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A Guide to Corporate Income Tax In Indonesia
Companies in Indonesia have to pay corporate income tax by the end of the fourth month after year-end and must file corporate income tax returns

A Guide to Corporate Income Tax In Indonesia

December 2022

The most common tax year in Indonesia is the same as the calendar year, (1st January to 31st December). Corporate tax years are determined by the company’s Articles of Association.

Companies in Indonesia have to pay corporate income tax by the end of the fourth month after year-end and must file corporate income tax returns by the end of the fourth month after the end of the reported tax year. You may apply for extensions for a maximum of two months if you submit a written notice to the Directorate General of Taxation before the tax return deadline. 

Indonesian Corporate Income Tax (CIT) Rate

  • In Indonesia, the corporate income tax (CIT) rate is 22% %.
  • Public firms that meet certain requirements, including a minimum listing requirement of 40%, are qualified for a 3% reduction from the usual CIT rate.
  • Businesses will qualify for a 50% proportionate tax discount from the usual CIT rate if their corporate taxpayers have annual revenues of no more than IDR 50 billion.
  • Some small and medium-sized businesses (SMEs) are subject to a CIT rate of 0.5% if their gross income is less than IDR 4.8 million.
  • Typically, the fiscal profit will be used to determine the CIT (taxable income). However, the gross revenue is used to determine the 0.5% CIT rate for SMEs.
     

Corporate Income Tax

Tax Rate
  1. Normal Rate

22% from Profit

       2. Public company with >40% of its shares traded on the IDX

19%  from Profit

       3. Companies with a gross turnover below IDR 50 billion

Range from 12.5% to 20% from Profit

      4. Companies with a gross turnover below IDR 4.8 billion

 0,5% from Revenue %


Which Businesses Pay Taxes

  • If a firm is incorporated in Indonesia or has its domicile there, it is regarded as a tax resident here..
  • With an additional Branch Profit Tax duty, a foreign corporation conducting business through a permanent establishment (PE) is subject to the same tax rates as resident taxpayers.

Permanent Establishment (PE)

Because of its establishment or location of management in Indonesia, an overseas corporation is regarded as a resident of Indonesia for tax reasons.
A non-resident firm may be considered to have a taxable presence under the Income Tax Law if it operates a business or engages in certain activities in Indonesia, including but not limited to:

  • a place of management
  • a branch of the company
  • a representative office
  • an office building
  • a factory
  • a workshop
  • a warehouse
  • a room for promotion and selling
  • a mining and extraction of natural resources
  • a mining working area for oil and natural gas
  • a project of construction, installation, or assembly the provision of services in whatever form by workers or other person, as long as carried out not more than 60 days within a 12-month period at a fishery, animal husbandry, agricultural, plantation, or forestry location
  • a fishery, animal husbandry, agriculture, plantation, or forestry location
  • a project of construction, installation, or assembly
  • The provision of services, in whatever form, by staff members or others, so long as it lasts no longer than 60 days in a calendar year.
  • An individual or organization serving as a dependent agent
  • a representative or employee of an insurance business that isn't based in Indonesia but insures risks there or collects insurance premiums there.
  • The computers, electronic agents, or automated equipment that an electronic transactions provider owns, rents, or utilizes to carry out commerce via the Internet

A form of business utilized by a foreign subject to conduct merely "preparatory or auxiliary" activity in Indonesia will not constitute the creation of a PE under the operation of a tax treaty, according to domestic legislation on PE, which also recognizes the notion approved under OECD and UN Commentaries.

 

Tax Holiday Criteria

The following criteria must be met in order for the aforementioned industries to qualify for a tax holiday:

Fresh financial commitment
 

IDR

Tax Holiday Facility

Tax Holiday Period

More than or equal to IDR 100 billion but not more than IDR 500 billion

50%

5 years

More than or equal to 500 billion but not more than 1 trillion

100%

5 years

More than or equal to 1 trillion but not more than 5 trillion

100%

7 years

More than or equal to 5 trillion but not more than 15 trillion

100%

10 years

More than or equal to 15 trillion but not more than 30 trillion

100%

15 years

More than or equal to 30 trillion

100%

20 years


In Indonesia, a crucial step that all businesses must take is to file and pay corporate income tax.

We advise consulting with Moores Rowland Indonesia tax services to make sure your company’s income tax filings are correct and submitted on time. Our skilled tax staff will guarantee that your taxes are in compliance with Indonesian law.  For more information on our services, please email: contact-Jakarta@moores-rowland.com or contact-Bali@moores-rowland.com.

**By: Stefani W. Anggraeni — Marketing Communications & Social Media Specialist