Getting to Know the Tax Objects and Various Tax Objects

Getting to Know the Tax Objects and Various Tax Objects

Nikereact.org –¬† Definition of Tax Object¬†The object of tax is income or additional economic capacity received by the taxpayer. In simple terms, the object of tax is income that is subject to tax. The meaning of own income is any additional economic capability received or obtained by the taxpayer, both from Indonesia and from outside Indonesia, which can be used for consumption or to increase the wealth of the taxpayer concerned in any name and in any form. The income comes from Indonesia.

The tax object is used for consumption or to increase the wealth of the taxpayer concerned. In the form of any name or form, income or additional economic capacity received by the taxpayer. The income comes from Indonesia and outside Indonesia. Some of these types of income, if included in the type of class and criteria for tax objects, will be subject to tax objects according to the applicable tax rates and types.

Types of Tax Objects

Getting to Know the Tax Objects and Various Tax Objects

The following include tax objects, namely:

1. Rewards

The meaning of compensation in other forms includes compensation in kind given by non-income tax subjects. Compensation or reimbursement with respect to work or services obtained or received including salaries, wages, allowances, honoraria, commissions, bonuses, gratuities, pensions or other forms of remuneration.

2. Gift

Prizes obtained from sweepstakes or work or activities or awards. What is meant by awards are rewards given in connection with certain activities, for example rewards received in connection with the discovery of archaeological objects.

3. Operating profit

Operating profit is profit from operating results. There is another opinion about operating profit is the company’s income minus explicit costs or company accounting costs. Operating profit differs from economic profit in that the company’s income is reduced by explicit costs and implicit costs.

Profit rates usually differ between firms in the same industry and the differences are even greater in different industries. The following theories attempt to explain these differences, namely:

  • The theory of profit in the face of risk.
  • According to this theory, above-normal economic returns are required by companies to enter and survive in several fields, such as oil exploration, which have above-average risks.
    The theory of profit due to friction.
  • This theory states that some firms due to factors (economies of scale, capital requirements or patent rights) can act as monopolists allowing them to maintain above-normal profits for the long term.
    Innovation profit theory.
  • In this innovation theory, above-normal profits are compensation for successful innovations.
    The theory of managerial efficiency earnings.
  • The theory of managerial efficiency profit is a profit that can achieve a profit above normal if it succeeds in carrying out efficiency in various fields and can fulfill the wishes of its consumers.

4. Advantage

Profits arise from selling or transferring assets, including among others:

  • Gains due to transfer of assets to companies, partnerships and other entities in lieu of shares or equity participation.
  • Gains due to the transfer of assets to shareholders, partners or members obtained by the company, in partnerships and other entities.
  • Gains due to liquidation, merger, consolidation, expansion, split, takeover of business or reorganization under any name.
  • Gains due to the transfer of assets in the form of grants, assistance or donations except those given to blood relatives in a straight line of one degree and religious bodies, educational bodies, social institutions including foundations, cooperatives or private individuals who run micro and small businesses.
  • The provisions will be further regulated by a Regulation of the Minister of Finance, as long as there is no relationship with business, employment, ownership or control between the parties concerned.
  • Profits due to sale or transfer of part or all of mining rights, sign of participating in financing or capitalization in mining companies.

5. Tax payment receipt

Receipt of tax payments that have been charged as fees and additional payment of tax refunds.

6. Flowers

Interest which includes premiums, discounts and rewards for guaranteed debt repayments, namely:

  • Premium occurs when bonds are sold above their par value. While the discount occurs when bonds are purchased below their nominal value.
  • The premium is income for those who issue bonds, while the discount is income for those who buy bonds.

