Just like any country, businesses are required to pay taxes in Indonesia. In Indonesia, companies are required to submit their corporate income tax returns and audited financial statements if they meet the following criteria:
- Their business collects or manages public funds (e.g. banks, insurance, mutual funds)
- If a business, in the past, has issued a public debt acknowledgment letter
- Are a public company (PT Tbk) or limited liability company (PT)
- Has business turnover with a value of at least IDR 50 billion
Other taxes such as value-added tax (VAT) and import tax are among other taxes Indonesian businesses face. Keep reading to find out more about which ones to know, and taxation services in Indonesia.
Personal Income Tax
In Indonesia paying personal income tax is mandatory. If you have stayed in Indonesia for more than 183 days within 12 months, your income will be taxed using a progressive rate. Generally, most individuals pay their income tax via monthly withheld by employers.
Indonesian personal income tax is calculated as follows:
|Taxable Income (Indonesian Rupiah)||Tax Rate|
|Up to IDR 50 million per year||5%|
|Between IDR 50 million and IDR 250 million||15%|
|Between IDR 250 million and IDR 500 million||25%|
|Above IDR 500 million||30%|
For your convenience, Cekindo’s personal tax calendar can be used to calculate your yearly personal income tax.
There are two types of taxpayers: resident and non-resident. Resident taxpayers can be identified as an individual that:
- Is domiciled in Indonesia
- Has resided in Indonesia at least a total of 183 within a calendar year
- Reside in Indonesia during a tax year.
Non-resident taxpayers are individuals who do not fit the above criterion. As a non-resident taxpayer, you do not have to register for an Indonesian tax ID number (NPWP), nor do you have to file your individual income tax. If you were taxed, it would only be on Indonesian sourced income, paid by withholding by your employer.
Corporate Income Tax
When a company generates more than IDR 50 billion in revenue per year, the standard corporate income tax is a flat rate of 22% for both domestic and international incomes. Companies that generate less revenue are subject to a smaller tax.
Enterprises that generate below IDR 4.8 billion in revenue are subject to a tax of 0.5% whereas those that generate revenue between IDR 4.8 billion and IDR 50 million are subject to 11% in corporate income tax.
Publicly traded companies can face a tax cut of 5%, on the condition that more than 40% of their shares are traded on the Indonesian stock exchange (IDX). There are also special tax rates for companies in the mining, petroleum, construction, and foreign design industries.
Note that foreign-owned companies that operate in Indonesia are also subject to the above tax rates. You can calculate your company’s basic corporate income tax calculator, or using taxation services in Indonesia.
Value Added Tax
Indonesian customs also impose a tax on goods and services called Value-Added Tax, or VAT. Indonesian VAT impacts both businesses and consumers, as the tax is applied to each production stage until a product’s final sale.
Indonesia’s VAT is set between 5% and 15% depending on government regulations, but generally, the standard rate is at 10%. Certain goods and services are VAT-exempt, such as the export of both tangible and intangible taxable goods, as well as certain taxable services.
Some non-taxable goods and services are not subject to VAT. Non-taxable goods include those that are food and beverages served at hotels and restaurants, basic commodities, and products that are extracted from the source (eg natural gas, coal, gravel, etc). Services that are non-taxable include:
- Medical and health services
- Mail services
- Social services such as funeral
- Religious services
- Insurance services
- Art and entertainment services
- Educational services
- Public transportation services
- Hotel services
- Manpower services
- Food and catering services
- Public telephone services
- Broadcasting services that are not relevant to advertising
There are three taxes goods are subjected to when importing goods into Indonesia. Below are the three taxes in Indonesia and their standard tax rates:
|Import duty||Between 0% and 450% depending on HS code of goods|
|Value-added Tax||Generally 10%|
|Income Tax||At least 2.5%, depending on the product|
In addition to these taxes, higher-end goods are also subject to a Luxury Tax. Below is an example of luxury goods and their tax rates:
- Luxury cars (150% – 200%)
- Yachts (75%)
- Luxury motorcycles (60%-125%)
- Alcohol beverages (5%-20%)
- Branded shoes (40%)
Need Assistance With Taxes?
Indonesia’s tax system can be quite complex, so it is important to seek assistance from experts in Indonesian tax laws. Our finance team is well-equipped to answer any questions you may have about tax in Indonesia while simplifying your company’s tax processing system. For more information about taxation services in Indonesia, contact us to start streamlining your tax processes.