{"id":113788,"date":"2025-10-09T11:03:05","date_gmt":"2025-10-09T11:03:05","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=113788"},"modified":"2025-10-09T11:03:05","modified_gmt":"2025-10-09T11:03:05","slug":"indonesia-tax","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/indonesia-tax\/","title":{"rendered":"Indonesia: Tax"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-113788","comparative_guide","type-comparative_guide","status-publish","hentry","guides-tax","jurisdictions-indonesia"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">METALAW<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2022\/09\/thumbnail_image002-4-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">METALAW<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2022\/09\/thumbnail_image002-4-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Tax laws and regulations applicable in Indonesia<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How often is tax law amended and what is the process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Normally Tax law is amended once a decade in Indonesia, provided that such amendments may be undertaken within a shorter timeframe in the event that a judicial review of the Tax Law is submitted. The recent big changes concerning tax law were the issuance of (a) Law No. 6 of 2023 on the Enactment of the Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation Into Law (Omnibus Law) and (b) Law No. 7 of 2021 on Tax Regulation Harmonization as amended and supplemented by Constitutional Court Decree No. 83\/PUU-XXI\/2023 (HPP Law). The issuance of these laws affects among others the law on the general provisions and tax procedures, income tax law, VAT and luxury taxed good law, and the excise law.<\/p>\n<p>The plan to draft a new law (including the amendments to existing law) is made in the national legislation program (Prolegnas). The prolegnas is prepared by the House of Representatives, the Regional Representative Council and the Government. Afterwards, either the House of Representatives or the President will prepare the draft of the law, in which the draft of the law shall be accompanied by the academic manuscript. If the draft is prepared by the President, the draft will be prepared by the relevant ministers or non-ministerial government agency leaders \u2013 this is the most cases concerning tax laws in Indonesia, thus only this type of lawmaking will be discussed for this purpose. The President will then submit the draft to the House of Representatives to be discussed in the meeting. After being discussed in the meeting, the draft that has been agreed upon between the House of Representatives and the President will be submitted to the President by the head of the House of Representatives to be ratified as Law. Once signed and ratified, the draft would be promulgated into Law. However, various implementing regulations of the tax laws are amended regularly.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the principal administrative obligations of a taxpayer, i.e. regarding the filing of tax returns and the maintenance of records?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The regulation requires taxpayers to save the documents that are used to prepare their bookkeeping for a period of 10 years.<\/p>\n<p>In addition, the taxpayers are also required to file taxes returns (e.g. VAT, Income Tax and withholding taxes). In addition to the annual tax return that must be filed by the end of March for individuals or April for corporate entities, taxpayers generally must also file a monthly tax return depending on the tax obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who are the key tax authorities? How do they engage with taxpayers and how are tax issues resolved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key regulatory authorities concerning tax in Indonesia is the Directorate General of Taxation (DGT) of the Ministry of Finance (MoF).<\/p>\n<p>The difficulty of dealing with the DGT and resolving tax issues would depend on how complex the issues and how complete and proper documentation is prepared by taxpayers when they filed tax returns and tax calculation. It may take months to years for a taxpayer to resolve tax issues with the authority depending on the level of difficulty of the issues<strong>.<\/strong><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are tax disputes heard by a court, tribunal or body independent of the tax authority? How long do such proceedings generally take?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>At the first instance, tax disputes in the form of tax objection filed by a taxpayer would be resolved by the DGT. If the issues cannot be resolved with the DGT, then the taxpayer can appeal the case before the tax court. If the decision of the tax court is deemed unfavorable by a disputing party (either the tax authority or the taxpayers), they can file for a case review (<em>peninjauan kembali<\/em>) to the Supreme Court. However, the case review process would not postpone any enforcement of the tax court\u2019s decision.