Income received by a CV owner in the form of prive (profit withdrawal) is not subject to Personal Income Tax (PPh) at the individual level, as it has already been taxed at the entity level. However, the CV owner remains obligated to report this income in their Annual Tax Return (SPT Tahunan) each year — and failure to do so may result in administrative penalties.
What is prive in a CV?
Prive is the mechanism by which owners of a Commanditaire Vennootschap (CV) — Indonesia's limited partnership business structure — withdraw their share of the entity's profit. Unlike a salary or dividend, prive is a direct draw from the CV's earnings by either an active partner (sekutu komplementer) or a passive partner (sekutu komanditer).
Because a CV's capital is not divided into shares as in a Perseroan Terbatas (PT), the owner's capital is considered merged with the entity itself. This is precisely what makes the tax treatment of prive different — and more advantageous — than that of other business structures.
Why is prive not subject to additional income tax?
The logic is straightforward: the same income cannot be taxed twice. A CV's profit is already subject to Corporate Income Tax (PPh Badan) at the entity level. When that profit is then distributed to the owner as prive, no further Personal Income Tax applies at the individual level.
Prive is not subject to additional PPh because the CV's profit has already been taxed at the entity level through Corporate Income Tax (PPh Badan).
Dividends distributed by a PT may be subject to further taxation at the shareholder level. Prive from a CV is not — making the CV structure notably more tax-efficient in this regard.
The reporting obligation remains
Being exempt from tax does not mean the income goes unreported. CV owners, as individual taxpayers, must declare their prive income in their Annual Personal Income Tax Return (SPT Tahunan) every year. The steps are as follows:
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01.
Use Form 1770S This form is recommended over the standard 1770, as it includes a dedicated section for prive income that accommodates the specific nature of CV profit distributions.
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02.
Complete Appendix I, Section B, Item 3 "Share of Profit of a Non-Share Commanditaire Vennootschap Member, Partnership, Association, Firma, or Kongsi" — this is the correct field for CV prive income.
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03.
Attach a detailed breakdown of prive distribution A supporting document detailing the profit distribution must be attached to the SPT at the time of filing. Without this attachment, the return is considered incomplete.
The CV's own tax obligations as an entity
Separate from the individual owner's obligations, the CV itself carries a set of tax duties as a corporate taxpayer subject:
Calculated on the CV's net profit. May be paid in monthly instalments (PPh 25) and reconciled annually (PPh 29).
Mandatory monthly withholding and reporting if the CV employs permanent or non-permanent staff.
The CV must hold its own Tax Identification Number (NPWP), entirely separate from the personal NPWP of its partners.
As amended by the Job Creation Law No. 6/2023 (UU Cipta Kerja), Article 2(1)(b) and Article 4(3).
Risks of failing to report
The absence of tax payable does not eliminate the administrative reporting obligation. Failing to declare prive in the Annual Tax Return — even when no tax is owed — can still expose the taxpayer to legal consequences.
Important: Failure to file an Annual Tax Return on time — even when there is no tax liability — may result in administrative penalties in the form of late filing fines or a formal notice from the Directorate General of Taxes (DJP). The obligation to report is entirely independent of any obligation to pay tax.
| Primary Law | Law No. 36 of 2008 on Income Tax (UU PPh), Article 2(1)(b) and Article 4(3) |
| As Amended By | Law No. 6 of 2023 on the Job Creation Law (UU Cipta Kerja) |
| Reporting Form | Annual SPT Form 1770S, Appendix I, Section B, Item 3 |
| Official Source | Directorate General of Taxes, Republic of Indonesia (pajak.go.id) |
This article is intended for informational purposes only and does not constitute legal or tax advice. For guidance specific to your circumstances, we strongly recommend consulting a registered tax consultant or licensed legal professional familiar with Indonesian tax law.