Type of Tax Paid for Car Rental Services

The business opportunity of car rental services is indeed quite tempting. Especially now, many people prefer to rent cars rather than use public transportation for trips that involve many people. Almost everyone can find car rental services in every district in Indonesia.

If you also want to start a car rental service, you must not forget that there are taxes for car rentals. The tax for car rentals is a type of tax that must be paid when you open a car rental business. There are several types of taxes that you need to pay. What are they? Here’s the review.

Motor Vehicle Tax

Since you are renting out cars, the first tax you must pay is the motor vehicle tax. This tax is paid annually and there is an additional fee every 5 years for changing the license plate. The amount of tax can be seen on the vehicle registration certificate (STNK) of the car you own.

You should know that this motor vehicle tax is progressive. If you have several cars for rent, you will find that the tax for the latest vehicle will be higher than the tax for the previous vehicle, even if the brand, type, and year of purchase are the same.

Land and Building Tax

Car rental services are certainly closely related to having land to park the rental cars. That land will also have a tax amount. This tax is the Land and Building Tax (PBB). Usually, the PBB amount for business land is different from the PBB amount for regular houses. The PBB for business land is more expensive compared to the PBB for regular houses.

Value Added Tax

Almost all goods sold in Indonesia are subject to Value Added Tax (VAT). From visible goods and services to digital forms, everything is subject to VAT. If you have a car rental service, you should have calculated this VAT and charged it to the car renters. The VAT rate is 10% of the price of goods or services.

For VAT itself, it is usually charged to companies whose annual turnover exceeds 600 million and are registered as Taxable Enterprises (PKP). Try calculating your annual turnover to see if it has reached that figure. If it exceeds 600 million, it is appropriate for you to register your business as a PKP.

Corporate Income Tax

If your car rental service is in the form of a Limited Liability Company (PT) or a Commanditaire Vennootschap (CV), you also have to pay Corporate Income Tax (PPh). You can ask a tax consultant about the amount of Corporate Income Tax you need to pay each year. A tax consultant can calculate how much tax you need to pay annually. You can also calculate it yourself if you know the regulations and formulas for your type of business.

Income Tax Article 21

In addition to Corporate Income Tax, you also have to pay Income Tax (PPh) Article 21. This tax is for personal income. You are required to report the income you receive, employee salaries, honorariums, bonuses, and holiday allowances (THR) that do not exceed the basic salary.

Again, if you do not want to bother calculating the amount of PPh Article 21 tax, you can use the services of a tax consultant you know. However, if your car rental company already has employees specifically handling finances, they should be able to calculate the tax.

Those are the 5 types of taxes you must pay for a car rental business. I hope this writing can provide enlightenment for those of you who are going to start a car rental business.

Author: Iskael