<\/p>\n<p>The taxpayers can also file a lawsuit to the tax court over (i) the implementation of a distress warrant, warrant letter for implementing confiscation, or auction announcement, (ii) preventive decisions in the context of tax collection, (iii) decisions concerning on the implementation of tax decisions, other than those regulated under the law, or (iv) issuance of tax assessment letter or a decree of objection which issuance process is in violation of the prevailing laws and regulations.<\/p>\n<p>Tax objection proceedings would be normally decided within few months. On the tax appeal case, the tax court must issue a decision for: (i) an appeal within 15 months (12 months plus 3 months of extension for certain cases), and (ii) for a lawsuit within 9 months (6 months plus 3 months of extension for certain cases).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical deadlines for the payment of taxes? Do special rules apply to disputed amounts of tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The followings are brief information on the set dates for payment of tax obligations in Indonesia:<\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<tbody>\n<tr>\n<td rowspan=\"2\"><strong>Tax Obligations<\/strong><\/td>\n<td colspan=\"2\"><strong>Payment Deadline<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Individual<\/strong><\/td>\n<td><strong>Corporate<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Monthly Installment\u00a0<\/strong><\/td>\n<td>15th\u00a0day of the following month<\/td>\n<td>15th\u00a0day of the following month<\/td>\n<\/tr>\n<tr>\n<td><strong>Withholding Tax<\/strong><\/td>\n<td>N\/A<\/td>\n<td>15th\u00a0day of the following month<\/td>\n<\/tr>\n<tr>\n<td><strong>Annual Individual Income Tax<\/strong><\/td>\n<td>The end of March, before filing the tax return<\/td>\n<td>The end of April, before filing the tax return<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>If the DGT conducts a tax audit and issues Tax Assessment Letters (SKP) to the taxpayers, the taxpayers must pay the underpaid tax as stated in the SKP within one month after the issuance of the SKP unless the taxpayer files for an objection.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are tax authorities subject to a duty of confidentiality in respect of taxpayer data?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. A tax official is prohibited from disclosing the tax information of the taxpayers. However, the MoF can authorize the tax official to disclose the information in the interest of the State, in the context of investigating, prosecuting, or in the context of establishing cooperation with State institutions, government agencies, legal entities established through laws or government regulations, or other parties.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is this jurisdiction a signatory (or does it propose to become a signatory) to the Common Reporting Standard?  Does it maintain (or intend to maintain) a public register of beneficial ownership?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indonesia is a signatory to the Common Reporting Standard. Since 2018, Indonesia also requires a company to declare its beneficial ownership \u2013 to be reported to the Minister of Law and Human Right\u2019s system. However, this information is not accessible to the public. The information is only accessible to several authorized institutions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tests for determining residence of business entities (including transparent entities)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><u>Individual<\/u><\/p>\n<p>Individual taxpayers are deemed as resident taxpayers if they (a) reside in Indonesia, (b) are present in Indonesia for more than 183 days in 12 months, or (c) are present in Indonesia in a fiscal year and have an intention to reside in Indonesia. If none of the above condition is met, generally the individual would be a nonresident taxpayer.<\/p>\n<p>In the event an individual has also a tax resident status in another jurisdiction, he\/she would be an Indonesian taxpayer unless the tie breaker rule for dual resident in any relevant tax treaty requires otherwise.<\/p>\n<p><u>Corporations<\/u><\/p>\n<p>For corporations, they are treated as Indonesian tax resident if they (a) are established in Indonesia, or (b) have its place of management in Indonesia (including having domicile in Indonesia as stated in its deed of incorporation, having its principal office in Indonesia, having a domicile for its center of administration or financial center in Indonesia, having a principal office in Indonesia that carries out control, its management holds a meeting in Indonesia to decide on strategic decision, or its management is located or domiciled in Indonesia). In addition, a non-resident corporation can be treated as having taxable presence if it is deemed as running business or carrying out activities in Indonesia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do tax authorities in this jurisdiction target cross border transactions within an international group? If so, how?