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Dividend Income Tax Will Be Waived, These Are the Conditions

Jakarta, 09/09/2019 MoF - The government will relax some taxation regulations to strengthen the Indonesian economy. Therefore, the government is working on a Draft Law (RUU) on Tax Provisions and Facilities.
There are two big things the government will do, namely making a separate set of laws (Omnibus Law) and in parallel revising the Law on General Provisions and Tax Procedures (UU KUP), the Income Tax Law (UU PPh), and the Value Added Tax Law (VAT Law). This was conveyed by Director General of Taxes (Director General of Taxes) Robert Pakpahan at the Casual Chat (Ngobras) event at the Directorate General (DGT) on Thursday (05/09).
One form of tax incentives provided by the government is related to the elimination of Income Tax (PPh) on Dividends from Domestic and Overseas.
Based on the tax object, namely dividends from within the country, the government will provide a Domestic Corporate Taxpayer (WP Badan DN) with ownership equal to or more than 25% (≥ 25%), not subject to income tax. WP DN entities with ownership of less than 25% (<25%) are subject to normal income tax, unless they invest back in Indonesia within a certain time.
"At present, most of the dividends are subject to income tax, except for intercorporate dividends. Intercorporate dividends are dividends paid by one corporation to other corporations but those who receive dividends have a share of more than 25%. Now, if PT A has a 25% stake in PT B, when A gets dividends, that is not subject to income tax. The background law for intercorporate dividends was in order to strengthen the economy, it encouraged incentives for conglomerates, to merge so that the subsidiary is encouraged. Now, it is not subject to income tax. However, it is also to encourage those who invest back. Thus, every dividend which is directly invested, in this Draft Law is exempt from income tax," explained the Director General of Taxes.
For dividends from abroad, the Corporate Taxpayer and Domestic Personal Taxpayer (WP Orang Pribadi Dalam Negeri) will be charged the normal rate, except if reinvested in Indonesia within a certain time. (nr/ds)