Corporate Tax is a tax imposed on the economic capacity received or obtained by the corporate taxpayers, both from within and outside the country. Corporate taxpayers include all public and private companies (PT PMA and PT PMDN) in Indonesia, permanent establishments, and state-owned enterprises. This article discusses the corporate tax systems in Indonesia and other important things that every company must not fail to look into.
Types of Taxes
1. Corporate Income Tax
A flat rate of 25% is imposed on all domestic corporate taxpayers. However, this is reduced to 22% in 2020 through the Government Regulation instead of Law (Perppu) No 1/2020. The Perpu states that the corporate income tax rate for domestic corporate taxpayers and permanent establishments is adjusted from the previous 25% to 22% which applies to the 2020 and 2021 tax years. The Perppu also states the adjustment of the income tax rate for domestic corporate taxpayers and permanent establishments for the 2022 tax year at 20%.
For companies listed on the Indonesia Stock Exchange that offer at least 40% of their total share capital to the public, the tax rate is reduced to 20%. Small and medium (SME) companies with annual revenue of IDR 4.8 billion – IDR 50 billion are entitled to a 12.5% tax rate, whereas for companies with annual revenue below IDR 4.8 billion, a 0.5% tax rate is imposed.
| Annual Gross Turnover | Tax Rate |
|---|---|
| < IDR 4.8 billion | 0.5% |
| IDR 4.8 billion – 50 billion | 12.5% |
| > IDR 50 billion | 22% |
| Public companies with >40% public capital | 20% |
2. Employee Withholding Tax
Your employees are subject to the progressive personal income tax, which is deducted from their monthly salary. The rates vary between 5-30%. An additional 20% rate is levied for employees who do not possess a Tax Identification Number or NPWP.
| With NPWP | Without NPWP (20% higher rate) | ||
|---|---|---|---|
| Annual Income Threshold | Rate | Annual Income Threshold | Rate |
| < IDR 50 million | 5% | < IDR 50 million | 6% |
| IDR 50 million – 250 million | 15% | IDR 50 million – 250 million | 18% |
| IDR 250 million – 500 million | 25% | IDR 250 million – 500 million | 30% |
| > IDR 500 million | 30% | > IDR 500 million | 36% |
Related Article: Individual Income Tax in Indonesia for Foreigners
3. Value Added Tax (VAT)
VAT is a tax that is charged for transactions on taxable goods (BKP) and taxable services (JKP). The value of VAT is usually added to the cost of goods or services. The standard VAT rate is 10%.
Indonesia introduced VAT for intangible digital goods and services to overseas providers in July 2020. Overseas digital goods and services providers that conduct transactions with customers residing in Indonesia through electronic systems are subject to the VAT if the value of their transactions exceeds IDR 600 million per year or IDR 50 million per month, and the traffic coming from Indonesia exceeds 12,000 visitors per year or 1,000 per month.
Luxury Goods Sale Tax (LGST)
Luxury Goods Sales Tax (Pajak Penjualan atas Barang Mewah or PPnBM) is a tax imposed on goods or products that are not considered basic necessities. These goods are usually consumed by certain groups of people who are generally high-income generating people. They are subject to a surcharge that can range anywhere from 10% all the way up to 200%.
Important Dates
All corporate tax payments must be made to the State Treasury through a specified bank. You must file all tax returns to the Indonesian Tax Office. Depending on the tax duty, tax collections and reporting can be made weekly or yearly. Take note that all of this can be done online, saving you the hassle and expense of going to the nearest tax office.
| Type of Tax | Monthly Payment Deadline | Monthly Filing Deadline | Annual Filing Deadline |
|---|---|---|---|
| Corporate Income Tax | 15th of the following month | 20th of the following month | End of the 4th month after the tax year ends |
| Employee Withholding Tax | 10th of the following month | 20th of the following month | N/A |
| Other Withholding Taxes | 10th of the following month | 20th of the following month | N/A |
| VAT and LGST | Before the VAT filing deadline | End of the following month | N/A |
Closing Thoughts: Corporate Tax Indonesia
Permitindo provides company incorporation services, as well as accounting and tax advisory services for its clients in Indonesia. We help our clients prepare their financial statements regularly following the Indonesian accounting requirements. If you have any questions that we did not address in this article, please contact us at anita@permitindo.com or by filling out this form. Our finance team will get back to you shortly afterwards.
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