Venture capital is a way to promote equal development and increase roles from all layers of society, where it is done by capital participation in investee companies moving in certain industries, of which its economic condition should be improved and prioritized to be developed.
Tax Subject
Article 4(2) Income Tax is imposed on Venture Capital that received or obtained income from sales of shares or transfers of capital participation in investee companies.
Investee companies are companies that fulfill certain conditions, such as:
Is a small, medium company, or is doing business in industries as managed by the Minister of Finance
Its shares are not open for trade in the Indonesian Stock Exchange
Micro, small, and medium enterprises that are considered investee companies are companies with a net income of not more than IDR50,000,000,000 (fifty million rupiahs). The limitation of the annual net income is the net income from the previous tax year when the venture capital conducts a transfer of capital participation in investee companies.
Transfer of capital participation of the venture capital on each investee company is done as long as said investee companies have not traded shares in the stock exchange or for a time period of not more than 10 (ten) years. Venture capital here refers to venture capital that has received business permits from the Financial Services Authority (OJK).
Tax Object
Article 4(2) Income Tax is imposed on venture capital income received or obtained from sales of shares or from transfers of capital participation in investee companies. Income received or obtained by venture capital companies categorized as micro, small, and medium companies in the form of a share of profits from investee companies is not an Income Tax Object.
Income in the form of a share of profits received or obtained by venture capital from the transfer of capital participation in investee companies that have sold their shares in the stock exchange or have exceeded the 10 (ten) year period is considered an Income Tax Object.
Tax Basis Imposition
The imposition basis for Article 4(2) income Tax is the gross amount of the sale of shares or the transfer of capital participation.
This requirement is only applicable if the investee company fulfills the 2 (two) requirements, as follows:
Is a small, medium company, or is doing business in industries as managed by the Minister of Finance, which is a company with an annual net income of not more than IDR5,000,000,000 (five million rupiahs), and
Its shares are not traded in the Indonesian Stock Exchange
Suppose the sale of shares or the transfer of capital participation in investee companies from the venture capital is made through the stock exchange. In that case, the imposition of the income tax will follow the provision of income tax imposition on income in the form of sales of shares in the stock exchange.
Tax Rate
Income received by venture capital is imposed with a Final Income Tax at a rate of 0.1% on the gross amount from the sale of shares or transfer of capital participation.
Tax Due Date
Article 4(2) Income Tax on income received by venture capital is payable during the repayment period of the sale of shares.
Tax Payment Procedure
The Income Tax Withholder must pay the Income Tax to the Tax Office or banks appointed by the Ministry of Finance, no later than the 10th (tenth) day of the following month after the month the tax withholding is made.
The payment is made using a Tax Payment Slip with the tax account code 411128 for Article 4(2) Income Tax and the payment code 408.
If the tax payment due date coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.
Tax Filing Procedure
Withholders of Article 4(2) Income Tax must report the withheld income tax on the Unification Income Tax Returns no later than the 20th (twentieth) day after the tax period ends.
If the filing due date of the Article 4(2) Final Income Tax return coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the filing can be made on the next working day.
Corporates, which are venture capitals, that receive income from the sale of shares or through transfer of capital participation in investee companies and have been withheld with Article 4(2) Income Tax, then must file the income and the withheld Article 4(2) Income Tax on Attachment IV of the Corporate Taxpayers Annual Tax Returns by 4 (four) months after the end of the Tax Year.
Legal Basis:
Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 7 Year 2021 regarding Harmonization of Tax Regulations
The Government Regulations Number 4 Year 1995 regarding Income Tax on Venture Capital Income from Sales of shares of Transfer of Capital Participation in Investee Companies
The Minister of Finance Regulations Number 48/PMK.010/2018 regarding Tax Procedures on Transfer of Capital Participation of Venture Capital on Micro, Small, and Medium Enterprises
The Directorate General of Taxes Circular Letter Number SE - 33/PJ.4/1995 regarding Small and Medium Investee Companies for Venture Capital and Tax Procedures on Capital Participation for Venture Capital (General Income Tax Series No. 14)
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