Someone will try to meet the need for a place to live, even willing to live in a place with minimal facilities, as long as there is shelter to sustain life. When physiological needs have been met, fulfillment of needs in the next hierarchy begins to become a priority. Residence with various accompanying characteristics can still be a means to meet needs at the next hierarchical level. A place to live that provides a sense of security, fosters affection, depicts appreciation and shows self-actualization.
Boarding house Is part of the fulfillment of physiological needs. The need for a place to live for students who are studying far from where their parents live or even employees who work at a distance that is not reachable to be traveled to and from home every day.
Businesses in the field of meeting basic human needs always provide great opportunities for success. Likewise with the boarding house business. Not limited to just meeting physiological needs for a place to live, modern boarding houses certainly consider the lifestyle of its residents. A boarding house is not only a shelter, but can be a proof of the self-actualization of the people who live in it. Today’s boarding house owners will try to fulfill the hierarchy of needs according to Maslow’s Theory. Today’s boarding house owners will also try to fulfill their obligations according to tax regulations.
Law Number 28 of 2009 concerning Regional Taxes and Regional Levies, mentions one definition of a hotel as a boarding house with more than ten rooms. Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments has revoked the validity of Law Number 28 of 2009.
Article 53 of Law Number 1 of 2022 defines hospitality services as providing accommodation services and supporting facilities, as well as meeting/meeting room rentals at hotel service providers such as: hotels, hostels, villas, tourist lodges, motels, inns, tourism guest houses, guest houses, guest houses /guesthouse/bungalow/resort/cottage, private residences that function as hotels and glamping. Boarding houses no longer meet the definition of a hotel as stated in the previously applicable provisions, so that local tax provisions on hotels cannot be applied to boarding houses.
Government Regulation Number 34 of 2017 concerning Income Tax on Income from Land and/or Building Rentals states that income from land and/or building rentals, either part or all of the buildings received or earned by individuals or entities, is subject to final Income Tax. The amount of income tax is 10% of the gross amount of the rental value of land and/or buildings. The income referred to in this provision does not include income received or obtained from lodging services and their accommodation. Lodging services include rooms, dormitories for students/students, worker dormitories or huts, and boarding houses. Based on these provisions, it can be concluded that boarding houses are not subject to 10% Final Income Tax of the gross amount of the rental value of land and/or buildings.
Government Regulation Number 55 of 2022 dated December 20, 2022 concerning Adjustment of Arrangements in the Field of Income Tax, Article 56 paragraph 3, explains that one of the income that does not include income from business which is subject to Income Tax which is final in this provision is income that has been subject to Tax Income that is final with the provisions of separate tax laws and regulations.
Boarding houses are not subject to Final Income Tax of 10% of the gross amount of the rental value of land and/or buildings, as stipulated in Government Regulation Number 34 of 2017, so boarding houses comply with the provisions of being subject to Income Tax in accordance with Government Regulation Number 55 of 2022.
A boarding house owned by an individual taxpayer who receives or earns income with gross turnover not exceeding IDR 4.8 billion in one year, is subject to final Income Tax at a rate of 0.5% of the business’ gross turnover. Income tax is not subject to income tax for the share of gross income from business up to IDR 500 million in one tax year (calculated cumulatively since the first tax period in a tax year or part of a tax year).
If the gross circulation in the current tax year has exceeded IDR 4.8 billion, income from business is still subject to the Income Tax rate of 0.5% until the end of the tax year concerned. Furthermore, the income of the said taxpayer in the following tax year is subject to Income Tax based on the rate of Article 17 of the Income Tax Law.
Individual taxpayers have a maximum opportunity of seven years from the time the new taxpayer is registered to calculate the Income Tax of 0.5% of the gross turnover of the business. For individual taxpayers who have previously used the Income Tax rate in accordance with the provisions of Government Regulation Number 23 of 2018 (PP-23 of 2018), the calculated period continues the period of using the tax rate according to the provisions of PP-23 of 2018. After exceeding the period 7 years, the individual taxpayer will calculate the income tax payable based on the rate of Article 17 of the Income Tax Law.