National regulation and international agreements

Consumption taxes

Nature of the tax

Value Added Tax, Pajak pertambahan nilai (PPN).

Tax rate

10%

Reduced tax rate

- sellers of second-hand cars, travel agents, postal services (1%)
- manufacturers of cigarettes (8.4%)
- machining services (0.5%), some small and medium retailers (2%), DIY construction (4%)

 

Other consumption taxes

There is a tax on luxury goods which ranges from 10% to 75%. Luxury goods are non-vital goods such as air conditioning, television (10-20%), goods whose consumption is exclusive to more well-off people like jewelry and precious metals (30-50%), goods consumed more for their status than their usefulness, such as luxury cars (75%), harmful products such as alcoholic drinks (30-50%) and some luxurious properties.

Corporate taxes

Tax rate

Pajak penghasilan (Income Tax)	:	Progressive rate from 10 to 30% depending on income (10% for taxable income under 50 million Rp, 15% for income between 50 and 100 million Rp, and 30% for income over 100 million Rp).
Capital gains tax	:	Taxed as ordinary income
Levy on dividends	:	Deduction of 15%
Levy on interest	:	Deduction of 20% on interest paid to non-residents
Levy on royalties	:	Deduction of 20% on royalties transfered abroad
Levy on branch profits	:	Deduction of 20%
Social contributions	:	3.7%
Property tax	:	0.50%
Stamp duty	:	3 000 Rp to 6 000 Rp
Tax on transfers of property/real estate rights	:	5%

Tax rate for foreign companies

VAT applies in the same way to residents and non-residents.

Capital gains taxation

Long term capital gains are taxed as ordinary income, and losses are tax deductible.

Main allowable deductions and tax credit

Dividends received or derived from a resident company and stemming from holdings in another Indonesian limited liability company are exempt from tax if the beneficiary exercises commercial activities and holds at least 25% of the shares of the payer and if the dividends come from non-distributed profits. Generally, all legitimate expenses linked to business activities are deductible from income when income tax is calculated, but there are many exceptions. These can be deducted from tax: aid, donations and gifts received (as long as there are no commercial or work relations between the parties), inheritances, payments made by an insurance company (health, accident, life, education), premiums derived from interest on investment fund bonds (during the first 5 years after the setting up of the company), income generated by the main contractors in foreign aid projects, profits paid to a risk-capital company by an LDC doing business in Indonesia, the share of profits received by a member of a limited partnership without capital holding, affiliation, association or company.

Other corporate taxes

Income derived from resident companies and coming from foreign sources is subject to a unilateral tax credit concerning the foreign income tax paid. Income tax of 5% deductible at the end of the year, is levied on those who owe corporate tax. A tax on transfers of 5% is levied on buyers (except commercial activities).

Individual taxes

Tax rate

Pajak penghasilan (individual income tax)	:	Progressive marginal rate from 5% to 35% (20% for non-residents)
Property tax	:	0.50% of the value of the property
Tax on leaving Indonesia	:	From 250 000 Rp to 1 000 000 Rp (50 000 Rp to 250 000 Rp for non-residents)
Stamp duties	:	From 3 000 Rp to 6 000 Rp
Contribution to social security	:	2%

Allowable deductions and tax credit

Tax deduction allowance of 1 728 000 Rp for single people and 864 000 Rp for every married person.
Fixed deduction of 648 000 Rp (maximum) or 5% of the annual income.

 

Special expatriate tax regime

There is no special tax regime for expats in Indonesia.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

List of countries with which a double taxation treaty has been signed, available on the website of the General Tax Office

Whithholding taxes

Bilateral agreement

Sources of fiscal information

Tax Authorities

Ministry of Finance, Directorate General of taxes

Other domestic resources

Website for information and discussion about taxes