Tax Issues For Businesses In Indonesia

The main taxes businesses in Indonesia are subject to are:

• Income tax. This tax is imposed on the income received, whether domestically or abroad, in one fiscal year. If the income from abroad is already taxed by the relevant tax authorities in the foreign jurisdiction, then the tax treatment will be different depending on the tax treaty between Indonesia and the relevant foreign country. The corporate tax rate in Indonesia is generally 25%. A 5% reduction is applicable for a publicly listed company that fulfills certain requirements.
• VAT. This tax is imposed on the delivery of goods and services. The rate is 10%.
• Luxury goods sales tax. In addition to VAT, taxes are imposed on the import and/or delivery of luxury goods and services. Government Regulation No. 145/2000 stipulates the types of goods that are considered luxury goods and the rate of sales tax on those goods. Under Government Regulation No. 145/2000, there are six types of goods that are subject to