tax planning guide in indonesia

One of the key factors of a sustainable business is its accurate tax compliance. In this article, we will introduce you to tax planning in Indonesia and give an overview of the taxes (foreign) companies need to pay.

Overview of Corporate Taxes in Indonesia

Corporate Income Tax

Companies are liable to Indonesian tax obligations if their domicile is in Indonesia. The standard corporate income tax in Indonesia is 25%. However, there are exceptions and tax planning allows you to significantly reduce the amount of income tax you have to pay.

Understanding Withholding Tax System in Indonesia

Tax payments are settled by direct payments, third party withholdings, or by a combination of both.

Most of the income taxes are collected through a tax withholding system. The employer is responsible for withholding the income tax and paying it directly to the state treasury on their employee’s behalf. This also includes other types of payments (e.g fees for services) besides salary.

Some types of income payments to resident taxpayers are subject to either 15% or 2% tax withholding.