Indonesia’s government regulation No. 9/2022 regarding income tax on income from construction services business.
On 21 February 2022, the Indonesian government has issued the government regulation No. 9/2022 to further amend the government regulation No. 51/2008 regarding income tax on income from construction services business (GR-9).
Article 2 of this GR-9 explains that construction services classification which are subject to final income tax as follow:
- Construction consultation business classification for general construction consultation
- Construction consultation business classification for specialist construction consultation
- Construction work/implementation business classification for general construction work
- Construction work/implementation business classification for specialist construction work
- Integrated construction work/implementation business classification
GR-9 also updates the applicable final income tax rates for construction services as follows:
| Description | Tax rate |
|---|---|
| Construction work/implementation carried out by a service provider who holds a certificate of small business construction services (SBUJK) or a certificate of work competence for individual service provider. | 1.75% |
| Construction work/implementation carried out by a service provider who does not hold an SBUJK nor a certificate of work competence for individual service provider. | 4% |
| Construction work/implementation conducted by service provider other than those mentioned in point a) and b) above. | 2.65% |
| Integrated construction work/implementation conducted by a service provider who holds an SBUJK. | 2.65% |
| Integrated construction work/implementation conducted by service provider who does not hold an SBUJK. | 4% |
| Construction consultancy conducted by service provider who holds an SBUJK or a certificate of work competence for individual service provider. | 3.5% |
| Construction consultancy conducted by service provider who does not hold an SBUJK nor a certificate of work competence for individual service provider. | 6% |
Further, GR-9 explains that the government reserves the right to re-evaluate the use of this final income tax on construction services business after 3 years since the enactment of this GR-9. Based on the re-evaluation performed by the relevant ministries, the income from construction services business can be subject to income tax based on Art. 17 of the Income Tax Law (i.e., the general corporate tax regime).
As a transitional provision for construction service contracts which have been signed before the enactment of this GR-9, the following condition will apply:
- For payment of contract or part of the contract before the enactment of GR-9, the final income tax rate use is based on the GR-51/2008 as amended by GR-40/2009.
- For payment of contract or part of contract upon the enactment of GR-9, the final income tax rate use is based on this GR-9.
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