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. There are several provisions under the prevailing laws and regulations that target cross border transactions within an international group, among others:<\/p>\n<p>a. Transfer Pricing<\/p>\n<p>MoF Regulation No. 172 of 2023 regulates that the arm\u2019s length principles implementation for transactions affected by certain related relationships must be preceded by an initial procedure. In addition, MoF regulation No. 79 of 2023 empowers the DTG to carry out evaluations to determine the value of tangible and intangible assets and businesses. The recent update regarding transfer pricing provisions in Indonesia is set forth in Minister of Finance Regulation No. 172 of 2023, which consolidates the norms and regulations related to transfer pricing into a single comprehensive framework. In general, parties engaging in affiliated transactions are required to prepare transfer pricing documentation consisting of a master file, a local file, and a country-by-country report provided they meet the applicable threshold criteria.<\/p>\n<p>b. Expansion on Definition of Affiliated Transaction<\/p>\n<p>The definition of affiliated transaction is expanded into transactions affected by special relationships that includes transactions between parties without special relationship but the affiliated party of one or both transacting party determines the counterparty and the transaction price.<\/p>\n<p>c. Controlled Foreign Corporation<\/p>\n<p>The Indonesian tax agency has the authority to determine the time when dividends will be received by Indonesian tax residents for capital participation in non-listed foreign entities whose shares are 50% or more owned by Indonesian tax residents. The relevant Indonesian tax resident is determined to receive a deemed dividend through capital participation which includes dividends, interest, rent, royalties, and income for the assignment of ownership, at the end of the fourth month after the deadline for submitting the annual income tax return.<\/p>\n<p>d. Special Purpose Company Related Transaction<\/p>\n<p>This provision is stipulated under the Government Regulation No. 55 of 2022, which regulates that the transfer of shares of a special purpose company affiliated with an Indonesian entity can be designated as a transfer of shares of an entity established or domiciled in Indonesia, if the relevant special purpose company was established or domiciled in a tax haven country.<\/p>\n<p>e. Global Minimum Tax<\/p>\n<p>As a member of the G20, Indonesia recently issued Minister of Finance Regulation No. 136 of 2024, which pertains to the Imposition of a Global Minimum Tax Based on International Agreements. This regulation aligns with the OECD\u2019s guidelines regarding the two-pillar approach within the inclusive framework on BEPS, which mandates a minimum effective corporate tax rate for multinational enterprises that meet specific thresholds and criteria, set at 15%.<\/p>\n<p>f. Double Taxation Avoidance Agreement<\/p>\n<p>The Government of the Republic of Indonesia, through the Directorate General of Taxation, has issued several circular letters regarding the Notification on Applicability of Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting (Convention). These circular letters serve as a modification of the provisions of the Double Taxation Avoidance Agreement (DTAA) between Indonesia and several countries. The implementation of these measures aims to eliminate double taxation with respect to the taxes covered by the DTAA without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance. The DTAA regulates matters concerning capital gain, permanent establishment, dual residency, and adjusted profit.<\/p>\n<p>Please see our elaboration on the exemption of tax dividend in point 23 below.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a controlled foreign corporation (CFC) regime or equivalent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, Indonesia has a CFC (please see the elaboration in point 9 above), Thin Cap (the government sets the maximum amount of debt-to-equity ratio as 4:1) and transfer pricing (see no 9). It is also possible to obtain an advance pricing agreement in Indonesia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a transfer pricing regime?  Is there a \"thin capitalization\" regime?  Is there a \"safe harbour\" or is it possible to obtain an advance pricing agreement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Question answered above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a general anti-avoidance rule (GAAR) and, if so, how is it enforced by tax authorities (e.g. in negotiations, litigation)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The HPP Law and its implementing regulation namely Government Regulation No. 55 of 2022 (GR No. 55\/2022), establish provisions concerning general anti-avoidance rules, which govern the scope of tax avoidance practices. HPP Law further extends the authority of the government to establish and\/or implement taxation agreements and\/or memorandum of understanding with partnered country or partnered jurisdiction for the purpose of among others (i) double tax avoidance and the prevention of tax evasion and (ii) prevention of tax base erosion and profit shifting. The HPP Law and GR No. 55\/2022 also regulates benchmarking that will be applied to the taxpayers who report (i) smaller amount of profit compared to other taxpayers with similar business activities or (ii) unreasonable loss for the taxpayers who have carried out their business or five years. In this case, the authority will use the financial performance of taxpayers with similar business activities as the benchmark.