Indonesia: Tax & Auditing Requirements

As per the 2018 World Bank Ease of Doing Business Rankings, Indonesia ranks 137 in the global index for ease of paying taxes. Tax in Indonesia is accounted for on a decentralized basis. This implies that different provinces and regions collect their own tax data, which makes tax reporting a bit complicated. These tax reports are supposed to be filed to the District Tax Office where the company is registered.

Tax payments are required to be settled on specific dates of each month. For example, all corporate income tax needs to be settled before the 15th of every month while Employee Withholding Tax and all other withholding taxes must be settled before the 10th of every month. The tax filing deadline, upon payment, is the 20th of every month. For VAT and Luxury Goods Sales Taxes, the filing and payment deadline is the end of the following month. The Income Tax rates in Indonesia vary by annual income. For an individual earning up to IDR 50 million annually, the tax rate is 5%. For someone earning between IDR 50 million and IDR 250 million, it is 15%, for someone earning between IDR 250 million and IDR 500 million, it is 25% and for an income above IDR 500 million the income tax is 30%. Meanwhile, non-resident Indonesians are subject to a 20% withholding tax on Indonesia sourced income.

For businesses paying Corporate Income Tax, all reporting and payment needs to be done at the end of the fourth month after the end of the book year (hence, April). A penalty of 2% per month, could be imposed in case of delay in late payment of taxes. The normal rate of Corporate Income Tax for companies is 25%. However, for companies with a gross turnover below IDR 50 billion, the rate is 12.5% and for companies with a gross turnover below IDR4.8 billion is 1%.

Apart from Corporate Income Tax and Income Tax, a VAT of 10% is applied to all taxable goods and services by an enterprise and Luxury Goods Sales Tax varies between 10% and 125% depending upon an item. The customs and excise duties also vary between 0 and 150% depending on the HS code of the product.

More details on the reporting structure of taxes can be found in PWC’s Indonesian Pocket Tax Book 2018


-Indonesian Pocket Tax Book 2018 -Indonesia Investments

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