Are MLM Partners Required to Report Taxes?
In response to the question of whether MLM partners are required to report taxes, it turns out that the provision is mandatory. Although the MLM company has deducted PPh from the partner’s commission, the partner still has the obligation to report the Annual Personal Income Tax Return.
There are several steps to carry out the calculation, including:
Step 1, calculate the annual personal income tax on income in the form of bonuses or sales commissions with two alternatives:
- Calculation of Income Tax using Net Income Calculation Norm (NPPN)
((Gross income per year x NPPN) – PTKP) x Income Tax Article 17 Rate
- Calculation of income tax based on bookkeeping
Step 2, minus tax credits (PPh that has been deducted by other parties).
Step 3, the value of the calculation results is visible: Nil PPh / underpayment / overpayment.
In addition, MLM company partners or distributors can calculate Net income using NPPN, with the following conditions:
- Gross circulation in one year is less than IDR 4.8 M
- Mandatory to maintain records
- Notify the Director General of Taxes within the first 3 months of the relevant tax year.
The following is an illustration of the calculation of Annual Income Tax for MLM business partners:
Ms. A is a partner (distributor of an MLM company) of an MLM company who has met the requirements for using NPPN.
In 2024, Ms. A received a total annual sales commission from MLM business partners of Rp. 300.000.000,-
Ms. A has no other source of income. Ms. A’s status is unmarried and has no dependents. (TK/O).Ms. A received 12 proofs of Article 21 Income Tax deductions from an MLM company (PT ABC) with a total value of Rp 7.500.000. Ms. A chose to calculate Income Tax using NPPN.
Step 1
Calculation of Annual Personal Income Tax:
((Gross income per year x NPPN) – PTKP) x Article 17 Income Tax Rate
= ((300.000.000 x 50%) – 54.000.000) x Article 17 Income Tax Rate
= 96.000.000 x Article 17 Income Tax Rate
= (60.000.000 x 5%) + (36.000.000 x 15%)
= 3.000.000 + 5.400.000
= 8.400.000
Step 2
Minus tax credit (PPh that has been deducted by other parties)
Tax credit (PPh that has been deducted by PT ABC) = 7.500.000
Step 3
The value of the calculation result is visible:
PPh Nil / underpayment / overpayment
Income Tax still to be paid
= Annual Income Tax – Tax Credit
= 8.400.000 – 7.500.000
= 900.000 (Underpayment of PPh)
This article is based on:
PERATURAN DIREKTUR JENDERAL PAJAK NOMOR PER-17/PJ/2015, DATED 10 APRIL 2015
UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 7 TAHUN 2021, DATED 21 OCTOBER 2021
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