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a digital services tax? If so, is there an intention to withdraw or amend it once a multilateral solution is in place?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. The Indonesian government has issued a regulation that targets the imposition of taxation on:<\/p>\n<ol style=\"padding-left: 0\">\n<li>the financial technology market, including among others the Peer-to-Peer lending and payment services provider. The regulation requires the Fintech operator who has been appointed as a taxable entrepreneur to collect the VAT over the fee, commission, merchant discount rate or other consideration obtained from the services provided to the consumer. The tariff is currently 11%.<\/li>\n<li>the crypto market, the recent update under Minister of Finance Regulation No. 50 of 2025 has exempted the transfer of crypto assets that are equivalent with securities from VAT object. However, the VAT is still applicable for (i) taxable services in the form of the provision of electronic facilities for crypto assets trading by the trade organizer through the electronic system and (ii) taxable services in the form of verification of crypto assets transactions by the mining pool. In addition, the regulation also imposes income tax on any income received by the crypto market players. For the crypto income of the crypto assets traders, they will be subject to final income tax with the tariff of 0.21% of the value of the crypto asset transaction (domestic electronic system trade organizer) or 1% of the value of the crypto asset transaction (foreign electronic system trade organizer).<\/li>\n<li>the government has also issued regulation that imposed tax on electronic system trading after the case precedent of a foreign giant platform against the Indonesian government. To prevent losses, the Indonesian government issued a regulation that can be used as a basis to impose (i) VAT in the utilization of intangible taxable goods and\/or taxable services from outside of Indonesia in Indonesia through an electronic system transaction in which the current tariff of the VAT for electronic system trading shall be 11% of the tax basis, and (ii) income tax or electronic transaction tax for the electronic system transaction carried out by foreign tax residents who fulfill the criteria of significant economic presence, i.e., having certain amount of consolidated gross circulation of a business group, having sales in Indonesia for certain amount, having active users of digital media in Indonesia for certain amount.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have any of the OECD BEPS recommendations, including the BEPS 2.0 two-pillar approach been implemented or are any planned to be implemented?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indonesia\u2019s tax provisions prior to the agreement on the BEPS Action Plan have accommodated the BEPS Action Plan, among others CFC regulation and transfer pricing regulation. Indonesia also has regulation implementing Action 13 of the Action Plan, i.e., the country-by-country reporting. The latest maneuver was to implement the Global Minimum Tax requirement (please refer to question 9).<\/p>\n<p>As for the OECD\u2019s recent two-pillar solution to address the tax challenges arising from digitalization of the economy, Indonesia has issued some regulations to impose taxation on digital services globally (please see the elaboration in question number 13).<\/p>\n<p>Generally, the Indonesian government supports the BEPS Action Plan and it seems that the prospects for further implementation of the BEPS Action Plan in Indonesia are quite promising. The HPP Law also extends the authority of the government to establish and\/or implement taxation agreements and\/or memorandum of understanding with partnered country or partnered jurisdiction for the purpose of (i) double tax avoidance and the prevention of tax evasion, (ii) prevention of tax base erosion and profit shifting (iii) tax information exchange, (iv) tax collection assistance, and (v) other tax cooperation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How has the OECD BEPS program impacted tax policies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indonesia has been supportive of BEPS project since 2013. The government supports the BEPS Action Plan and has implemented some of the Action Plan into the existing laws and regulations, among others the CFC rules, thin capitalization rules, promoting the exchange of tax information, transfer pricing regulations, the regulation on digital tax. Recently, through the HPP Law, the government also implemented the following:<\/p>\n<ul style=\"padding-left: 0\">\n<li>The national identification number has been regarded as a taxpayer identification number \u2013 this is regulated in the hope to simplify tax procedures for the taxpayers in fulfilling their tax obligations.