File Interest Income from Online Loans in the Annual Tax Return

JAKARTA, DDTCNews - Taxpayers that earn interest income from P2P lending applications or online loans last year need to report the income in their 2022 Annual Tax Teturn.

Even though Article 23 Income Tax has been withheld by 15% by the online loan provider, the interest income remains required to be filed in the Annual Tax Return.

“Interest income referred to in Article 2 paragraph (2) is income that must be filed in the lender’s annual Tax Return,” reads Article 3 paragraph (2) of the Minister of Finance Regulation (MoF Reg.) 69/2022, quoted on Friday (17/2/2023) ).

Referring to Article 4 of MoF Reg. 69/2022, the lender receives an Income Tax withholding receipt for all payments of loan interest received every month. The withholding receipt received from the online loan provider must be attached to the Annual Tax Return.

It should be noted, the tax withheld on the interest received by the lender from the online loan provider is not final Income Tax. As a result, the interest income will increase taxable income and may lead to an underpayment.

If an underpayment arises, the taxpayer must independently settle the underpayment before filing the Annual Tax Return.

“In the event that tax payable for a Tax Year is greater than the tax credit ..., tax underpayment payable must be settled before the Annual Income Tax Return is filed,” reads Article 29 of the Income Tax Law.

On a side note, MoF Reg. 69/2022 which stipulates the obligation to collect Article 23 Income Tax of 15% by online loan application providers was promulgated on 30 March 2022 and has come into force since 1 May 2022.

Until the end of the year, the realised revenues from Article 23 Income Tax on loan interest received from online loans reached IDR121.84 billion. (rig)