7. Dividend

Dividends in any name and form, including dividends from insurance companies to policyholders and distribution of profits from cooperative operations. Dividends in any name and form, which consist of:

  • Profit sharing either directly or indirectly with any name and form.
  • Repayment due to liquidation exceeds the amount of paid-in capital.
  • The distribution of bonus shares without deposit includes bonus shares from capitalized shares of paid-in capital, except if the total nominal value of the shares owned after the distribution of the bonus shares does not exceed the total paid-in capital.
  • Profit sharing in the form of shares (share dividends).
  • Recording of additional capital without deposit except those originating from the capitalization of the excess revaluation of fixed assets.
  • The amount that exceeds the number of paid-in shares received or obtained by the shareholders due to the repurchase of shares by the company concerned.
  • Repayment of all or part of the paid-up capital, if profits were made in previous years, unless the repayment is the result of a legal (statutory) reduction of capital.
  • Payments in respect of profit tokens include those received as redemption for said profit tokens.
    Share of profits in relation to bond ownership.
  • The share of profits received by the policyholder.
  • Distribution of the remaining operating results to members of the cooperative.
  • Company expenses for the personal use of shareholders which are charged as company expenses.

8. Royalties

Royalty or return for the use of rights. Royalty is an amount paid or payable in any way or calculation whether done periodically or not. Examples include patents, copyrights or natural resources. For example, creators get paid royalties when their creations are produced and sold. Authors can earn royalties when their books are sold. Land owners who lease their land to oil companies or mining companies will receive royalties on the basis of the amount of oil produced from the land.

According to Article 4 of Law No. 36 of 2000 concerning Income Tax, which includes the use of copyright and patent rights are as follows:

  • The use or right to use copyright in the field of literature, art or scientific works, patents, designs or models, plans, secret formulas or processes, trademarks or other forms of intellectual/industrial property rights or other similar rights.
  • The use or right to use industrial, commercial or scientific equipment or supplies.
  • Providing knowledge or information in scientific, engineering, industrial or commercial fields.
  • The provision of additional assistance or equipment in connection with the use or right to use the rights mentioned in item 1, the use or right to use the equipment or equipment in item 2 or the provision of such knowledge or information in item 3, in the form of:
  • First, the receipt or right to receive image recordings or sound recordings or both which are distributed to the public via satellite, cable, fiber optic or similar technology.
  • Second, the use or right to use image recordings or sound recordings or both for television/radio recordings broadcast/transmitted via satellite, cable, fiber optic or similar technology.
  • Third, the use or right to use part or all of the radio communication spectrum.
  • Use or right to use motion picture films, films or video tapes for television broadcasts or video tapes for radio broadcasts.
  • The waiver in whole or in part of the rights relating to the use or granting of intellectual/industrial property rights or other rights as mentioned above.

9. Rent

Rent or income with the use of property. The definition of rent includes compensation received or obtained in any name and in any form in connection with the use of movable property or immovable property, for example car rental, office rental, house rental, warehouse rental and others.

10. Periodic payments

Receipt of obtaining periodic payments, such as elemental or lifetime allowances that are paid repeatedly within a certain period of time.

11. Debt

Profits obtained from debt relief, unless it has reached a certain amount determined by government regulations.

12. Foreign currency

Profits can also be obtained from the difference in exchange rates in foreign currencies.

13. Assets

The difference is also more due to the revaluation of assets.

14. Insurance premium

Insurance premium is a sum of money that must be paid by each registered customer to the insurance company as the insurer. The amount of money that must be paid every month has been determined by the insurance company by taking into account the condition of the customer.

15. Dues

Contributions are also received or obtained from the association of its members consisting of taxpayers who run a business or work independently.

16. Neto

Additional net assets derived from income that has not been taxed.

17. Sharia business

Income derived from the existence of a business that is of course based on sharia.

18. Interest reward

The interest rate referred to in the law governing general provisions and taxation procedures.

19. Bank Indonesia surplus

Bank Indonesia surplus is the difference between receipts and expenditures of Bank Indonesia. In the context of taxation, the treatment of Bank Indonesia’s surplus (profit) underwent significant changes. These changes are related to.

