Living in Indonesia, A Site for Expatriates

Check out What's New on the Expat Web Site
Information for foreigners moving to Indonesia

Home » Doing Business in Indonesia »

Corporate Taxation in Indonesia

Practical Information for foreigners, expats and expatriates moving to Indonesia - find out about housing, schooling, transport, shopping and more to prepare you for your stay in Indonesia

 

Translate this Page

Bookmark and Share
Links to hundreds of articles giving practical information for expats moving to Indonesia
Post your questions or communicate with other expats in Indonesia on the Expat Forum
Looking for a place to stay in Indonesia - check out the Housing Forum
Looking for a weekend or holiday getaway ... visit some of Indonesia's Great Escapes
Some great restuarants in Jakarta
Advice and resources for conducting business in Indonesia
Info on expatriate community organizations in Indonesia
Shops, Products and Services
Links to other useful Indonesian or expat-related web sites
Expat Humor - spread the joys of Living in Indonesia through e-postcards
Site Map
Return to the Home Page
expatriate information for Indonesia

This is a brief overview of the calculation and payment of corporate tax in Indonesia.

  1. Indonesia operates a self-assessed taxation system that is similar to many other countries.
  2. Rates are stepped and top out at 30% of taxable income.
  3. Expenses are deducted from revenue to arrive at taxable income.
  4. Indonesian GAAP (Generally Accepted Accounting Principles) is very similar to those of other countries.
  5. Revenues are revenues in any language and should be declared and can be subject to tax audit. Reimbursements are not considered as revenue, but any mark-up will be.
  6. Expenses are normal operating expenses of a company but there are some expenses that cannot be included for tax purposes:
  7. Fringe Benefits (What the company pays on behalf of the employee that the employee would normally pay for himself/herself).
  8. Fines and interest for late reporting/payment of taxes.
  9. Vacation airfares, housing and schooling for expatriate staff and families.
  10. There are also some strange interpretations by the tax office on other expenses that need knowledge of the relevant rules to argue against.
  11. Taxes are paid throughout the year to maintain even flow of funds into the State treasury and maintain a reasonably even cash flow for the company.
  12. One twelfth of the tax due for the previous year is paid each month in the current year less corporate tax withheld by third parties.
  13. When you import into Indonesia there is corporate tax withheld by Customs and paid to the Tax Office on your behalf.
  14. When customers pay you for services there is corporate tax withheld and paid to the Tax Office on your behalf.
  15. Likewise when you make payments to your suppliers there may well be corporate tax that you withhold and pay on behalf of your supplier.
  16. These rates of withholding tax vary dependent upon internal Indonesia, external Indonesia and what type of service/supplies was concerned.
  17. The aim of the company is to finish the year in a tax underpayment situation as to receive a tax refund or carry forward means a tax audit must be performed. Good planning ensures this.
  18. On top of corporate tax there is a wide-ranging VAT/GST system mainly rated at 10% and some items will also attract a luxury sales tax. Exports are rated 0% but refunds must undergo a field audit by the tax office.
  19. VAT/GST allows for monthly offsets of inputs over outputs and excess inputs can be carried forward to the subsequent months. Or a refund claimed.
  20. All tax payments are made via the banking or the postal system to receive credit for them.
  21. Proof must be given or received where withholding tax is involved to obtain the credit.
  22. Of course there are variations in taxes within certain industries with tax facilities that are too detailed to be listed here.
  23. Indonesia has Double Tax Treaties with a number of countries and with good planning your firm may well be able to utilize available benefits.
  24. Tax withheld by Indonesian resident companies to overseas will be treated as prepaid tax in the recipient country.

How to find a tax consultant

Most of the large international accounting firms have staff that can help you to prepare your taxes, both Indonesian and foreign.

We suggest you contact the business association that relates to your nationality and ask them to recommend one of their members that works in the accounting/tax field.

Website for the Directorate General of Taxes - Republic of Indonesia

 

Housing and schooling information for expats in Indonesia expatriate website for Indonesia Indonesian language translation of article

Practical Information for foreigners, expats and expatriates moving to Indonesia - find out about housing, schooling, transport, shopping and more to prepare you for your stay in Indonesia

Practical Information |  Expat Forum |  Site Map  |  Search |  Home Page |  Contact

 

Return to top

Copyright © 1997-2014, Expat Web Site Association Jakarta, Indonesia http://www.expat.or.id All rights reserved. The information on Living in Indonesia, A Site for Expatriates may not be retransmitted or reproduced in any form without permission. This information has been compiled from sources which we, the Expat Web Site Association and volunteers related to this site, believe to be reliable. While reasonable care has been taken to ensure that the facts are accurate and up-to-date, opinions and commentary are fair and reasonable, we accept no responsibility for them. The information contained does not make any recommendation upon which you can rely without further personal consideration and is not an offer or a solicitation to buy any products or services from us. Opinions and statements constitute the judgment of the contributors to this web site at the time the information was written and may change without notice.