TaxSavvyID

Construction contract withholding

Kami bayar kontraktor renovasi. PPh-nya berapa?

The situation

Construction services bear final tax under PP 9/2022 at rates that depend on the type of work and the contractor's certification.

The law

  • Art 4(2), Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: Certain income bears final tax: land and building rent, construction services, MSME turnover and others set by government regulation
  • PP 9/2022 on final tax on construction services: Final tax rates on construction services depend on the type of service and the contractor's certification

What it means for you

Ask the contractor for its business entity certificate (SBU) or individual certificate. Apply the PP 9/2022 rate for that class and work type. Without the right certificate, a higher rate applies.

What to do

  1. Get the contractor's certificate.
  2. Identify the work type.
  3. Apply the PP 9/2022 rate.
  4. Issue the unified slip.

Using PPh 23 2 percent for construction is a common error.

We can do this for youMonthly withholding on vendors and non-residents: PPh 23, PPh 4(2) final and PPh 26 with unified slips: IDR 1.500.000

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