Mar

23

New Rules for Final Income Tax for Construction Services in Indonesia

The Indonesian Government has issued a new rule for Income Tax or Pajak Penghasilan (“PPh”) for construction services, namely Government Regulation No. 9 of 2022 concerning the Second Amendment to Government Regulation No. 51 of 2008 concerning Income Tax on Income from Construction Services Business (“GR 9/2022”).

The classification and scope of construction services have changed, as have the final PPh rates imposed. The imposition of final PPh on construction services is limited to only three years. Promulgated on February 21, 2022, GR 9/2022 amends the provisions of Government Regulation No. 51 of 2008, and its first amendment is in Government Regulation No. 40 of 2009.

The following are several provisions that have changed with the issuance of GR 9/2022:

Final PPh only three years

Article 10D of GR 9/2022 limits the imposition of final income tax for construction service businesses to only three years, which applies from the promulgation of GR 9/2022 and only for contracts made after the date of the enactment. In the previous government regulation, there was no time limit for the imposition of this final PPh.

In the third year of implementation of GR 9/2022, an evaluation will be carried out to consider the principles of justice and equality. From the evaluation results of these considerations, PPh for construction services may be subject to general provisions as stipulated in Article 17 of the Income Tax Law.

Classification of construction services
GR 9/2022 changes and clarifies the classification of construction services into:
  1. Construction consulting service classification for general nature;
  2. Construction consulting service classification for specialist nature;
  3. Construction work classification for general nature;
  4. Construction work classification for specialist nature; and
  5. Integrated construction work classification.

Of the five classifications, construction service business activities are categorized into three scopes:

  1. Construction consultancy includes services in whole or in part activities that include assessment, planning, design, supervision, and management of the implementation of the construction of a building.
  2. Construction work, including the construction, operation, maintenance, demolition, and rebuilding of a building.
  3. Integrated construction work includes a combination of construction work and construction consulting services, including the integration of service functions in the planning, procurement and development integration model, as well as the planning and development integration model.

In GR 9/2022, construction supervision services are included in construction consulting service business activities.

Schinder Law Firm has had years of experience in construction activities. Should you wish to carry out these matters, please drop us an email at info@schinderlawfirm.com.

Author: Dewi Susanti

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  • Developing policies, best practices, and procedures
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  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
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Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.