Most Indonesians know that taxes are mandatory contributions paid to the government annually through the Directorate General of Taxes (DJP). However, there are basically two different types of legal levies, namely central taxes and local taxes, each with its own basic rules. Central taxes are taxes levied, managed, and determined by the central government in accordance with tax laws. DJP, under the leadership of the Minister of Finance, is the agency responsible for collecting these central taxes. The following are the types of taxes included in central taxes: Income Tax (PPh) is a tax imposed on income received or earned by individual or corporate taxpayers during a fiscal year, which can be obtained from domestic and foreign sources. The taxable scope for individual taxpayers' income tax generally includes wages, remuneration, honoraria, and sales profits. Meanwhile, for corporate taxpayers, the scope of income tax includes profits, business profits, dividends, withholding tax, etc. Law No. 36 of 2008 on Income Tax clearly stipulates PPh, some of which have been amended by Law No. 36 of 2008 on Income Tax. Value Added Tax (VAT) and Luxury Goods Sales Tax (PPnBM) are governed by Law No. 42 of 2009 on Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM). VAT is a tax imposed on the sale and purchase transactions of taxable goods and/or taxable services carried out by taxable entrepreneurs inside and outside the customs area, while PPnBM is a tax imposed on the delivery of taxable goods classified as luxury goods. Stamp duty is a tax imposed on documents, regulated by Law No. 10 of 2020 on Stamp Duty. Documents subject to stamp duty include agreements, notarial deeds, land deeds, securities, securities transaction documents, auction documents, documents with a face value exceeding IDR 5,000,000.00, and other documents stipulated by government regulations. Land and Building Tax (PBB) is a tax imposed on the use or ownership of land and/or buildings, regulated by Law No. 12 of 1994 on Land and Building Tax. PBB is essentially the authority of the central government, but in its realization, PBB revenue is transferred to local governments. PBB is a central government tax, including plantations, forestry, and mining.
Local taxes are mandatory contributions imposed by law on individuals or entities to the region, without direct compensation, to meet the needs of the region. Regional taxes are directly governed by Law No. 1 of 2022 on Financial Relations between the Central Government and Local Governments. Regional taxes include several types, namely provincial taxes and district/city taxes, where provincial taxes include Motor Vehicle Tax, Motor Vehicle Transfer Fee, Motor Vehicle Fuel Tax, Surface Water Tax, Tobacco Tax, Heavy Equipment Tax, Non-Metal and Rock Mineral Tax. District/city taxes include Urban and Rural Land and Building Tax, Land and Building Acquisition Fee, Certain Goods and Services Tax (Hotel Tax, Entertainment Tax, Parking Tax, Restaurant Tax, and Street Lighting Tax), Advertisement Tax, Groundwater Tax, Non-Metal Mineral and Rock Tax, Swiftlet Nest Tax, Motor Vehicle Tax, Motor Vehicle Transfer Fee, etc.
Most Indonesians know that taxes are mandatory contributions paid to the government annually through the Directorate General of Taxes (DJP). However, there are basically two different types of legal levies, namely central taxes and local taxes, each with its own basic rules. Central taxes are taxes levied, managed, and determined by the central government in accordance with tax laws. DJP, under the leadership of the Minister of Finance, is the agency responsible for collecting these central taxes. The following are the types of taxes included in central taxes: Income Tax (PPh) is a tax imposed on income received or earned by individual or corporate taxpayers during a fiscal year, which can be obtained from domestic and foreign sources. The taxable scope for individual taxpayers' income tax generally includes wages, remuneration, honoraria, and sales profits. Meanwhile, for corporate taxpayers, the scope of income tax includes profits, business profits, dividends, withholding tax, etc. Law No. 36 of 2008 on Income Tax clearly stipulates PPh, some of which have been amended by Law No. 36 of 2008 on Income Tax. Value Added Tax (VAT) and Luxury Goods Sales Tax (PPnBM) are governed by Law No. 42 of 2009 on Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM). VAT is a tax imposed on the sale and purchase transactions of taxable goods and/or taxable services carried out by taxable entrepreneurs inside and outside the customs area, while PPnBM is a tax imposed on the delivery of taxable goods classified as luxury goods. Stamp duty is a tax imposed on documents, regulated by Law No. 10 of 2020 on Stamp Duty. Documents subject to stamp duty include agreements, notarial deeds, land deeds, securities, securities transaction documents, auction documents, documents with a face value exceeding IDR 5,000,000.00, and other documents stipulated by government regulations. Land and Building Tax (PBB) is a tax imposed on the use or ownership of land and/or buildings, regulated by Law No. 12 of 1994 on Land and Building Tax. PBB is essentially the authority of the central government, but in its realization, PBB revenue is transferred to local governments. PBB is a central government tax, including plantations, forestry, and mining.
Local taxes are mandatory contributions imposed by law on individuals or entities to the region, without direct compensation, to meet the needs of the region. Regional taxes are directly governed by Law No. 1 of 2022 on Financial Relations between the Central Government and Local Governments. Regional taxes include several types, namely provincial taxes and district/city taxes, where provincial taxes include Motor Vehicle Tax, Motor Vehicle Transfer Fee, Motor Vehicle Fuel Tax, Surface Water Tax, Tobacco Tax, Heavy Equipment Tax, Non-Metal and Rock Mineral Tax. District/city taxes include Urban and Rural Land and Building Tax, Land and Building Acquisition Fee, Certain Goods and Services Tax (Hotel Tax, Entertainment Tax, Parking Tax, Restaurant Tax, and Street Lighting Tax), Advertisement Tax, Groundwater Tax, Non-Metal Mineral and Rock Tax, Swiftlet Nest Tax, Motor Vehicle Tax, Motor Vehicle Transfer Fee, etc.