Leasing is a type of activity that is still new in Indonesia, the lease term is derived from the English language that means the lease to rent. This activity is born with the decision with the three Ministers, namely the Minister of Finance, Minister of Industry and Minister for Trade and Cooperation No. Kep-122/MK/IV/1/1974, 32/M/SK/2/1974 Tax, and Tax 30/Kpb/I/1974, dated 7 February 1974, the definition given on lease, as follows:
"Every company's financing activities in the form of provision of capital goods for use by a company, for a period of time, based on the payment regularly accompanied by the right select (optie) for the company to purchase capital goods or extend the time period lease based on the remaining value that has been agreed together. "
So, leasing is a financing activity in the asset ownership of individuals or companies, where companies or individuals can not provide funds in terms of asset ownership. Leasing can help facilitate the ownership of it.
This paper discusses the income tax treatment of business activities in order to rent (leasing). Principle is:
1. Minister of Finance Decree No. 1169/KMK.01/1991, dated 27 November 1991 on business activities in order to rent (leasing)
2. Circular letter No Director General of Taxation. SE-29/PJ.42/1992, dated 19 December 1992 on income tax treatment terdadap business activities in order to rent (leasing)
3. Circular letter No Director General of Taxation. SE-02/PJ.31/1993, on 29 January 1993 on completion SE Tax Directorate General of Taxes: SE-29/PJ.42/1992, dated 19 December 1992 on Income Tax treatment of business activities in order to rent (leasing).
4. Circular letter No Director General of Taxation. SE-10/PJ.42/1994, on 22 March 1994 on Income Tax and VAT treatment of the rental agreement for business with the right option that ends become shorter than the lease to a business that required in Article 3 of the Finance Minister Decree No. 1169/KMK.01/1991
Type of business to leasing, there are two (2) types, namely:
a. Leasing with the right options (finance lease).
b. Leasing without the right option (operating lease).
Leasing with the right options, defined as the activities of financial institutions other.
Criteria for leasing with the right options, including:
a. Number of lease payments to the business during the first lease for the business plus the remaining value of capital goods, must be able to close the acquisition of capital goods price advantages and lessor;
b. Tenancy in order to set the business at least 2 (two) years for capital goods Group I, 3 (three) years for capital goods Group II and III, and 7 (seven) years for the Group;
c. Rental agreement to include provisions on business option for lessee.
Criteria in order to rent a business without the right options, including:
a. Number of lease payments to the business during the first lease for the business can not cover the cost of capital goods in order to try to hire the added benefit calculated by the lessor;
b. Business rental agreement in order not to load the options for the provision of the lessee.
Obligations of lessor:
1. Lessor must billposter etike or capital goods on which the rent to try to include your name and address of lessor and a statement that the capital goods is bound in the rental agreement for the business.
2. Placard or sticker placed in such a way, so easy with capital goods can be differentiated from other capital goods that pengadaannya not done in a rent-to-business;
3. Lessor only permitted to provide financing of capital goods to the lessee who has NPWP, have any business activities or work and free.
Obligations of lessee:
1. Lesse prohibited in order to rent-try-again capital goods for the rent-try-to others;
2. Lesee responsible to maintain the placard or sticker in order to remain attached to the capital goods are hired-to-business.
Leasing agreement
1. Each transaction lease must be bound in an agreement to lease (lease agreement);
2. Leasing agreement-to-business, at least include:
a. Type of transaction-to-leasing business;
b. Name and address of each party;
c. Name, type, location and type of capital goods;
d. Acquisition price, the value of the financing, the payment-to-lease, principal installment financing, recompense leasing, the remaining value, savings and insurance, and insurance regulations on the capital goods are hired-to-try;
e. Period of leasing;
f. Terms of the transaction closing leasing, which quickened, and the determination of loss must be borne by the lessee in the case of capital goods are hired-to-business with the right option is missing, damaged or not working due to any reason;
g. Option for the tenant-to-business transactions in the case of leasing with the right options;
h. Responsibilities of the parties on the capital goods are hired-to-business;
i. Leasing agreement-to-business must be made in the Indonesian language, and, if deemed necessary may be translated into foreign languages
Implementation of option rights.
