Apart from that, the government’s incessant efforts to provide tax incentives during the wake of the pandemic will also accelerate the development of this business model in the future. So with that, it is interesting to understand the taxation aspects related to tolling service business activities.
As a start, tolling services have never been grouped into any type of Business Field Classification (KLU). Regulation of the Director General of Taxes Number PER-12/PJ./2022 regarding KLU does not mention the name of tolling services as a term. So, we need to provide the context of the discussion here, limited to tolling services as an object in taxes that can be associated with any KLU.
There are at least three aspects of taxation related to tolling services. There are two aspects related to Income Tax (PPh), namely PPh Article 23 and PPh Article 15. The rest is related to Value Added Tax (VAT).
First, the PPh aspect of Article 23. The category of tolling services as an object of tax can be found in the Regulation of the Minister of Finance Number PMK-141/PMK.03/2015 concerning Other Types of Services as referred to in Article 23 Paragraph (1) Letter C number 2 of the Law Income tax.
The definition of tolling services based on this regulation refers to the provision of services in the context of the process of completing a certain item that must meet three criteria. First, the work process is carried out by the subcontracted party. Second, the specifications, raw materials, semi-finished goods, and/or supporting/auxiliary materials to be processed are partly or wholly provided by the service user. Third, the ownership of finished goods rests with the service user.
Because it is part of a third party collection mechanism (withholding), it is necessary to be careful who is obliged to deduct and deposit it to the state. Service recipients are required to deduct Article 23 Income Tax to service providers of 2% of the gross amount.
Next is the second aspect, namely Income Tax Article 15. It is interesting to discuss in this section, tolling services are regulated more specifically as a lex specialist. Philosophically, Article 15 of Income Tax is final and is used to avoid difficulties in calculating the amount of Taxable Income for certain groups of taxpayers.
Based on the Decree of the Minister of Finance of the Republic of Indonesia Number 543/KMK.03/2002 concerning Special Calculation Norms of Net Income and Income Tax Payment Methods for Taxpayers Conducting International Maklon Service Business Activities in the Production of Children’s Toys, it is stated that this type of tolling service has the characteristics specifically included in Article 15.
Tax subjects included in the definition of this regulation are domestic corporate taxpayers who perform services for the manufacture or assembly of goods in the form of children’s toys, with materials, specifications, technical guidelines and determination of fees for services from the ordering party domiciled abroad. and has a special relationship with the taxpayer.
There are several subjective requirements to be included in the imposition of Article 15, namely the counterparty to the transaction is domiciled abroad and the counterparty to the transaction must also be affiliated. This is what distinguishes Article 15 from tolling services in PPh Article 23 discussed earlier.
The Special Calculation Norm used is set at 7%. This tariff is calculated from the total cost of making or assembling goods excluding the cost of using raw materials. After obtaining net income in the form of international tolling services, then multiply the PPh tax rate of Article 17 paragraph (1) letter b of the Income Tax Law to calculate the tax payable. Of course, for 2022 the rate will be 22%. When summarized, the applicable effective rate becomes 1.54%, which is the result of multiplying the 7% normal rate by 22% the rate of tax payable.
The last aspect is VAT. Maklon services are classified as Taxable Services which are subject to 11% VAT. It’s just that, according to the principle of consumption destination. Tolling services which are intended for use outside customs, such as the example of International Tolling Services Article 15 in the previous discussion, will be subject to a 0% facility rate.
Regulation of the Minister of Finance Number 32/PMK.010/2019 concerning Limitations of Activities and Types of JKP whose Exports are subject to VAT for Maklon Services must meet four criteria. First, specifications and raw materials and/or semi-finished materials are provided by the Taxable Services Export Recipient. Second, raw materials and/or semi-finished materials will be processed to produce Taxable Goods. Third, the ownership of the resulting Taxable Goods is at the Recipient of the Export of Taxable Services. Fourth, toll service entrepreneurs send Taxable Goods which are the result of their work outside the Customs Area by using the goods export mechanism.
So, the taxation aspect of tolling services includes three aspects, namely Article 23 Income Tax, Article 15 Income Tax and VAT. However, two similar criteria were found in distinguishing tolling services from other services, both in PPh and VAT. First, if the specifications and raw materials and/or semi-finished materials are provided by the service recipient. Second, if the ownership of the product produced is also in the recipient of the service. This is what distinguishes tolling services from other services.