TODAY, the investment and savings instruments offered to the public are increasingly diverse. The public can find instruments in the form of savings, time deposits, bonds, discounted Bank Indonesia Certificates (SBI), and cooperative deposits with attractive yields or interest.
From the taxation aspect, income in the form of interest or yields from savings deposit instruments, bonds, discount SBIs, and cooperative deposits is the object of final income tax (PPh). As is known, the imposition of final income tax for each type of income is different.
Although the type of income has been regulated in the Income Tax Law, the imposition mechanism is regulated separately in the implementing regulations, ranging from tariffs, tax bases (DPP), and others. So what about the final PPh aspect on interest instruments, deposits, bonds, SBI discounts, and cooperative deposits? Here’s the review.
BEFORE discussing further, it is necessary to understand in advance the definitions of deposits, savings, and SBI discounts as stated in PP 123/2015.
Time deposits can be understood as deposits with any name and in any form, including time deposits, certificates of deposit, and deposits on call, both in rupiah and in foreign currencies placed at or issued by banks.
Meanwhile, savings are defined as deposits in banks of any name, including demand deposits, which are withdrawn according to certain conditions imposed by each bank.
In general, deposit interest rates are charged according to point number 3 in the table above. However, there are different provisions for DHE deposits in rupiah or United States (US) dollars which are placed domestically at banks established or domiciled in Indonesia or overseas bank branches in Indonesia. The DHE deposits are subject to the tariff provisions in numbers 1 and 2.
However, if the DHE deposit is disbursed before the maturity date and/or the source of the deposit funds is partially or wholly not from the DHE fund, the provisions according to the table in number 3. About the withholding of final income tax, income in the form of savings interest and/or discount is deducted by the bank. The final income tax withholding on the SBI discount is carried out by Bank Indonesia.
Then, pension funds whose establishment has been approved by the minister of finance or obtained permission from the Financial Services Authority (OJK) also must withhold final income tax. The withholding obligation arises when pension funds resell SBIs to non-bank institutions or pension funds whose establishment has not been approved by the minister of finance or OJK.
It should be noted, that 5 groups are not subject to this income tax deduction. First, an individual subject to domestic tax whose entire income including interest and discount does not exceed non-taxable income (PTKP) in 1 tax year. Second, income from deposit interest, savings interest, and SBI discount do not exceed Rp. 7.5 million.
Third, SBI interest and discounts come from banks established in Indonesia or overseas bank branches in Indonesia. Fourth, deposit interest, savings interest, and SBI discounts come from pension funds whose establishment has been approved by the minister of finance or has obtained permission from the OJK.
Fifth, interest on savings comes from banks appointed by the government for ownership of simple houses and very simple houses (RSS), ready-to-build plots for simple houses and RSS, or simple flats.
Final PPh on Bond Interest
INCOME in the form of bond interest is also subject to final PPh Article 4 paragraph (2). Based on PP 91/2021 jo. PP 9/2021, income in the form of bond interest is defined as compensation received or obtained by bondholders in the form of interest, umrah/fee, profit sharing, margin, other similar income, and/or discount.
The scope of bonds that are subject to final income tax includes bonds, government bonds, and regional bonds with a maturity of more than 12 months issued by the government and non-government, including debt securities issued based on sharia principles (Sukuk).
In addition to the applicable tariffs in the table above, WPLNs can also take advantage of the applicable tariffs based on the P3B. In the withholding aspect, the final income tax is deducted by bond issuers, custodians, securities companies, dealers, banks, pension funds, mutual funds, or sub-registries. In the case of interest on bonds issued by the government which is administered through the Bank Indonesia Scriptless Securities Settlement System, the final income tax is paid by the income recipient himself.
It should be understood that not all recipients of bond interest can be subject to final income tax. 2 groups of recipients of bond interest are not subject to final income tax as stipulated in Article 3 of PP 91/2021.
First, pension fund taxpayers whose establishment or formation has been approved by the Minister of Finance or has obtained permission from the OJK and fulfills the specified requirements. Second, taxpayers of banks established in Indonesia or foreign bank branches in Indonesia.
Final PPh on Cooperative Savings Interest
BASED ON PP 15/2009, final income tax is imposed on interest on deposits which is a reward in the form of deposits received by individual cooperative members from funds deposited by individual cooperative members in the cooperative where the individual is a member.