After establishing a company or business unit in Indonesia, FDI is required to comply with taxation according to regulations set by the Indonesia Tax Authority (ITA). The business entity is classified as Corporate Taxpayer. Tax regulation interpret Corporate Taxpayer as a group of people and/or capital which is a unit, both doing business and not doing business, which includes limited liability companies, other companies, state-owned enterprises or regionally owned companies with the name and in any form, firm, partnership, cooperative, pension fund, association, foundation, mass organization, socio-political organization, or other organizations, institutions and other forms of bodies, including collective investment contracts and Permanent Establishments (BUT).
Corporate Income Tax
- Income Tax (Pajak Penghasilan, PPh) Article 29 regulates that the amount of tax owed by a WP entity in one year is greater than the sum of tax credits that have been deducted by the other party and have been deposited. The income tax rate under Article 29 is 22% of the taxable profit in one tax year.
According to Article 31E paragraph (1) of the Income Tax Act (UU PPh), corporate taxpayers with gross turnover less than Rp 50 billion per year benefit from a tariff reduction of 50% of the corporate income tax rate of 22% for profits before taxes, bringing the gross share of turnover up to Rp 4.8 billion. Profit before taxes for the 50 billion Rupiah is subtracted by 4.8 billion Rupiah will be calculated at a rate of 22%.
If the corporate taxpayers are fiscally in a loss position, the loss is compensated with earnings from the next tax year in a row, up to 5 years.
- If the corporate taxpayer has a gross business turnover of less than Rp 4.8 Billion in one tax year, the corporate taxpayer has the right to take advantage of the Final UMKM Income Tax scheme with a tax rate of 0.5% of the turnover. This scheme can be used by the corporate taxpayers for a maximum of 3 years.
For corporate taxpayers who use the Final UMKM Income Tax scheme, the earnings charged with Final UMKM Income Tax and the burden associated with the earnings will be fiscally corrected so that no Income Tax Article 29 is owed (Naught).
- For corporate taxpayer whose output is subject to Final Income Tax, such as construction and real estate enterprises, fiscal correction will be made on the corporate taxpayer that have been subjected to Final Income Tax and the burden related to such income, so that no Income Tax Article 29 is owed. (Naught).
- The payment and reporting deadline of corporate income tax is four months after the end of the fiscal year.
Withholding Income Tax
- Income Tax Article 4 Section (2)
Represents income tax on income deducted from interest on deposits and savings, bond interest, lottery prizes, stock transactions, land and building rental, construction services, and other transactions as specified in the regulations.
- Tariff of Income Tax:
| No. | Transactions | Tariffs |
| 1 | Deposit and savings interest | 20% |
| 2 | Bond interest | 10% |
| 3 | Lottery prize | 25% |
| 4 | Rent of land and building | 10% |
| 5 | Construction service | 1,75% – 6% |
- Payment deadline: on the 10th of the following month
- Reporting deadline: on the 20th of the following month
- Income Tax Article 15
Income tax imposed or collected from taxpayers in the shipping industry, as well as domestic and international flights.
- Tariff of Income Tax:
| No. | Transactions | Tariffs |
| 1 | Domestic shipping | 1,2% |
| 2 | Domestic flight | 1,8% |
| 3 | International shipping and/or flight | 2,64% |
- Payment Deadline:
- Deducted by Tax Authority: the 10th day of the following month
- Solely paid by: on the 15th of the following month
- Reporting deadline: on the 20th of the following month
- Income Tax Article 21
Income tax on services or activities received by individual taxpayers or employees.
- Income Tax Rate: Progressive from 5% to 35%
- Payment deadline: on the 10th of the following month
- Reporting deadline: on the 20th of the following month
- Income Tax Article 22
Tax collection levied on corporate taxpayers for trading activities such as imports, purchases of goods by treasurers and BUMN, sales of specific products, motor vehicles, oil and gas, luxury goods, and crypto assets.
| No. | Transactions | Tariffs | Payment Deadline | Reporting Deadline |
|---|---|---|---|---|
| 1 | Imports | 0,5% – 10% | When paying Import Duty or when completing PIB documents | – |
| 2 | Purchase of goods by the government treasurer | 1,5% | Same day as payment of goods | 14 days after the Tax Period ends |
| 3 | Purchase of goods by BUMN | 1,5% | on the 10th of the following month | on the 20th of the following month |
| 4 | Fuel oil, gas fuel and lubricants | 0,25% – 0,3% | on the 10th of the following month | on the 20th of the following month |
| 5 | Sales of production results in the field of business:Cement industryPaper industrySteel industryAutomotive industryPharmaceutical industry | 0,25%0,1%0,3%0,45%0,3% | on the 10th of the following month | on the 20th of the following month |
| 6 | Purchase of coal, metal minerals and non-metal minerals, from entities or individuals holding mining business licenses by industries or business entities | 1,5% | on the 10th of the following month | on the 20th of the following month |
| 7 | Gold jewelry and gold bars | 0,25% | on the 10th of the following month | on the 20th of the following month |
| 8 | Crypto Assets:Mechanism of collection by Trade Operators Through Electronic Systems (PPMSE):PPMSE is a Physical Crypto Asset Trader (PFAK)PPMSE is not a PFAKSelf-deposit mechanism:PPMSE is registered with BappebtiPPMSE is not registered with Bappebti | 0,1% 0,2% 0,1% 0,2% | on the 15th of the following month | on the 20th of the following month |
- Income Tax Article 23
Merupakan PPh atas transaksi terkait dividen, royalti, bunga, hadiah dan penghargaan, sewa, atau jasa.
- Tariff of Income Tax
| No. | Transactions | Tariffs |
| 1 | Services and Rent | 2% |
| 2 | Bunga, Dividen, Royalti, Hadiah dan Penghargaan | 15% |
- Payment deadline: on the 10th of the following month
- Reporting deadline: on the 20th of the following month
- Income Tax Article 25
Is a tax installment derived from the amount of tax payable according to the Corporate Income Tax Return minus income tax collected and income tax paid or payable abroad, which may be credited. This installment payment is due on the 15th day of the following month.
- Income Tax Article 26
Represents income tax on income sourced from Indonesia and received by foreign taxpayers other than permanent establishments (BUT) in Indonesia.
- Tariff of Income Tax: 20%
Indonesia has Double Tax Avoidance agreements with many countries. The tariff in the agreement is lower than 20% and can even be waived. One of the requirements for Corporate Taxpayers to take advantage of the DTA rate is that an overseas vendor provide a complete and valid DGT Form.
- Payment deadline: on the 10th of the following month
- Reporting deadline: on the 20th of the following month
Value Added Tax (Pajak Pertambahan Nilai, PPN)
VAT is an 11% tax levied on transactions for the delivery of Taxable Goods (BKP) and/or Taxable Services (JKP) that has been in effect since April 2022. VAT payments and reporting are due by the end of the following month.
Corporate WP with a turnover of more than IDR 4.8 billion that submits Taxable Goods and/or JKP must register as a PKP with the obligation to issue a Tax Invoice, collect VAT payable, and deposit accrued VAT in accordance with tax regulations.
To calculate accrued VAT, Taxpayers can offset between Output Tax and Input Tax in one Tax Period. Output Tax is VAT that is collected on the delivery of BKP and/or JKP made by Corporate Taxpayers while Input Tax is VAT paid by Corporate Taxpayers to vendors for purchasing BKP and/or JKP. Input Tax that can be credited but has not been credited with Output Tax in the same Tax Period can be credited in the next Tax Period no later than three Tax Periods after the end of the Tax Period when the Tax Invoice is made.
