The diversity of industries and business sectors in Indonesia presents unique challenges in tax calculations as each sector may generate profits differently. One of the industries or business sectors that has unique tax calculations is toll manufacturing service (jasa maklon). According to Article 2 Paragraph 4 of the Minister of Finance Regulation No. 141/PMK.03/2015, toll manufacturing service means the provision of services in completing a particular product, where the process is carried out by the service provider, while the specifications, raw materials, semi-finished products, and/or auxiliary materials (supporting materials) that will be partially or fully processed are provided by the service user, and ownership of the finished product is held by the service user.
To simplify tax calculations for the toll manufacturing service sector, the government regulates the type of income tax by using specific calculation norms in Article 15 of the Income Tax Law. For tax calculation purposes, the business sectors covered by Article 15 of the Income Tax Law are domestic air charter services, domestic shipping services, international air and sea transport services, foreign trade representative offices in Indonesia, and international toll manufacturing services for children’s toy production.
The taxpayer referred to in Article 15 of the Income Tax Law related to international toll manufacturing service for children’s toy production is a domestic taxpayer engaged in international toll manufacturing service for children’s toy production who receives instructions or requests regarding the specifications, technical instructions, and service fees from foreign parties with whom they have a special relationship. The tax basis is the total cost of manufacturing or assembling the product, excluding the cost of raw materials. The cost of manufacture or assembly includes all direct manufacturing expenses, indirect manufacturing expenses, and general and administrative expenses in accordance with the taxpayer’s commercial accounting records.
Referring to Article 2 Paragraphs (1) and (2) of Minister of Finance Decree No. 543/KMK.03/2002, the specific calculation norms used for calculating the net income from international toll manufacturing services received by the taxpayer are 7% of the total cost of manufacturing or assembling the product, excluding the cost of raw materials. Income tax is imposed on the net income according to Article 17 Paragraph 1 Letter b of the Income Tax Law. These provisions apply only if the taxpayer does not have a transfer pricing agreement with the Directorate General of Taxes regarding international toll manufacturing service fees. The Minister of Finance Decree also stipulates that income tax is imposed on other income, except for international toll manufacturing service fees, in accordance with applicable general provisions. The income tax on toll manufacturing service fees must be paid monthly based on the actual total cost of manufacturing or assembling the product, excluding the cost of raw materials.
The payment and reporting of taxes procedures are based on the general mechanism specified in the General Tax Provisions and Procedures Law, so the tax payment for each month must be done no later than the 15th of the following month, and its reporting must be made and done no later than the 20th of the following month.