Let's Understand Corporate Income Tax for Business Growth

Let's Understand Corporate Income Tax for Business Growth

PPN - 29 Jan, 2024 11:01 WIB

Every taxpayer has the responsibility to pay taxes according to the applicable rules and regulations. Apart from individuals, business entities or companies are also obliged to pay taxes, and one thing that needs to be paid attention to is Corporate Income Tax (Corporate Income Tax).


Corporate Income Tax is applied to profits earned by business entities or companies. Even though they are both PPh, the corporate income tax rates are different from the individual income tax rates. Unfortunately, there are still many business owners who do not fully understand this type of tax. For this reason, for you as a business person, pay attention to the information discussed in the following review.


What is meant by corporate income tax?

In general, Corporate Income Tax is a type of tax imposed on business actors, organizations and companies. Thus, this tax is imposed on various business entities such as CVs, Firms, BUMN, BUMD, PT, Pension Funds, BUT, Foundations, Associations, mass organizations and cooperatives.


The object of tax collected is the taxpayer's income earned during 1 year. It could be said that corporate income tax is the tax burden from the profits or income of a business entity in a year. The profits or income in question include business profits, sharia income, royalties, dividends, foreign exchange differences, awards or prizes, rent, interest, Bank Indonesia profits, profits from the sale or transfer of assets, utilization of assets other than buildings, land and transfer of services.


Types of Corporate Income Tax

Basically, Corporate Income Tax is a tax collected from business entities. Corporate Income Tax itself can be divided into several types as follows:

1. Income Tax Article 21

Article 21 regulates direct deductions from the company from employees' monthly income to be remitted to the state. This tax is only charged to employees whose income is above IDR 4,500,000.

2. Income Tax Article 22

Article 22 regulates taxes for business entities engaged in exports and imports, sales of luxury goods and re-imports. The amount of Corporate Income Tax imposed varies depending on the activities and operations of the business entity.

3. Income Tax Article 23

Meanwhile, PPh article 23 relates to the imposition of taxes imposed on transactions that occur between two parties. Such as distribution of profits or dividends to share owners, gifts, royalties, rental proceeds or use of business assets other than land, transfer of services and buildings.


So, that's a little overview regarding Corporate Income Tax and its types. However, apart from the three types of Corporate Income Tax that have been explained, there are still other types of taxes mentioned in PPh articles 25, 26, 28, PPh article 4 paragraph 2, and PPh article 15.


To better understand Corporate Income Tax and the procedures that must be carried out, you can visit our official website, Ideatax. We provide information and articles regarding the latest regulations related to taxation, practical steps for fulfilling tax obligations, and guides that can guide you through the complexities of tax regulations.

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