Minister of Finance Regulation (PMK) Number 110 / PMK.03 / 2020 concerning Amendments to the Regulation of the Minister of Finance Number 86 / PMK.03 / 2020 concerning Tax Incentives for Taxpayers Affected by Corona Virus Disease 2019. Incentives to reduce instalments of Income Tax Article 25 by 50% apply to start from the July 2020 tax period. However, many taxpayers have already deposited Income Tax Article 25 for the July 2020 tax period by using a reduction in instalments like the previous tax period of 30%. They have also submitted reports on the realization of the use of these incentives with the same amount of reduction in instalments. This happened because a copy of PMK Number 110 / PMK.03 / 2020 was only received recently, after a period of time the regulation was issued. As a consequence, there was an excess of Income Tax Article 25 for the July 2020 tax period.
As is known, through PMK 110/2020, the government increased the instalment discount for Income Tax Article 25 from 30% to 50%. Incentives can be used by taxpayers in 1,013 certain business fields, companies that obtain import facilities for export purposes, and companies in bonded zones.
What should be done about the overpayment of Article 25 Income Tax?
- Apply for Transfer. The first option that can be chosen by taxpayers is to apply for transfer. Book-entry itself is the process of transferring tax payments from a tax type, tax period, and/or tax object to a tax type, tax period, and/or another tax object due to an excess or error in tax payment. So, the overpayment of PPh Article 25 for the July 2020 tax period can be submitted for transfer to PPh Article 25 for the tax period after August 2020. Meanwhile, if the excess is to be allocated to the August 2020 period, it can be calculated as a deduction for that period of payment.
- File a Refund on Taxes That Shouldn’t Be Oweeable. Another option that taxpayers can choose is to apply for tax returns that should not be due. The provisions regarding this matter are regulated in PMK Number 187 / PMK.03 / 2015 concerning Procedures for Refunding Tax Overpayments that Should Not Have Been Owee. Article 2 and Article 3 of the law states that an application for a tax refund which should not be owed can be submitted one of them if there is a tax payment that is greater than the tax payable. That way, the excess depositing of Income Tax Article 25 for the July 2020 tax period can be resolved using this mechanism.
- Let it go. The last option that taxpayers can choose is to leave the excess of Income Tax Article 25 for the July 2020 tax period. After all, at the end of the year, the amount of income tax payable will be the same. The only difference lies in cash flow. If the larger PPh Article 25 instalments are paid, the underpayment of Income Tax at the end of the year will be smaller. Likewise, if the instalment of Article 25 Income Tax paid is smaller, the underpayment of Income Tax at the end of the year will be bigger.
Managing PPh Article 25 payments can use the services provided by Integra Consulting. You can contact via e-mail or telephone or Whatsapp chat to the available contacts. Integra Consulting is a company that partners with a Registered Tax Consultant (KIP-1510 / IP.C / PJ / 2015) so that it can help manage personal income tax and corporate taxpayers.