Understanding Indonesian Restaurant Tax (PB1): A Comprehensive Guide

When dining out in Indonesia, you might notice an additional charge on your bill labeled "PB1." This stands for Pajak Restoran (Restaurant Tax), also sometimes referred to as Pajak Bangunan 1. This article provides a comprehensive overview of PB1, differentiating it from Value Added Tax (VAT/PPN) and outlining which businesses are subject to this tax.

What is PB1 (Restaurant Tax)?

PB1 is a local tax levied on services provided by restaurants and similar establishments. It's a key source of revenue for regional governments (both at the provincial and regency/city levels). The legal basis for PB1 is primarily found in Law No. 28 of 2009 concerning Regional Taxes and Regional Levies (UU PDRD).

Key Aspects of PB1:

• Tax Subject: The tax subject is the business providing the food and/or beverage services. This includes:

  • Restaurants

  • Restaurants

  • Cafeterias

  • Food stalls (Warung)

  • Bars

  • Catering services

  • And other similar establishments that provide food and/or beverage services for a fee.

• Tax Object: The tax object is the service provided by the restaurant, which encompasses the sale of food and/or beverages, whether consumed on the premises or taken away (take-out/delivery).

• Tax Rate: The maximum PB1 rate is 10%, as stipulated by UU PDRD. However, the exact rate is determined by each local government, meaning it can vary from one region to another.

• Tax Base: The tax base is the total payment received or that should have been received by the restaurant for the services provided. This includes the price of the food and beverages but excludes other taxes like service charges (if any).

PB1 Calculation Example:

If your total bill at a restaurant in a region with a 10% PB1 rate is IDR 200,000, the PB1 amount would be IDR 20,000 (10% x IDR 200,000). Your total payment would then be IDR 220,000.

Why Restaurants are Subject to PB1, Not PPN:

The primary reason restaurants are subject to PB1 and not PPN is to prevent double taxation. If restaurants were subject to both taxes, consumers would effectively be paying tax on the same transaction twice: once to the central government (PPN) and again to the local government (PB1). This would be an unfair and inefficient system.

UU PPN specifically excludes the delivery of food and beverages in restaurants from PPN imposition. This exclusion is then complemented by UU PDRD, which explicitly designates restaurant services as subject to local tax (PB1).

Which Businesses Should Use PB1?

Any business that provides food and/or beverage services for a fee to consumers should collect and remit PB1. This includes, but is not limited to:

• Full-service restaurants

• Fast-food restaurants

• Cafes and coffee shops

• Food stalls (Warung, angkringan, etc.)

• Catering businesses

• Bars and pubs (for food and beverage sales)

Important Note: Even if a business also sells other goods or services that are subject to PPN, the food and beverage sales within their restaurant operations will still be subject to PB1.

Understanding the distinction between PB1 and PPN is essential for both restaurant owners and consumers in Indonesia. PB1 is a crucial source of local government revenue and plays a significant role in the local economy. By understanding the regulations and obligations related to PB1, businesses can ensure compliance and contribute to local development.

This blog post provides general information and should not be considered legal or tax advice. Consult with a qualified tax advisor for specific guidance related to your business.

Contact Dana Consultants today for understand more about business tax in Indonesia

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