Things Outside the Tax Object

There are also exemptions from the tax object, namely:

1. Help or donation

This includes zakat received by the Amil Zakat agency or Amil Zakat institution established or legalized by the government and received by eligible zakat recipients or religious donations that are obligatory for adherents of recognized religions in Indonesia. Those received by religious institutions established or legalized by the government and those received by the entitled recipients of donations.

The provisions are regulated by or based on government regulations as long as there is no relationship with business, work, ownership or control between the parties concerned.

2. Grant treasure

Donations received by blood relatives in a straight line of one degree, religious bodies, educational bodies, social agencies.

Including foundations, cooperatives, or private individuals who run micro and small businesses whose provisions are regulated based on a decision of the minister of finance as long as there is no relationship with business, ownership, work or control between the parties concerned.

3. Inheritance

Inheritance is a legacy left by the testator to the heirs. Inheritance according to language means the transfer of something from one person to another or from one people to another. An heir is a person who dies, both male and female, who leaves a number of property.

Heirs are people who are entitled to receive inheritance, both in terms of family relations, marriage and because they free their slaves. As for the basis for the right to inherit or the basis for obtaining a share of the inheritance according to the Qur’an are:

  • There is a blood relationship, this is determined by the Qur’an clearly in QS Annisa verses 7, 11, 12, 33, and 176.
    Marriage relationship
  • The marital relationship also determines the basis for dividing or obtaining inheritance.
    Brotherly relations due to religion determined by the Qur’an are not more than a third of the inheritance of the heir (Surah Al Ahzab: 6).
  • Relatives because of fellow hijrah at the beginning of the development of Islam, even though there is no blood relationship (Surah Al Anfal 75). There are various kinds of knowledge inheritance, for example obligatory prayer (fardhu), zakat, pilgrimage.
  • Cash
    Assets including cash deposits are accepted by state-owned enterprises and regional-owned and private-owned enterprises.
  • Rewards
    Reimbursement or remuneration in connection with work or services received or obtained in kind or pleasure from the taxpayer or the government.
  • Except those given by non-taxpayers. Taxpayers who are subject to final tax or taxpayers who use a special calculation norm (deemed profit).
  • Payments from insurance companies to individuals such as life insurance, health insurance, accident insurance, endowment insurance and scholarship insurance.
    Dividends or share of profits received or obtained by a limited liability company as a domestic taxpayer, cooperative, state-owned enterprise, regional-owned enterprise, from equity participation in a business entity established and domiciled in Indonesia provided that the dividend comes from retained earnings reserves.
  • For limited liability companies, state-owned enterprises and regional-owned enterprises that receive dividends, share ownership in the entity that provides dividends is at least 25% of the total paid-in capital.
  • Contributions received or obtained from pension funds that have been approved by the Minister of Finance, either paid by the employer or employee.
  • Income from capital generated by pension funds as referred to in the previous number in certain fields that have been determined by the Minister of Finance.
  • The share of profits obtained from members of limited liability companies whose capital is not divided into shares, partnerships, associations, firms and joint ventures, including holders of units of participation in collective investment contracts.
  • Income received or earned by a venture capital company in the form of a share of profits from a business partner entity that is established and runs a business or activity in Indonesia.
  • Provided that the partner business entity includes a micro, small, medium-sized business entity or that carries out activities in the business sector which is regulated based on the regulation of the Minister of Finance and its shares are not traded on the stock exchange in Indonesia.
  • Scholarships are based on certain requirements whose provisions are regulated by the Minister of Finance.
  • The excess is received or obtained by a non-profit agency or institution engaged in education and/or research and development that has been registered with the agency in charge of it.
  • It is reinvested in the form of facilities and infrastructure for educational and/or research and development activities within a maximum period of 4 years from the receipt of the remainder, the provisions of which will be further regulated by or based on a Regulation of the Ministry of Finance.
  • Assistance or compensation paid by the Social Security Administering Body to certain taxpayers, which has been further regulated based on the Regulation of the Ministry of Finance.

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