Corporate Tax in Indonesia
- Tax Base For Resident and Foreign Companies
- VAT applies in the same way to residents and non-residents.
|Pajak penghasilan (Corporate Tax)||Single tax rate of 28%|
|Capital gains tax||Taxed as ordinary income|
|Levy on dividends||Deduction of 15%|
|Levy on interest||Deduction of 20% on interest paid to non-residents|
|Levy on royalties||Deduction of 20% on royalties transfered abroad|
|Levy on branch profits||Deduction of 20%|
|Stamp duty||3,000 Rp to 6,000 Rp|
|Tax on transfers of property/real estate rights||5%|
- Tax Rate For Foreign Companies
- Foreign companies are taxed at the same rate as national companies.
- Capital Gains Taxation
- Long term capital gains are taxed as ordinary income, and losses are tax deductible.
- Main Allowable Deductions and Tax Credit
- Dividends received or derived from a resident company and stemming from holdings in another Indonesian limited liability company are exempt from tax if the beneficiary exercises commercial activities and holds at least 25% of the shares of the payer and if the dividends come from non-distributed profits. Generally, all legitimate expenses linked to business activities are deductible from income when income tax is calculated, but there are many exceptions. These can be deducted from tax: aid, donations and gifts received (as long as there are no commercial or work relations between the parties), inheritances, payments made by an insurance company (health, accident, life, education), premiums derived from interest on investment fund bonds (during the first 5 years after the setting up of the company), income generated by the main contractors in foreign aid projects, profits paid to a risk-capital company by an LDC doing business in Indonesia, the share of profits received by a member of a limited partnership without capital holding, affiliation, association or company. For more information, consult the Deloitte Tax Guide.
- Other Corporate Taxes
- Income derived from resident companies and coming from foreign sources is subject to a unilateral tax credit concerning the foreign income tax paid. Income tax of 5% deductible at the end of the year, is levied on those who owe corporate tax. A tax on transfers of 5% is levied on buyers (except commercial activities).
Country Comparison For Corporate Taxation
|Indonesia||East Asia & Pacific||United States||Germany|
|Number of Payments of Taxes per Year||51.0||24.5||11.0||16.0|
|Time Taken For Administrative Formalities (Hours)||266.0||218.2||187.0||215.0|
|Total Share of Taxes (% of Profit)||37.3||35.4||46.8||48.2|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
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