START NOW – It is very important for every entrepreneur and organization manager to understand about tax regulations for PT, CV, and foundations. 

By understanding about tax regulations for PT, CV, and foundations, you can apply it correctly and avoid tax violation penalties. 

Legal Basis for Tax Regulations for PT, CV, and Foundations

The establishment of tax regulations for PT, CV, and foundations in Indonesia is certainly based on some definite legal bases.

The legal basis regarding tax regulations for PT, CV, and foundations includes several relevant laws and regulations, namely: 

Income Tax Law 

Law No. 36 Year 2008 regarding Income Tax is a law that regulates general provisions regarding income tax.

This law also specifically discusses tax rates for business entities such as PT and CV.

Value Added Tax (PPN) Law

Law No. 42 of 2009 specifically regulates the collection, reporting, and payment of PPN for all types of business entities.

It is known as the Law on Value Added Tax on Goods and Services and Sales Tax on Luxury Goods.

Government regulations (PP)

PP No. 46 Year 2013 discusses Income Tax on Income from Business Received or Obtained by Taxpayers with Certain Gross Circulation.

It regulates small business tax rates.

Minister of Finance Regulation

Minister of Finance Regulation No. 197/PMK.03/2013 is concerning about Procedures for Collecting, Depositing and Reporting Income Tax Article 21. 

It regulates the obligation to withhold and deposit PPh 21 for companies.

Foundation Law

Law no. 16 of 2001 is about Foundations. It regulates the establishment and management of foundations as well as tax regulations that apply to foundations.

Special Tax Regulations for Foundations

Some of the foundation’s other tax obligations are explained through specific regulations issued by the Directorate General of Taxes.

KUP Law (General Provisions and Tax Procedures)

Law No. 28 Year 2007 discusses the General Provisions and Procedures of Taxation, including reporting obligations and sanctions.

Despite their different structures and operational purposes, the tax obligations for PT, CV, and foundation have some similarities.

All of them must comply with applicable tax regulations, including:

• Corporate income tax (PPh Final, PPh 21, and PPh23),
• Value Added Tax (PPN)

Tax Regulations for PT, CV, and Foundations

In Indonesia, each type of business entity—whether it is a PT, CV, or Foundation—has different tax obligations.

That’s why it is important for you to understand the specifics of tax regulations for PT, CV, and foundations.

By doing so, you will be able to apply it appropriately, according to the type of business entity you have.

The tax regulations for PT, CV, and foundations are respectively as follows:

Taxes for PT or Limited Liability Company

PT is a form of business entity that has a separation between the owner’s personal assets and company assets. 

Taxes that apply to this Limited Liability Company include:

Corporate Income Tax (PPh)

PT is subject to corporate income tax which is calculated based on the company’s net profit. This tax rate is 22percent of net profit.

However, for the 2024 tax year, this rate may change according to the latest provisions.

Value Added Tax (PPN)

If a PT’s business activities include the sale and purchase of goods or services, it must collect and remit PPN.

The standard of this Value Added Tax rate is 11percent. Next, PT is also required to report and pay this PPN every month.

Income Tax Article 21 (PPh 21)

If the PT has employees, then the company is obliged to deduct and pay PPh 21 on the employee’s income.

The amount of this tax depends on the amount of income and the employee’s tax status.

Income Tax Article 23 (PPh 23)

PTs also need to pay PPh 23 for several types of income received by other companies or individuals. 

The types of income that are subject to Income Tax Article 23 include rent, interest and royalties.

Taxes for CV or Commanditaire Vennootschap 

CV is a form of business that consists of two types of partners, namely active partners and passive partners.

Active partners are those who are fully responsible for managing and running all of the company’s operational activities.

Meanwhile, the passive partner or commoditer is only responsible for providing capital for the various needs of the company.

Taxes imposed on a Commanditaire Vennootschap include:

Corporate Income Tax (PPh)

Just like PT, CV is also subject to corporate income tax. The tax rate is also usually the same, at 22 percent of net profit.

However, the tax structure of a CV is relatively somewhat more complex as it involves both active and passive partners.

Value Added Tax (PPN)

CVs that sell taxable goods or services are also required to collect and remit PPN at a rate of 11percent.

The PPN reporting procedure is the same for both PT and CV.

Income Tax Article 21 (PPh 21)

Just like PT, CV must deduct and deposit PPh 21 if it has employees.

Income Tax Article 23 (PPh 23)

CVs are also subject to PPh 23 on certain income received.

Taxes for Foundations

Unlike PT and CV which are commercial companies, foundations are non-profit organizations. They are usually established for social, educational, or humanitarian purposes.

Taxes imposed on foundations include:

Corporate Income Tax (PPh)

Foundation funds generally come from the receipt of donations so they will not be subject to income tax.

This applies as long as the funds are used for social activities that are in line with the foundation’s objectives.

Value Added Tax (PPN)

Although not subject to income tax, foundations may still have to collect and remit PPN according to the applicable rates.

This applies to foundations whose business activities are related to the sale of various goods or services.

Foundations must ensure that they comply with the same VAT provisions as other business entities.

Income Tax Article 21 (PPh 21)

Foundations are required to withhold and pay PPh 21 for their employees’ income.

Income Tax Article 23 (PPh 23)

If a foundation receives income that is subject to PPh 23, then they must remit this tax.

So, what do you think? These tax regulations for PT, CV, and foundation are pretty easy to understand, right?

However, Start Now is ready to help if you need assistance meeting these tax regulations for PT, CV, and foundations.