Royalty Tax Rate Decreases, DGT: Send NPPN Proof to Withholding Agents

JAKARTA, DDTCNews – The government has cut the effective rate of Article 23 Income Tax on royalties for individual taxpayers using Deemed Profit from 15% to 6%.

Junior Functional Tax Dissemination Officer of the DGT’s Directorate of Tax Dissemination, Services, and Public Relations Rian Ramdani said that the reduction in the royalty income tax rate is stipulated under the Director General of Taxes Regulation No. PER-1/PJ/2023. The regulation has been issued to provide legal certainty in respect of Article 23 Income Tax withholding, which to date, has been subject to complaints.

"This regulation, issued in 2023, also responds to complaints from art workers in respect of royalties,” he said in Tax Live on the DGT’ss Instagram account, quoted on Sunday (2/4/2023).

It should be noted that the income in the form of royalties a taxpayer receives shall be subject to Article 23 Income Tax withholding by the income provider as stipulated in Article 23 of Law 7/1983 as last amended by Law 7/2021. Article 23 Income Tax withholding rate is 15%.

Pursuant to PER-1/PJ/2023, Article 23 Income Tax withholding rate remains 15%. However, for individual taxpayers applying calculations using Deemed Profit, the effective rate of Article 23 Income Tax decreases to 6%.

The requirement for individual taxpayers to use Deemed Profit is that their income is less than IDR4.8 billion. In addition, the taxpayer concerned must notify using the Confirmation of Taxpayer Status (Konfirmasi Status Wajib Pajak, hereinafter referred to as KSWP) feature on DJP Online.

“To be imposed with 6%, the taxpayers select the KSWP menu and then press Profil, scroll and press the notification using NPPN, click the captcha code then submit,” explained Rian.

After confirming the use of Deemed Profit, the taxpayer then uploads the form and provides the uploaded form to each royalty withholding agent, thereby, the effective rate of Article 23 Income Tax withholding becomes 6%. (sabian/rig)