Summary
PPh Article 22 (Pajak Penghasilan Pasal 22) is an Indonesian income tax collected at source by designated parties on payment or delivery of goods and import activities. Collectors include government treasurers, designated entities (including state-owned enterprises or BUMN), and certain corporate taxpayers appointed by the Minister of Finance. Rates vary from 0.1 percent up to 7.5 percent depending on transaction type and the taxpayer's NPWP status.
This tax is generally creditable against year-end income tax liability, except for specific transactions like certain final-tax imports in designated sectors. Understanding PPh 22 matters for importers, government suppliers, BUMN distributors, and any business dealing with appointed collectors.
What Is PPh Article 22
PPh Article 22 is an income tax collected by third parties on income from payments or delivery of goods and certain activities. Unlike PPh Article 21, which withholds from employee income, PPh Article 22 is collected at the moment of transaction: when goods are imported, when a treasurer pays a purchase, or when a BUMN distributor sells products to dealers.
The primary function is accelerating state revenue and expanding the taxpayer data base. Because the tax is collected upstream, PPh 22 is an effective administrative mechanism for large-scale transactions involving many parties.
Legal Basis
PPh Article 22 is rooted in several core regulations:
- Law Number 7 of 1983 on Income Tax as last amended by Law Number 7 of 2021 on the Harmonization of Tax Regulations (UU HPP), specifically Article 22.
- Minister of Finance Regulation Number 34/PMK.010/2017 on Collection of Income Tax Article 22 Related to Payment for Delivery of Goods and Activities in the Import Field or Other Business Activities, as last amended by PMK Number 41/PMK.010/2022.
- Minister of Finance Regulation Number 59/PMK.03/2022 governing special rates for certain transactions.
- Technical implementing regulations from the Directorate General of Taxes (DJP) on payment and reporting procedures.
Who Must Collect
PMK 34/PMK.010/2017 designates eight collector categories under PPh Article 22:
- Foreign Exchange Banks and the Directorate General of Customs and Excise on goods imports.
- Government treasurers and Budget Authorization Officials (KPA) on goods purchases.
- Expenditure treasurers on payments made through the cash advance mechanism.
- KPA or officials issuing Payment Orders by delegation.
- Designated State-Owned Enterprises (BUMN) purchasing goods or materials for business activities.
- Specific industries (paper, cement, steel, automotive, pharmaceutical) on sales of finished products to domestic distributors.
- Sole Brand Holders (ATPM), Brand Holders (APM), and general motor vehicle importers on motor vehicle sales.
- Producers or importers of fuel oil, fuel gas, and lubricants.
Transaction Types and Rates
Goods Imports
PPh Article 22 import rates vary by importer status and goods type. Importers holding an Importer Identification Number (Angka Pengenal Impor or API) face a 2.5 percent rate on import value. Non-API importers face 7.5 percent. For specific goods listed in PMK 34/2017 as amended by PMK 41/2022, special rates such as 0.5 percent apply for soybeans and wheat.
Purchases by Treasurers and BUMN
Government treasurer or KPA purchases of goods carry a 1.5 percent rate on the purchase price excluding VAT. BUMN purchases of designated goods also carry a 1.5 percent rate. Exemptions apply for purchases below a specified value under PMK 34/2017.
Sales by Specific Industries
Paper, cement, steel, automotive, and pharmaceutical industries selling finished products to domestic distributors collect PPh 22 at: paper 0.1 percent, cement 0.25 percent, steel 0.3 percent, automotive 0.45 percent, and pharmaceutical 0.3 percent of the VAT Tax Base (DPP).
Motor Vehicle Sales
ATPM, APM, and general motor vehicle importers selling vehicles domestically collect PPh 22 at 0.45 percent of the VAT DPP.
Fuel, Gas, and Lubricant Sales
Producers or importers of fuel oil, fuel gas, and lubricants collect PPh 22 at different rates for Pertamina fuel stations, non-Pertamina stations, and non-station buyers. Rates range from 0.25 percent to 0.3 percent depending on fuel type and buyer category.
Payment and Filing
Administrative steps for PPh Article 22 vary by collector category.
For Treasurers and BUMN
Collectors must remit PPh Article 22 to the state treasury no later than the 10th of the following month using a billing code generated through Coretax DJP. The periodic PPh Article 22 return (SPT Masa) must be filed no later than the 20th of the following month, also via Coretax DJP. Collectors must issue a withholding receipt (bukti pungut) to the party from whom tax was collected.
For Imports
PPh Article 22 on imports is collected by the Directorate General of Customs and Excise at the moment goods leave the customs area. Payment is remitted alongside Import Duty and Import VAT. Importers do not make a separate transfer because collection happens automatically within the DJBC CEISA system.
For Specific Industries
Producer collectors must issue withholding receipts, remit by the 10th of the following month, and file by the 20th of the following month.
Crediting PPh Article 22
For the party whose income was collected upon, PPh Article 22 is creditable against year-end income tax liability. Importers credit import PPh 22 as part of corporate income tax payable. Distributors credit PPh 22 collected by industries against their corporate income tax.
The withholding receipt is the primary document for crediting. Taxpayers must retain receipts for at least 10 years per Article 28 of the Law on General Provisions and Procedures of Taxation.
Example
PT Alpha Sentosa imports production machinery worth IDR 1,000,000,000 from Japan. The company holds an Importer Identification Number (API). Import Duty of 5 percent applies, so import value (CIF + Import Duty + other levies) becomes IDR 1,050,000,000.
PPh Article 22 on import is calculated: 2.5 percent x IDR 1,050,000,000 = IDR 26,250,000. This tax is collected by the Directorate General of Customs and Excise at the moment goods are released. PT Alpha Sentosa can credit IDR 26,250,000 against corporate income tax payable at year-end.