At the end of the lease-to-business transactions from the leasing with the right option, lessee can implement the option that has been approved at the beginning of the period with leasing.
Option to settle the purchase payment made with the remaining value of capital goods-for-hire business. In case the lessee chooses to extend the period of leasing agreement-to-business, then the remaining value of capital goods are hired-to-try is used as the basis used in setting account receivable leasing.
In case the lessee to use the option to buy, then the basic depreciation is the remaining value of capital goods.
Accounting treatment to leasing
Accounting transactions to leasing was conducted in accordance with accounting standards in the field of leasing in Indonesia.
Tax treatment.
Income Tax.
1. Leasing with the right option.
I. For the lessor:
a. Earnings lessor is subject to income tax payment was part of the leasing with the right options in the form of recompense to leasing;
b. Lessor can not depreciated on capital goods for the lease-to-try option rights;
c. In the case of the lease over a short period of which is determined in a specified, Director General of Taxes make corrections on the revenue side of the lessor;
d. Lessor can establish reserves deletion doubtful receivables that can be reduced from the gross earnings, at the high amount of 2.5% of average balance and the initial receivables balance end-to-rent business with the right options;
e. Losses suffered due receivables lease that positively can not be billed again on the backup deletion doubtful receivables that have been established at the beginning of the tax year concerned;
f. In the case of backup deletion doubtful receivables is not fully charged or not to cover the remaining loss is then counted as income, whereas when the backup is not sufficient then be minus can be reduced as the cost of gross revenue.
II. For the Lessee:
a. During the lease, lessee could not do on the depreciation of capital goods are hired-to-business, when the lessee to use the right option to purchase;
b. After the lessee the right to use the option to purchase capital goods, depreciation and the lessee do depreciation basis is the value of the remaining (residual value) of capital goods is concerned;
c. Payment-to-lease, which is paid by lessee or payable unless the burden on the land, is a cost that can be reduced from the gross earnings lessee throughout the lease transaction-to-business meet the criteria for rental business;
d. In the case of the rent-to-business over a short period of a specified, Director General of Taxation to the corrections on the charge-to-lease.
e. Lessee does not cut article 23 Income tax payment up-to-lease, which is paid or payable based on the lease agreement with the right option.
2. Leasing without the right option:
I. For the lessor:
a. The entire lease payment-to-business without the right option is received or obtained object is the lessor income taxes;
b. Lessor charge depreciation on capital goods for the lease without the right option, in accordance with article 11 Income Tax Act and its implementing regulations.
II. For the lessee:
a. Payment-to-lease without the right option that paid by lessee or payable is the cost of which can be reduced from the gross revenue;
b. Lessee shall deduct Income Tax Article 23 on the payment-to-lease without the right option that is paid to the lessor or payable.
Value Added Tax.
1. Up service delivery in the transaction lease with the right options from the lessor to the lessee, are exempt from Value Added Tax imposition.
2. Up service delivery in the transaction lease without the right option from the lessor to the lessee, owing Value Added Tax.
Installment article 25 Income tax
The amount of installment article 25 Income tax for each month terutang by the lessor is the amount of tax revenue as a result of the implementation of tariff article 17 of Law on Income Tax Year 1984 tax revenue is based on the quarterly financial report last a year, divided by 12 (twelve).
Reporting
1. Lessor must submit quarterly financial reports to the Directorate General of Directorate General of Tax and Monetary.
2. Quarterly financial reports must be submitted at least 15 (fifteen) days after the quarter ends.
3. Lessor shall deliver a report based on the operational middle the calendar year to the Directorate General of Monetary.
4. The form of reports and reporting it procedure established by the Director General of Monetary.
Any changes to the budget basis, the shareholders, the management, experts, and the address of the office must be reported to the Minister of Finance no later than 15 (fifteen) working days after the changes implemented.
