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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
                                  (logo)

                               PRESIDENT OF

                        THE REPUBLIC OF INDONESIA


      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        REGULATION    CONCERNING

                           INCOME      TAX     ON     INCOME       FROM

                           CONSTRUCTION SERVICES BUSINESS



                                 Article 1

In this Government Regulation:
                                    (logo)

                              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

                      THE REPUBLIC OF INDONESIA


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

                       THE REPUBLIC OF INDONESIA


       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

                       THE REPUBLIC OF INDONESIA


(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

                     THE REPUBLIC OF INDONESIA


(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

                            THE REPUBLIC OF INDONESIA


                                        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

                      THE REPUBLIC OF INDONESIA




                                   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
                                  (logo)

                               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
                                     (logo)

                                 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
                                  (logo)

                              PRESIDENT OF

                        THE REPUBLIC OF INDONESIA


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

                        THE REPUBLIC OF INDONESIA


                    “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

                       THE REPUBLIC OF INDONESIA


       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

				
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