Income Tax on Dividend Received by Resident Individual Taxpayer

According to Article 17 paragraph (2c) of Law No. 36 Year 2008, the tax rate imposed on income in the form of dividends distributed to resident individual taxpayers is at the highest of 10% of the gross dividend.

Furthermore, according to Article 2 of Government Regulation No. 19 Year 2009, the imposition of income tax on dividends distributed to the resident individual tax payer is executed through tax withholding by the payer or other person designated as the payer of the dividends.


With this provision, the rich will get richer. Generally, the person who owns share is the wealthy people. For poor people they never think about share or dividend even the meaning of share or dividend they do not know too. 

Previously, the highest tax rate for dividends received or accrued by resident individual taxpayers is 35% and the withholding tax rate of Income Article 23 is 15% of the gross dividend. This 15% withholding tax is creditable against the tax payable of the dividend recipient. Under the current tax rules, the individual share owners who receives dividend will receive an income of 90% of the dividends received or accrued. If we have money, it would be more advantage to buy the shares, rather than trying to run our own business. This is because the net profits derived from business activities will be subject to a progressive tax rate at the maximum rate of 30%. 

For the tax with holder of the dividend  which is subject to 10% tax rate mentioned above, it remains unclear what the administration means to be used, for example how to make the Evidence of Withholding Tax, Tax Payment Slip and  Monthly Tax Return to be used for reporting the withholding tax. 

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Eventually the puzzle above has been answered. Apparently the Directorate General of Taxes decided that the withholding tax on dividend received by resident individual taxpayers amounting to 10% of the gross dividend is categorized as a final tax in nature and it is categorized as the withholding tax of Income Tax Article 4 paragraph (2). This withholding tax shall be reported in “Monthly Tax Return of Final Income Tax of Income Tax Article 4 paragraph (2).

Hi friends, do you have opinion on this issue. It is grate if you share your opinion with others.

About Jaja Zakaria

Nama saya Jaja Zakaria, saya tinggal di Depok, Jawa Barat, kurang lebih 40 km dari Jakarta Selatan. Saya alumni Fakultas Hukum Universitas Gadjah Mada, Yogayakarta, dan Opleidings Instituut Financien, Den Haag, Belanda di bidang Hukum Pajak Internasional. Saya pengarang beberapa buku, e-book, dan makalah-makalah perpajakan. Pengalaman saya antara lain pernah menjadi anggota delegasi Indonesia dalam perundingan Perpajakan dengan Denmark, Mesir, Kanada, Uni Emirat Arab, Kuwait, Turki, Brunei Darussalam, Pilipina, Vietnam, Mongolia, dan Taiwan; dalam Study Group on Asian Tax Administration and Research (SGATAR) meeting; dan dalam Joint Commission Indonesia - China. Saya juga anggota International Word Tax Expert.

Posted on May 23, 2013, in English Version, Taxation Topic, Uncategorized. Bookmark the permalink. 8 Comments.

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