On April 11 and 12, I attended a forum discussing about taxation aspect for married women based on UU PPh 1984 which had been ultimately revised by UU Nomor 36 Tahun 2008. Discussion went deadlocked because audiences had different understanding about Article 8: how do we calculate tax payable of a married woman who chooses to carry her own obligation of taxation out by herself as well as earns income from one employer?

As we know, the article regulates as follow:

(1) Seluruh penghasilan atau kerugian bagi wanita yang telah kawin pada awal tahun pajak atau pada awal bagian tahun pajak, begitu pula kerugiannya yang berasal dari tahun-tahun sebelumnya yang belum dikompensasikan sebagaimana dimaksud dalam Pasal 6 ayat (2) dianggap sebagai penghasilan atau kerugian suaminya, kecuali penghasilan tersebut semata-mata diterima atau diperoleh dari 1 (satu) pemberi kerja yang telah dipotong pajak berdasarkan ketentuan Pasal 21 dan pekerjaan tersebut tidak ada hubungannya dengan usaha atau pekerjaan bebas suami atau anggota keluarga lainnya.

(2) Penghasilan suami-isteri dikenai pajak secara terpisah apabila:
1. suami-isteri telah hidup berpisah berdasarkan putusan hakim;
2. dikehendaki secara tertulis oleh suami-isteri berdasarkan perjanjian pemisahan harta dan penghasilan; atau
3. dikehendaki oleh isteri yang memilih untuk menjalankan hak dan kewajiban perpajakannya sendiri.

(3) Penghasilan neto suami-isteri sebagaimana dimaksud pada ayat (2) huruf b dan huruf c dikenai pajak berdasarkan penggabungan penghasilan neto suami isteri dan besarnya pajak yang harus dilunasi oleh masing-masing suami-isteri dihitung sesuai dengan perbandingan penghasilan neto mereka.

This post contains two major opinions cited by the audiences in the forum. Feel free to deliver your opinion in comment box below, either it is additional reason of one of the major opinions or it is third opinion.

Complexity of Article 8
Article 8 par. (1) is manifestation of family entity principle. The principle means that income tax is basically subjected to family entity. Therefore, if a married woman earns income, the income will be calculated together with her husband’s income in order to count tax payable of the family.

Illustration 1
For instance, say Laura has earned accumulative nett income of Rp100.000.000 for 2010 by working as a broadcaster in Radio Sonora and as a freelance writer in Bee Magz. Her husband, Rio, have earned nett income of Rp200.000.000 for the same year. They have two children.

Based on the principle, their tax payable is counted as follow:
Rio’s nett income Rp200 million
Laura’s nett income Rp100 million
Sum Rp300 million
Less: nontaxable income (Rp 35.64 million)
Taxable income (PKP) Rp264.36 million
Income tax payable:
5% x Rp50.000.000 = Rp2.5 million
15% x Rp200.000.000 = Rp30 million
25% x Rp14.360.000 = Rp3.59 million
Sum = Rp36.09 million
Thus, they accumulatively owed income tax of Rp36.09 million.

Article 8 par. (1) also has exception for the principle: if a married woman only works for one employer and the employer isn’t her husband, her income will have to be calculated itself (separate from her husband income).

Illustration 2
Using the previous illustration, except that in this illustration Laura only works for one employer, then their tax payable will be as follow:

Laura’s nett income Rp100 million
Less: Laura’s nontaxable income herself (Rp15.84 million)
Taxable income (PKP) Rp84.16 million
Laura’s income tax payable:
5% x Rp50.000.000 = Rp2.5 million
15% x Rp34.160.000 = Rp5.124 million
Sum = Rp7.624 million

Rio’s nett income Rp200 million
Less: Rio’s nontaxable income himself (Rp19.8 million)
Taxable income (PKP) Rp180.2 million
Rio’s Income tax payable:
5% x Rp50.000.000 = Rp2.5 million
15% x Rp130.200.000 = Rp19.53 million
Sum = Rp22.03 million

Thus, they accumulatively owed income tax of Rp29.654 million. This result is Rp6.436 million less than the previous result.