<\/li>\n<li>Amend the Mutual Agreement Procedures (MAP) provisions to promote fairness to the taxpayers and to follow the best international practice. Different from the previous regulation that stopped the MAP if there was a tax court or supreme court decision even though the substance of the decision was not the same as the substance in the MAP application, the HPP Law states that the MAP application can be conducted simultaneously with objection or appeal proceedings.<\/li>\n<li>Promote the exchange of information between, as elaborated in point 14 above.<\/li>\n<li>Implement the new tax amnesty program following the success of the first tax amnesty program in 2016. In addition to collecting more taxable income, the government also utilizes the information that is submitted during the tax amnesty program to ensure a better tax compliance of the taxpayers.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax system broadly follow the OECD Model i.e. does it have taxation of: a) business profits, b) employment income and pensions, c) VAT (or other indirect tax), d) savings income and royalties, e) income from land, f) capital gains, g) stamp and\/or capital duties? If so, what are the current rates and how are they applied?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the Indonesian tax system are affected by the recognized OECD model. Business profits, employment income and pensions, income from land and capital gains are generally regarded as income tax. Unless otherwise regulated, the tax rates are:<\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<tbody>\n<tr>\n<td rowspan=\"3\"><\/td>\n<td colspan=\"3\"><em><strong>Rate<\/strong><\/em><\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\"><em><strong>Individual<\/strong><\/em><\/td>\n<td rowspan=\"2\"><em><strong>Corporate<\/strong><\/em><\/td>\n<\/tr>\n<tr>\n<td width=\"189\"><em>Income Law Tax Rate<\/em><\/td>\n<td width=\"161\"><em>Effective Tax Rate<sup>1<\/sup><\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>Income Tax<\/strong><\/em><\/td>\n<td width=\"189\"><em>\u00a0Rp0-60mio 5%<\/em><\/p>\n<p><em>&gt; Rp60-250mio 15%<\/em><\/p>\n<p><em>&gt; Rp250-500mio 25%<\/em><\/p>\n<p><em>&gt; Rp500mio \u2013 5 bio 30%<\/em><\/p>\n<p><em>&gt; Rp5 bio 35%<\/em><\/td>\n<td width=\"161\"><em><u>Monthly Income<\/u><\/em><\/p>\n<p><em>1.\u00a0\u00a0\u00a0\u00a0 Category A<\/em><\/p>\n<p><em>This category consists of the taxpayers who are (i) not married without any dependent, (ii) not married with one dependent, or (iii) married without any dependent.<\/em><\/p>\n<p><em>The tax rate for this category ranges from\u00a0<strong>0%<\/strong>\u00a0(for taxpayers with a gross monthly income of IDR 0 \u2013 5.4 million \u2013 approx. USD 350) to\u00a0<strong>34%<\/strong>\u00a0(for taxpayers with a gross monthly income of above IDR 1.4 billion \u2013 approx. USD 90,500).<\/em><\/p>\n<p><em>2.\u00a0\u00a0 Category B<\/em><\/p>\n<p><em>This category consists of the taxpayers who are (i) not married with two dependents, (ii) not married with three dependents, (iii) married with one dependent, or (iv) married with two dependents.<\/em><\/p>\n<p><em>The tax rate for this category ranges from\u00a0<strong>0%<\/strong>\u00a0(for taxpayers with a gross monthly income of IDR 0 \u2013 6.2 million \u2013 approx. USD 400) to\u00a0<strong>34%<\/strong>\u00a0(for taxpayers with a gross monthly income of above IDR 1,405,000,000 \u2013 approx. USD 90,800).<\/em><\/p>\n<p><em>3.\u00a0\u00a0\u00a0\u00a0\u00a0 Category C<\/em><\/p>\n<p><em>This category consists of the taxpayers who are married with three dependents.<\/em><\/p>\n<p><em>The tax rate for this category ranges from\u00a0<strong>0%<\/strong>\u00a0(for taxpayers with a gross monthly income of IDR 0 \u2013 6.6 million \u2013 approx. USD 425) to\u00a0<strong>34%<\/strong>\u00a0(for taxpayers with a gross monthly income of above IDR 1,419,000,000 \u2013 approx. USD 91,700).<\/em><\/p>\n<p><em><u>Daily Income<\/u><\/em><\/p>\n<p><em>As for the taxpayers whose nature of work is paid daily, the applicable effective tax rate ranges from\u00a0<strong>0%<\/strong>\u00a0(for taxpayers with a gross daily income of IDR 0 \u2013 450,000 \u2013 approx. USD 30) to\u00a0<strong>0.5%<\/strong>\u00a0(for taxpayers with a gross daily income of above IDR 450,000 to 2.5 million \u2013 approx. USD 160).<\/em><\/p>\n<p>&nbsp;<\/td>\n<td><em>22%<\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>VAT<\/strong><\/em><\/td>\n<td colspan=\"2\"><em>11% \/ 12% (for luxury goods)<sup>2<\/sup><\/em><\/td>\n<td><em>11%\/12%<sup>2<\/sup><\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>Savings Income\u00a0<\/strong><\/em><\/td>\n<td colspan=\"3\"><em>Interest paid by Indonesian bank to Indonesian residents is subject to a 20% final withholding tax<\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>Royalties<\/strong><\/em><\/td>\n<td colspan=\"2\"><em>15%\/20%<sup>3<\/sup><\/em><\/td>\n<td><em>15%\/20%<sup>3<\/sup><\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>Capital Gains<\/strong><\/em><\/td>\n<td colspan=\"2\"><em>0.1% \u2013 35%<sup>4<\/sup><\/em><\/td>\n<td><em>22%<sup>4<\/sup><\/em><\/td>\n<\/tr>\n<tr>\n<td><em><strong>Stamp Duties<\/strong><\/em><\/td>\n<td colspan=\"3\"><em>Duty stamp sticker at the nominal amount of Rp 10,000,-.