the benefits?
Income Tax Article 23 is a tax imposed on the acquisition of capital, delivery of services, or gifts and awards, in addition to those that have been deducted by Income Tax Article 21. The income provider (buyer or recipient of services) will deduct and report the Income Tax Article 23 to the tax office. This aims to record in order to avoid calculation errors at the time of reporting the Corporate Income Tax Return.

Is PPH Article 23 important?
Yes, PPH Article 23 aims to determine the company’s overall tax calculation so that it can carry out tax payments correctly. Tax obligations that must be paid by companies tend to be more difficult and complicated than individuals.

What are the main provisions of Income Tax Article 23?
ITA 23 is one type of tax that is generally imposed on income in the form of capital, delivery of services, or gifts. In general, the income in question only occurs when there is a transaction between two parties. Where the party receiving income or the seller or service provider will be subject to PPh 23 tax burden. As for the income tax subjects that need to be known are as follows:

1. Individuals or individuals, and undivided inheritance as a unit to replace the party who has the right
2. Entity consisting of a group of people and capital which is a unit. Where what is meant is an entity that does business or does not do business. These entities include limited liability companies, limited liability companies, state-owned enterprises or regionally-owned enterprises, institutions and other forms of entities.
3. Permanent establishment which is a form of business conducted by a private person. Where the person concerned does not reside in Indonesia, or who is in Indonesia within a period of 12 months. Then a body that is not established and does not reside in Indonesia in order to conduct business or carry out activities in Indonesia.

What does PPH Article 23 mean to me?
PPh Article 23 is an income tax in connection with dividends, interest, royalties, gifts, awards, bonuses, rent (except land and buildings), engineering services, construction, consultants etc.

How does ITA 23 help?
Income Tax Article 23 has the purpose of recording transaction activities and taxation in order to avoid calculation errors at the time of reporting the Corporate Income Tax Return.

Here are some examples of the application of PPH Article 23 for you:
On May 5, 2020, KAP Johan Malonda Mustika & Rekan announced that it would distribute dividends through the General Meeting of Shareholders (GMS), and made a cash dividend payment to PT X of Rp50,000,000 which made a 15% equity investment. Therefore;
Income Tax Article 23 = 15% x Rp50,000,000 = Rp4,500,000
When payable: the end of the month the payment is made, namely on May 31, 2020
Time of deposit: no later than June 5, 2020
When to report: no later than June 15, 2015

Details can be accessed at the following link:

https://drive.google.com/file/d/1QWVCmTCC-nhEB1CT_S2XIJfPutZ1Bc5L/view?usp=sharing