FINANCE

How to Calculate Corporate Income Tax (PPh) Payable

How to calculate income tax or corporate income tax payable? What is the corporate income tax (PPh) rate? The Mekari Journal Blog article will answer your questions about how to calculate income tax payable and calculate corporate income tax.

Corporate Tax is a tax imposed on the income of a company where the income in question is any additional economic capacity received or obtained by a Corporate Taxpayer, both from within and outside the country, for any purpose including for example increasing wealth, consumption, investment, and others. etc.

For how to calculate tax payable or how to calculate income tax payable, at least you have to understand the tax rate set by the government.

The reason is, the basis of calculation to determine the amount of income tax payable is the accuracy of paying taxes in the company.

For companies that are diligent in paying taxes, it means having good credibility.

This will make it easier for other companies to cooperate.

Business Entity Tax Calculation Mechanism

As follows:

Taxable income

Before you do the calculation of Corporate Income Tax, you must first know the nominal corporate taxable income.

How to? You can reduce your taxable net income by compensating for fiscal losses.

Where fiscal net income is net income received by domestic taxpayers, both from business activities and not, after passing through fiscal adjustments based on tax provisions.

Meanwhile, the net fiscal compensation is the loss suffered by the company.

When using bookkeeping, such losses can be compensated for five consecutive years.

Calculating Income Tax Payable

To get this amount, you can multiply your Taxable Income by the applicable tax rate.

Based on Article 17 paragraph (1) part b of Law no. 36 of 2008 concerning Income Tax, the tax rate imposed on entities is 25%. This rate is effective since the 2010 tax year.

Lower rates may be imposed on domestic corporate taxpayers with the following conditions:

  1. In the form of a public company.
  2. Own at least 40% of the total number of shares paid up and traded on the Indonesian stock exchange.
  3. The tariff charged is 5% lower than the normal tariff.

Based on these provisions, the formula for tax payable or how to calculate the rate of corporate income tax payable is as follows:

Maju Bersama Company has a total Taxable Income of Rp.2,000,000,000, then the income tax rate or corporate income tax that must be paid is:

25% x Rp2.000.000.000 = Rp500.000.000.

And you need to know, income withheld with final income tax is not included in this provision.

The final tax rate is regulated in a separate regulation based on a Government Regulation.

Other Provisions About Business Entity Income Tax

In addition to the above mechanism. There are also other things that you must understand, namely gross turnover and its importance in calculating corporate income tax (PPh) rates.

Gross turnover is all income received, both individuals and entities.

If the taxpayer chooses not to keep the books, the PKP will be calculated based on the Net Income Calculation Norm.

On the other hand, if the taxpayer does the correct bookkeeping, the calculation of PKP is carried out based on the records written in the books. You can see an example of calculating body pph.

You can see the aforementioned Net Income Calculation Norm in Article 14 of Law no. 36 of 2008 concerning Income Tax.

Based on the applicable tax provisions, the Net Income Calculation Norms are divided into 2 types based on the amount of gross turnover, namely:

Gross Circulation up to IDR 50 Billion

Gross Income (Gross) (Rp) Tax Rate
Less than IDR 4.8 Billion 50% x 25% x Taxable Income
More than IDR 4.8 billion to IDR 50 billion [(50%x25%) x Taxable Income Obtaining the Facility] + (25% x Taxable Income Not Obtaining the Facility)

Gross Circulation above IDR 50 billion

Corporate income tax payable with gross turnover above IDR 50 billion will be calculated based on general provisions or without tariff reduction facilities.

So it can be concluded that the amount of fixed corporate income tax is 25% x taxable income.

Gross Income r (Gross) Tax Rate
Less than IDR 4.8 Billion 1% x Gross Income

(Gross Circulation)

More than IDR 4.8 billion to IDR 50 billion {0.25 – (0.6 Billion/Gross Income)} x PKP
More than IDR 50 Billion 25% x PKP

 

How to Calculate the Rate of Corporate Income Tax (PPh) Payable

 

In 2019, PT Maju Bersama earned a gross income of IDR 2 billion. Then the amount of PT Maju Bersama’s income tax is as follows:

How to calculate the income tax payable to be paid is:

50% x 25% x IDR 5 billion = IDR 625 million.

However, it should be noted that during the 2018 period, PT Maju Bersama has deposited employee income tax to the state treasury of Rp. 100 million and Article 23 income tax of Rp. 200 million.

Therefore, the income tax payable by PT Maju Bersama is:

IDR 625 million – IDR 100 million – IDR 200 million = IDR 325 million.

Rp325 million is a number that can be repaid by PT Maju Bersama to the state treasury for the income of the Business Entity in 2018.

This is the remaining tax paid by PT Maju Bersama to the State Treasury for corporate income tax in 2018.

This tax can be repaid by seeking approval from the local tax office.

In tabular form, the following is a summary of the calculation of the income tax of PT. Forward Together.

 

No Information Amount
1 Gross Income 2.000.000.000
2 Income Tax Credit 21 100.000.000
3 Income Tax Credit 23 200.000.000
4 Corporate Income Tax (50% x 25% IDR 2 Billion) 625.000.000
5 Income Tax Payable ((4)-(2)-(3)) 325.000.000

 

The example of calculating corporate income tax above is an illustration of a simplified tax calculation.

In reality, the process of calculating income tax within a company is not that simple and requires reports from various financial accounts.

Financial accounts that have been previously recorded and collected in financial statements will help simplify the process of calculating your business corporate tax.

You can use the help of an accounting system application to simplify the calculation of corporate income tax.

That’s the explanation of how to calculate the corporate income tax (PPh) payable.

Therefore, accounting management is important so that your company does not experience difficulties in calculating taxes.

If your company wants to get convenience and accuracy in calculating taxes, then you can use Mekari Jurnal’s online accounting software  .

Through the online tax reporting feature of the Journal , you can easily make estimates or plan tax payments. The journal also provides various other features that make it easier to manage business finances. For example, as a company’s financial report software .

Then to understand the basis for calculating corporate income tax more comprehensively, you can take online courses available at Mekari University for free.

Mekari University is a technology-based educational service provider platform to help business owners and professionals improve their skills.

 

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