<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"text-decoration: underline\">Footnote(s):<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>1<\/sup>\u00a0As per January 2024, the Indonesian government introduces a new regulation concerning the withholding tax rate for individual income tax, i.e., Effective Tax Rate. The monthly withholding will be based on the Effective Tax Rate while the withholding amount will be adjusted at the end of the year by using the Income Law Tax Rate for the calculation.<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>2<\/sup>\u00a0The VAT tax rate for luxury goods is 12%, whilst for non-luxury goods is 11\/12 * 12% (11%).<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>3<\/sup>\u00a0Please see the elaboration on point 23 (withholding taxes).<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>4<\/sup>\u00a0Gains on the listed shares on the Indonesian Stock Exchange are subject to a final tax of 0.1% (founder shares will be imposed with additional 0.5% final tax on the share value at the time of the IPO), capital gains on disposal of land\/buildings generally are subject to 2.5% income tax of the sale proceeds.<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is business tax levied on, broadly, the revenue profits of a business computed in accordance with accounting principles?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, the Indonesian GAAP would be the basis (with some adjustments due to certain differences from tax regulations) to compute the income tax on the net basis. For certain types of income (e.g. construction, crypto trading, etc.), there are final flat tax rate based on gross revenue.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are common business vehicles such as companies, partnerships and trusts recognised as taxable entities or are they tax transparent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes except for trust. Partnership and firm are transparent for tax purposes and are used for tax efficiency on the profit distribution to the partners vis a vis profit distribution to shareholders by a company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is liability to business taxation based on tax residence or registration?  If so, what are the tests?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indonesia implements worldwide income basis for its tax resident. However, for non-resident taxpayer, Indonesia generally applies a territorial basis of income taxation unless it becomes a permanent establishment in Indonesia since Indonesia may impose force of attraction rule. The first test would be a tax residency test as elaborated in point 8 above. Once there is ambiguity on the residency of the taxpayers, the tie breaker rule should be used to determine the main residency and avoid double taxation. The criteria of the tie breaker rule is (i) permanent home, (ii) center of vital interest, (iii) habitual abode, (iv) nationality, and (v) MAP between tax authorities of each country.<\/p>\n<p>If it is a nonresident taxpayer based on the first test, its income generally is subject to tax if it is earned in Indonesia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any favourable taxation regimes for particular areas (e.g. enterprise zones) or sectors (e.g. financial services)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. As a part of the government\u2019s support to Individual Micro, Small and Medium Enterprises (UMKM), the HPP Law regulates that the UMKM will be exempted from income tax if their gross turnover is less than or equal to Rp 500 million. From &gt;Rp 500 million onwards, their income will be subject to 0.5% final income tax tariff.<\/p>\n<p>The Indonesian government provided tax incentives to support the development of Indonesia&#8217;s new capital city, namely the Ibu Kota Nusantara (&#8220;<strong>IKN<\/strong>&#8220;). The tax incentives provided vary starting from tax holiday for investment, income tax reduction facility, income tax rate of 0% for employees in IKN, to super deduction. Interestingly, the tax incentive in IKN is not only provided for Indonesian tax resident, but non-Indonesian tax resident as well. In addition, the government also provides certain fiscal incentives for certain businesses that fulfill the following criteria (i) it can be considered as national strategic projects, (ii) it is capital intensive, (iii) it is labor-intensive, (iv) it uses high technology, (v) it is a pioneer industry, (vi) it is an export-oriented industry, or (vii) it is a research, development, and innovation-oriented industry. The incentives that can be given to these industries are among others tax holiday, tax allowance, investment allowance, custom incentives.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any special tax regimes for intellectual property, such as patent box?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is fiscal consolidation permitted? Are groups of companies recognised for tax purposes and, if so, are there any jurisdictional limitations on what can constitute a tax group? Is there a group contribution system or can losses otherwise be relieved across group companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<p>It should be structured via company reorganization. A qualified internal restructuring may offer possibility to utilize certain fiscal losses of entity participating in the reorganization.