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Corporate Tax in Indonesia

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Indonesia has blossomed into Southeast Asia’s largest economy and is an emerging market that investors and companies are looking to venture into. Although the pandemic has struck a huge blow in the country’s growth, there are still opportunities for businesses and entrepreneurs to start a business.

Before incorporating a company in Indonesia, it is important to understand the tax compliances and system so to align with your business and financial goals.

Tax Compliance as a Resident or Non-Resident Company

Resident and non-resident companies have different tax compliances and regulations. How a company is classified as a resident or non-resident company is dependent on where the business is established.

Resident company – incorporated and conducting business activities in Indonesia

Non-resident company – incorporated overseas, however, generating revenue from Indonesia

As a resident company, you will be charged as per a resident taxpayer. These include benefits such as:

  • Income tax relief for setting up businesses in key sectors or in certain locations
  • 5% reduction should your company be listed and fulfil certain criteria
  • Flexibility of tax payments – direct payment to Director General of Tax (DGT), 3rd party withholding, or a mix of both.

For non-resident companies, it can only be done through withholding tax from income avenues within the country.

Types of Taxes and Tax Rates in Indonesia

There are various types of corporate taxes that one should take note of, including the tax rates and deadline to file these taxes.

Types of Taxes Description Tax Rates Deadline
Annual Corporate Tax Annual income tax return needs to be filed by all companies 22% (20% from 2022 onwards) Payment deadline
4th month after the financial year-end before filing tax returnReturn filing deadline
4th month after the financial year-end
Employee Withholding Tax Requirements for employers to withhold tax from salaries payable to pay the tax to the State Treasury on their employees’ behalf From 5% to 30%, depending on their salaries

Up to IDR 50K: 5%

Above IDR 50K, up to 250K: 15%

Above IDR 250K, up to 500K: 25%

Above IDR 500K: 30%

Payment deadline
10th of the following monthReturn filing deadline
20th of the following month
Third-Party Withholding Tax Requirement to withhold final tax from the gross payments to resident taxpayers and Permanent Establishments Rental of land/ buildings: 10%

Income from transfer of land/ buildings: 2.5%

Construction fees: 2-6%

Interest on saving deposits: 20%

Interests to bonds other than payable to banks: 15%

Payment deadline
10th of the following monthReturn filing deadline
20th of the following month
Other Taxes (Resident Taxpayers) Any other forms of income paid or payable to residents are subjected to tax at their gross amounts Dividends, interests, royalties, etc.: 15%

Management and consultation services, etc.: 2%

Payment deadline
10th of the following monthReturn filing deadline
20th of the following month
Other Taxes (Non-resident Taxpayers) Any other forms of income paid or payable to non-residents Dividends, interests, royalties, service fees, pensions, rental, etc.: 20% Payment deadline
10th of the following monthReturn filing deadline
20th of the following month
Value Added Tax (VAT) Only applicable when the turnover exceeds IDR 4.8 billion per annum for the transfer of taxable goods or services listed in the Indonesian Customs Area VAT: 10%

VAT on export of goods and services: 0%

Payment deadline
Last date of the following monthReturn filing deadline
Last date of the following month

While the flat rate for corporate income tax stands at 22% (20% from 2022 onwards), there are discounts available selected group of companies in Indonesia:

  • Public Companies – tax discount of 3%

    ✓ Min. Listing requirement of 40%
    ✓ Fulfilment of other conditions such as shares must be owned by a minimum of 300 parties

  • Small Companies – tax discount of 50%

    ✓ Only for small companies
    ✓ Annual turnover below IDR 50 billion & below
    ✓ Imposed proportionately on taxable income on the gross turnover up to IDR 4.8 billion
    ✓ Companies with gross turnover of IDR 4.8 billion & below are subject to final income tax of 0.5% of turnover

Requirements for Tax Reporting

Tax reporting is a tedious, yet important task for all companies in Indonesia. The main requirements when it comes to corporate tax reporting include:

  • Company’s tax identification number & SKT (Surat Keterangan Terdaftar)
  • All financial reports duly completed
  • Previous tax reports with documentation (if any)
  • Income statement
  • Balance sheet
  • General ledger
  • List of assets and depreciation
  • List of prepayments, lease, and its amortisation

Requirements for Tax Reporting

Tax reporting is a tedious, yet important task for all companies in Indonesia. The main requirements when it comes to corporate tax reporting include:

  • Company’s tax identification number & SKT (Surat Keterangan Terdaftar)
  • All financial reports duly completed
  • Previous tax reports with documentation (if any)
  • Income statement
  • Balance sheet
  • General ledger
  • List of assets and depreciation
  • List of prepayments, lease, and its amortisation
Corporate Tax checker

Corporate Tax Incentives in Indonesia

If you are a public or small company in Indonesia, there are some corporate tax incentives that you can tap on.

  • Public Companies

    For public companies that have a minimum listing requirement of 40% and fulfil other conditions, they are granted a tax discount of 3% off the standard rate. This means 19% for the fiscal year of 2020/21 and 17% for the fiscal year 2022 onwards.

  • Small Companies

    For small companies who have an annual turnover of not more than IDR 50 billion, they are entitled to a 50% tax discount off the standard rate. This is imposed proportionately on the taxable income on the gross turnover up to IDR 4.8 billion.

    Certain companies with a gross turnover of not more than IDR 4.8 billion are subject to a final income tax at 0.5% of turnover.

The Indonesia tax compliances and regulations can be complicated.

That’s why we’re here to help you with your corporate needs from taxation, incorporation, auditing, and more, so you can put your focus on your business – reach out to us today!

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FAQs

Siapa yang tidak berhak mendapatkan insentif pajak?2022-07-19T17:08:22+08:00

Anda harus memiliki nomor identifikasi pajak, membayar semua biaya bea cukai yang diperlukan, membayar kewajiban pajak apa pun yang mungkin masih terutang, dan menunjukkan perincian pendapatan terbaru untuk tahun keuangan terbaru sebelum diizinkan secara hukum untuk mengklaim pembebasan pajak apa pun di Indonesia. Jika tidak, Anda tidak memenuhi syarat untuk insentif pajak. 

Mengapa pemerintah Indonesia menurunkan pajak perusahaan?2022-07-19T17:08:39+08:00

Salah satu dari banyak alasan untuk menurunkan tarif pajak perusahaan di Indonesia adalah untuk menarik lebih banyak investasi asing langsung di negara ini. 

Apa itu Nomor Pokok Wajib Pajak?2022-07-19T17:08:50+08:00

Nomor Pokok Wajib Pajak (NPWP) dikenal di Indonesia sebagai Nomor Pokok Wajib Pajak (NPWP). Adalah sekumpulan angka yang diberikan kepada Wajib Pajak (baik orang pribadi maupun badan) sebagai tanda pengenal diri dalam melaksanakan hak dan kewajiban perpajakannya (yaitu Pajak Penghasilan, dan PPN). NPWP diberikan kepada Wajib Pajak yang memenuhi syarat yang telah memenuhi persyaratan subjektif dan objektif sebagaimana diatur dalam peraturan perundang-undangan perpajakan. 

Apakah orang asing perlu membayar pajak di Indonesia?2022-07-19T17:09:04+08:00

Jika Anda tinggal di Indonesia selama total kumulatif 183 hari dalam satu tahun pajak, Anda harus mengajukan dan membayar pajak. 

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