Is There a Tax on Mutual Funds? Check the Regulations Here!
Is Mutual Fund Investment Taxable?
Do You Need to Report Mutual Funds in Your Annual Tax Return?
Reporting Schemes for Mutual Funds in the Annual Tax Return
How to Report Mutual Funds in the Annual Tax Return
You probably already know that all types of income are subject to tax. So, does the return from Fixed Income Mutual Fund investments get taxed as well? If so, what percentage is applied? To answer this, make sure to read this article to the end!
Technically, all of your wealth and assets must be reported annually in your Annual Tax Return (SPT), and this applies to Mutual Fund investments too. But how much tax is applied to Mutual Funds? Let’s find out below!
Is Mutual Fund Investment Taxable?
One of the investment instruments that generates returns is Fixed Income Mutual Funds. This type of investment helps you grow your income. When you purchase a Mutual Fund product, your investment is managed and pooled by an Investment Manager (MI).
The goal is to generate a return that meets your expectations. Based on this, it seems that Mutual Fund returns could be considered a form of income. So, the question arises—are Mutual Fund returns taxable?
Referring to Law No. 46 of 2008 on Income Tax, it is stated that all types of income are subject to tax. However, there are certain exemptions, such as collective investment contracts.
According to Law No. 8 of 1995 on Capital Markets, Mutual Funds are considered collective investment contracts or companies. Therefore, Mutual Funds are not subject to tax, and the returns (gains) are not taxable either.
Do You Need to Report Mutual Funds in Your Annual Tax Return?
Even though Fixed Income Mutual Funds are not subject to income tax, you still need to report both the ownership and returns from Mutual Funds in your Annual Tax Return.
This is because Mutual Funds are considered an investment asset and part of your wealth, separate from your income. Other wealth assets that must be reported in the Annual Tax Return include bonds, gold, land, buildings, and cash.
So, when preparing your Annual Tax Return, make sure to have the necessary data on your Mutual Fund ownership and returns ready to include in the report. Check out the reporting schemes below!
Reporting Schemes for Mutual Funds in the Annual Tax Return
Understanding the reporting schemes for Mutual Funds in your Annual Tax Return is important to ensure you correctly report your wealth. There are two ways to report Mutual Funds in the Annual Tax Return: using the category of investment assets or the category of non-taxable income.
These two schemes depend on your Mutual Fund holdings. To better understand, here’s a more detailed explanation:
- Reporting Scheme for Investment Assets (Wealth)
This scheme applies if you bought the Mutual Fund at the beginning of the year and held the Mutual Fund investment until the reporting period ended.
In this case, you report the initial purchase value of the Mutual Fund. For example, if you purchased Mutual Funds worth IDR 20 million and their value increased to IDR 27 million by the end of the reporting period, the amount you need to report is the initial value of IDR 20 million.
- Reporting Scheme for Non-Taxable Income
This scheme applies if you bought the Mutual Fund at the beginning of the year and sold it during the Annual Tax Return reporting period. In this case, the amount to report is the profit from the sale.
For example, if you bought Mutual Funds for IDR 15 million at the start of the year and sold them for IDR 30 million during the reporting period, the value to report is the IDR 15 million profit, which is the difference between the sale price and purchase price.
However, note that if you didn’t make a profit or incurred a loss when selling your Mutual Funds during the reporting period, you do not need to report any gains.
Read more:
How to Report Mutual Funds in the Annual Tax Return
Are you all clear about the reporting schemes for Mutual Funds in the Annual Tax Return? If so, here’s how you can report Mutual Funds in your Annual Tax Return. First, you must have a Taxpayer Identification Number (NPWP).
There are two ways to submit your Annual Tax Return—offline and online. Here's how to do it offline:
- Visit your nearest Tax Office;
- Meet the staff;
- Fill out the Annual Tax Return form accurately and completely;
- Submit the form to the staff.
If you prefer not to visit the Tax Office, you can file your Annual Tax Return online. Here’s how to do it online:
- Log in to the DJP Online application;
- Fill in the login form with your NPWP, password and captcha code;
- Click the "E-Filing" option;
- Complete the fields required for the Annual Tax Return;
- Fill in the “New Asset” or “Harta Baru” section;
- Enter code “036”;
- List the Mutual Fund under the asset name;
- Select the year when the Mutual Fund was acquired, for example, 2023;
- Enter the value based on your Mutual Fund holdings, for example, IDR 30 million;
- Fill in the details of the company where the Mutual Fund was purchased.
From the above explanation, it can be concluded that Fixed Income Mutual Funds are investment instruments not subject to tax, so investors do not need to worry about being taxed. However, investors are still required to report Mutual Fund returns in the Annual Tax Return, as they are part of their wealth.
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