Unjustice on the Taxation of Income from Construction Service

Abstract

Income earned from construction services is subject to tax with a specific final Income Tax flat rate applied to gross income. It is different from the general Income Tax rate where net income is a basis of tax calculation. The current legislation of Income Tax on income derived from construction services in Indonesia is Government Regulation Number 51 of the Year 2008 as amended by Government Regulation Number 40 of the Year 2009. This paper intended to do an in-depth analysis of whether the regulation conformed with equity principle as referred to legal theory and taxation theory. This research is legal research using a normative method. The result of research concludes that the current regulation on the taxation of income derived from construction services is not in line with the principle of horizontal equity and vertical equity because tax imposed not based on their ability to pay that reflected in net income.

Keywords: Reconstruction, Construction Services Income Tax, Final Tax, Equity, Regulation,