Income tax on dividends is only collected at the corporate level, see the explanation from the Directorate General of Taxes

Reporter: Yusuf Imam Santoso | Editor: I knew Laoli

KONTAN.CO.ID – JAKARTA. The government has given relaxation on the exemption of income tax (PPh) on dividends. The provisions as in the Omnibus Law Cipta Kerja Law Plan (RUU) which was enacted on Monday (5/10).

In the seventh part of the draft Omnibus Law Job Creation, Article 111 states that the income tax exemption on dividends applies to individual taxpayers (WP OP) and domestic corporate taxpayers as long as the dividends are invested in the territory of the Republic of Indonesia (NKRI) within a certain period of time.

Director of Tax Regulations II of the Directorate General (Ditjen) of Taxes of the Ministry of Finance (Kemenkeu) Yunirwansyah conveyed that through the law’s sweeping law, the direction of the tax authorities on the new provisions for income tax exemptions on dividends received by domestic taxpayers, namely changing the system classical Becomes one-tier system.

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This means that the clause changes the previous income tax rules on dividends which stipulate that the same income will be taxed twice at the company and shareholder levels. Then it becomes only taxed at the corporate level as corporate taxpayers.

“Those who charge income tax on dividends are only at the corporate level, previously it was also imposed at the individual level. This will also reduce the effective tax rate for domestic investors, ”Yunirwansyah told Kontan.co.id, Tuesday (6/10).

Yunirwansyah added that the policy was also intended to increase domestic investment funding and ensure that domestic investment returns in the form of dividends were not reinvested abroad.

“In the medium and long term, it will improve the business climate. Apart from the incentives that have been issued previously, “he said.

On the other hand, the Job Creation Omnibus Law Bill also regulates income tax on dividends from abroad. Yunirwansyah said this was intended so that the need for funds for investment could be obtained, one of which was from funds that had been abroad.

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“Maybe all this time income in the form of dividends has not been reported to Indonesia, because of our world wide income system, with this exception, namely the requirement to be invested in the country, WP will report by self-assessment,” said Wawan.