Various forms of taxes from Indonesia that you should know

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In investment matters, tax is a key issue, no matter where you are. As one of the major contributors to the income of a country, for investors considering joining a market country, the amount of tax levied is often a deciding factor.

No exception is Indonesia. It imposes both corporate taxes on companies doing business in Indonesia and taxes on individuals’ personal income.

Here we explain Indonesia’s key taxes:

1. Charge on Corporate Profits

Level of Tax:

  • Companies with annual revenue of up to IDR 50 billion have the right to a tax deduction. Plus, they will apply for a tax discount of up to 50%.
  • Companies with gross revenue of less than 4.8 billion earn a 1 per cent tax limit.
  • A tax rate of 5 per cent applies to companies listed on the Indonesian stock exchange that offers a minimum of up to 40 per cent of their total share.
  • The revenue accumulated from the permanent establishment is taxed at 20 per cent by foreign companies with an Indonesian branch.

2. Tax on Personal Income

  • Lives in Indonesia.
  • Stays in Indonesia for more than 183 days over the span of 12 months.
  • Present in Indonesia with the intention of remaining in the country during the fiscal year, except in cases where less than 183 days have been spent.
  • People working overseas but still earning some sort of income in Indonesia

Note: In cases where tax treaties circumvent the requirements, the tax exemption is applicable;

Level of Tax:

  • Earnings of up to 50 million IDR per year = 5 per cent
  • About 50 -250 million = 15%
  • 250–500 million = 25%
  • 0 to 500 million = 30%
  • Non-residents are subject to a tax rate of 20 per cent on their Indonesian wages.

3. Tax with value-added

Some taxable goods for importation and export

  • Export of services subject to taxes and intangible goods
  • Taxable goods shipped between the head office and the branch or branches of the same company
  • Goods movement on consignment
  • Consumption of offshore-origin taxable intangible goods and services

Level of Tax:

4. Luxury-Sales Tax on Commodities (LGST)

Level of Tax:

In conclusion, the types of tax and the rates of tax vary from each other. In order to find the rate appropriate to your company, it is best to also speak to your tax advisor. Read more about the Wallex Indonesia tax scheme. Contact us and read all about how to avoid disadvantageous exchange rates and premature disbursements.