Tax Concepts & Taxpayers

The concept of tax is fundamentally a compulsory contribution to the state, owed by an individual or entity (body), that is mandatory under the Law, without receiving direct recompense, and is utilized for the state's needs for the greatest possible prosperity of the people. Tax is one of the main and essential sources of state revenue for financing development and the administration of government. This tax obligation is based on the principles of justice and economic capability, whereby every subject that meets the requirements and earns income or possesses certain wealth is obliged to participate in the state's financing.

Meanwhile, a Tax Subject (Subjek Pajak) refers to a party or entity that is stipulated by law to have the potential to be subjected to tax, which can then become a Taxpayer (Wajib Pajak) if it has met both the subjective and objective requirements. Tax subjects in Indonesia are generally classified into four main categories: private individuals, entities (such as Limited Liability Companies/PT, Commanditaire Vennootschap/CV, or cooperatives), undivided estates as a unified whole, and Permanent Establishments (PE) (Bentuk Usaha Tetap/BUT). These tax subjects are further distinguished into Domestic Tax Subjects (SPDN) and Foreign Tax Subjects (SPLN), each having different tax rights and obligations, especially regarding the scope of income subject to tax.