Now consider paragraph (2) no. 3 juncto paragraph (3): if a married woman chooses to carry her own obligation of taxation out by herself, her income will still have to be calculated together with her husband and she will have to pay tax proportionally in ratio of their income.

Illustration 3
Using the first instance above, where Laura works for Radio Sonora and Bee Magz, except that in this illustration Laura also chooses to carry her own obligation of taxation out by herself, then their accumulative tax payable will be same as the first instance (Rp36.09 million). Because she chooses to carry her own obligation of taxation out by herself, then her tax payable has to be counted as follow:
(100 million : (100 million + 200 million)) x 36.09 million
Thus, she owed tax of Rp12.03 million and her husband owed tax of Rp24.06 million.

That’s simple, isn’t it?

It will be confusing if Laura only works for one employer, the employer isn’t her husband, as well as she chooses to carry her own obligation of taxation out by herself. Should Laura and Rio’s tax payable be counted separately like the second illustration? Or should it be counted cumulatively like the last illustration?

First opinion: it should be counted separately like second illustration
One group of the audiences opined that it should be counted like the second illustration: Laura’s income has to be separated from her husband’s income when counting her tax payable. Thus, Laura owed tax of Rp7.624 million and her husband owed tax of Rp22.03 million. Their accumulative tax payable was Rp29.654 million.

This group gave reason as follow:
Basically, Article 8 regulate that income tax is subjected to family entity (family entity principle). Even in a case where a married woman chooses to carry her own obligation of taxation out by herself, the Code is still consistent with the principle. Look par. (3):

(3) Penghasilan neto suami-isteri sebagaimana dimaksud pada ayat (2) huruf b dan huruf c dikenai pajak berdasarkan penggabungan penghasilan neto suami isteri dan besarnya pajak yang harus dilunasi oleh masing-masing suami-isteri dihitung sesuai dengan perbandingan penghasilan neto mereka.

They meant, par. (2) and (3) are intent to control taxpayers from planning tax avoidance. So,tax obligation of a married woman can’t be reduced just because she has her own NPWP. In addition, there is only one rightfull married woman’s tax reduction served by the Code, as regulated in Article 8 par. (1) at line “kecuali penghasilan tersebut semata-mata diterima atau diperoleh dari 1 (satu) pemberi kerja bla bla bla…”

They concluded, income of a married woman who only works for one employer as well as the employer isn’t her husband has to be separated from her husband’s income when counting her tax payable, though she has her own NPWP. In this case, according to the group of audiences, par. (2) and (3) can’t be applied.

Second opinion: it should be counted cumulatively like last illustration
Rest of audiences opined that it should be counted like last illustration: Laura’s income has to be calculated together with her husband’s income; her tax payable will be proportional when counting her own tax payable. Thus, Laura owed tax of Rp12.03 million and her husband owed tax of Rp24.06 million. Their accumulative tax payable was Rp36.09 million.

This group gave reason as follow:
The case is specifically regulated at par. (2): married woman chooses to carry her own obligation of taxation out by herself. So, in this case, fact that the married woman only works for one employer can be excluded.

If the woman had had NPWP before married, she should submit erasing her own NPWP in order to pay tax lower (as in second illustration), otherwise her income will be collected with her husband’s income. Higher tax burden, according to the group of audiences, is logical consequence of her decision keeping her own NPWP.

What about me?
I prefer first opinion to second opinion. In terms of income tax calculation, Article 8 par. (2) and (3) were made to keep family entity principle, not as logical consequence of married woman’s decision keeping her own NPWP. In addition, tax which is borne to married woman who keeps her own NPWP is not “higher”, but equal to other families in which “Mom” doesn’t choose to carry her own obligation of taxation out by herself.