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any withholding taxes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the following are the applicable withholding taxes in Indonesia:<\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<tbody>\n<tr>\n<td rowspan=\"2\" width=\"175\">Type of Payment<\/td>\n<td colspan=\"2\" width=\"223\">Residents<\/td>\n<td rowspan=\"2\" width=\"142\">Non-residents<\/td>\n<\/tr>\n<tr>\n<td width=\"109\">Company<\/td>\n<td width=\"114\">Individual<\/td>\n<\/tr>\n<tr>\n<td width=\"175\">Dividends<\/td>\n<td width=\"109\">0%<\/td>\n<td width=\"114\">0%\/10%<sup>1<\/sup><\/td>\n<td width=\"142\">20% (or lower tariff according to the applicable tax treaty)<\/td>\n<\/tr>\n<tr>\n<td width=\"175\">Interest<\/td>\n<td width=\"109\">15%\/20%<sup>2<\/sup><\/td>\n<td width=\"114\">15%\/20%<sup>2<\/sup><\/td>\n<td width=\"142\">10%\/20% (or lower tariff according to the applicable tax treaty)\u00a0<sup>3\u00a0<\/sup><\/td>\n<\/tr>\n<tr>\n<td width=\"175\">Royalties<\/td>\n<td width=\"109\">15%<\/td>\n<td width=\"114\">15%<\/td>\n<td width=\"142\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"text-decoration: underline\">Footnote(s):<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>1<\/sup>\u00a0Please see further elaboration on this in question number 25.<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>2<\/sup>\u00a0Interest paid by a non-bank institution is subject to a 15% withholding tax while the interest by bank institution is subject to a 20% final withholding tax.<\/span><\/p>\n<p><span style=\"font-size: 12px\"><sup>3<\/sup>\u00a0After the issuance of the Omnibus Law, the government reduced the interest payable to non-permanent establishment foreign tax subjects.<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any environmental taxes payable by businesses?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The government recently introduced carbon tax in HPP Law. The first implementation of the carbon tax should have been implemented against the coal power plant sector.<\/p>\n<p>The tariff of the carbon tax is higher or equal to the market price, with a minimum tariff of Rp 30,- per kg of CO2e.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is dividend income received from resident and\/or non-resident companies taxable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, dividends received by domestic tax resident and\/or non-resident are subject to the following tax rates:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>dividends received by domestic individual tax resident from domestic companies at a rate of 10%;<\/li>\n<li>dividends received by non-resident individual and\/or foreign entities from domestic companies at a rate of 20%.<\/li>\n<\/ol>\n<p>However, Indonesian government provides incentives in the form of tax exemption for dividends that meet the following conditions:<\/p>\n<p>Onshore Dividend<\/p>\n<p>Dividend income earned from domestic listed and non-listed companies, that is declared in a shareholders meeting, is exempted from tax if:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>the recipient is a domestic individual recipient, provided that the dividend is reinvested into Indonesia within certain period, as regulated by the MoF regulations.<\/li>\n<li>the recipient is a corporate entity.<\/li>\n<\/ol>\n<p>Offshore Dividend<\/p>\n<p>Offshore dividend is divided into:<\/p>\n<p>a. Stock Exchange Dividend<\/p>\n<p>Stock exchange dividend will be exempted from income tax if the dividend is re-invested in Indonesia for a minimum period of three tax years.<\/p>\n<p>b. Non-stock Exchange Dividend<\/p>\n<p>To be exempted from income tax, the non-stock exchange dividend must be re-invested in Indonesia for a minimum period of three tax years. In addition to this requirement, there are additional requirements that must be fulfilled, among others (i) the invested amount should be at least 30% of the profit after-tax, (ii) the dividend must be re-invested before the DGT issues a tax statement to the taxpayer, and (iii) the dividend arises from profit after-tax from the tax year of 2020 that is obtained or received after 2 November 2020.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the advantages and disadvantages offered by your jurisdiction to an international group seeking to relocate activities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As one of the global investment destinations after India, China and the United States of America, Indonesia has abundant natural resources, a big market and demographic bonus. The uncertainty in law enforcement, lack of infrastructure, and lack of experts would be considered as the main disadvantages. Currently, Indonesia also encounters political instability which may affect business industries.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5112<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/113788","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=113788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}