FAQ Withholding Tax

General

Indonesian income tax is collected mainly through a system of withholding taxes. Where a particular income item is subject to withholding tax, the payer is generally held responsible for withholding or collecting the tax.

These withholding taxes are commonly referred to using the relevant article of the Income Tax Law, as follows.

 

Article 21 Income Tax

Employers are required to withhold Article 21 income tax from the salaries payable to their employees and pay the tax to the State Treasury on their behalf.

The same withholding tax is applicable to other payments to non-employee individuals (e.g., fees payable to individual consultants or service providers).

Resident individual taxpayers without an NPWP are subject to a surcharge of 20% in addition to the standard withholding tax.

 

Article 22 Income Tax

Article 22 income Tax is Typically Applicable to the Following:

Event

Tax Rate

Tax Base

The Import of Goods – Using an Importer Identification Number (Angka Pengenal Impor/API)

2.5%

Import Value, i.e., CIF Value plus Duties Payable

The Import of Goods – Without an Importer Identification Number (Angka Pengenal Impor/API)

7.5%

Import Value, i.e., CIF Value plus Duties Payable

The Sale of Goods to the Government Requiring Payment from the State Treasury and Proxy of Budget User (Kuasa Pengguna Anggaran/KPA)

1,5%

Selling Prices

The Purchasing of Steel Products

0.30%

Selling Prices

The Purchasing of Automotive Products

0.45%

Selling Prices

The Purchasing of Paper Products

0.10%

Selling Prices

The Purchasing of Cement

0.25%

Selling Prices

The Purchasing of Luxury Goods

5%

Selling Prices

Notes:

Taxpayers Without An NPWP Will Be Subject To A Surcharge Of 100% In Addition To The Standard Tax Rate.

 

Article 23 Income Tax

Article 23 Income Tax withheld on Payment to Indonesian Tax Resident

The Relevant Types of Payment and Their Generally Applicable Rates are as Follows:

a. Article 23 income tax is due at a rate of 15% of the gross amounts on the following:

-  Dividends;

- Interest, including premiums, discounts, and loan guarantee fees;

- Royalties;

- Prizes and awards.

b.  Article 23 income tax is due at a rate of 2% of the gross amounts on the fees for the following:

1) Rental And Other Income For Use Of Property, Except Rental Of Land And/ Or Buildings

2) Remuneration For Technical, Management, Construction, Consultant Services And Certain Other Services, Viz.:

-          Appraisal Services

-          Actuarial Services

-          Accounting/Audit/Attest Services

-          Design Services

-          Drilling Services In The Oil/ Gas Industry, Except Those Provided By A Permanent Establishment

-          Auxiliary Services In The Oil/ Gas Mining Industry

-          Mining And Support Services In The General Mining Sector

-          Airline & Airport Support Services

-          Forest Tree Felling Services

-          Waste Management Services

-          Manpower Supply Services

-          Broker/Agency Services

-          Services In Securities Trading, Except For Trading Performed By The Indonesian Stock Exchange, KSEI (Indonesian Central Securities Depository), And KPEI (Indonesian Clearing And Guarantee Corporation)

-          Custodian Services, Except For Services Provided By KSEI

-          Dubbing Services

-          Film Mixing Services

-          Service In Relation To Computer Software, Including Repairs And Maintenance

-          Installation Services, Except For Installation Services Performed By A Licensed Construction Company

-          Repair And Maintenance Services, Except For Building Repair And Maintenance Services Performed By A Licensed Construction Company

-          Toll-Manufacturing (Maklon) Services

-          Investigation And Security Services

-          Event Organizer Services

-          Packaging Services

-          Service In Providing Space And/Or Time In Mass Media, Outdoor Media Or Other Media For Delivering Information

-          Pest Eradication Services

-          Cleaning Services

-          Catering Services

Notes:

Rates are 100% Higher For Taxpayers That Do Not Have Tax ID

 

Article 26 – Non-Residents

Resident Taxpayers, Organisations, And Representatives Of Foreign Companies Are Required To Withhold Tax At A Rate Of 20% From The Following Payments To Non-Residents:

On Gross Amounts:

×           Dividends;

×           Interest, Including Premiums, Discounts And Guarantee Fees;

×           Royalties, Rents And Payments For The Use Of Assets;

×           Fees For Services, Work, And Activities;

×           Prizes And Awards;

×           Pensions And Any Other Periodic Payments;

×           Swap Premiums And Other Hedging Transactions;

×           Gains From Debt Write-Offs;

×           After-Tax Profits Of A Branch or PE.

On Estimated Net Income (ENI), Being A Specified Percentage Of The Gross Amount:

Description

ENI

Effective Tax Rate

Insurance Premiums Paid to Non Resident Insurance companies:

- by the Insured

50%

10%

- by Indonesian Insurance Companies

10%

2%

- by Indonesian Reinsurance Companies

5%

1%

Sale of Non-Listed Indonesian Company Shares by Non-Residents

25%

5%

Sale by Non-Residents of a Conduit Company Where This Company Serves as an Intermediary for the Holding of Indonesian Company Shares or a PE

25%

5%

Where The Recipient Is Resident In A Country Which Has A Tax Treaty With Indonesia, The Withholding Tax Rates May Be Reduced Or Exempted.

 

Article 4 (2) – Final Income Tax

Resident Companies, Pes, Representatives Of Foreign Companies, Organisations, And Appointed Individuals Are Required To Withhold Final Tax From The Following Gross Payments To Resident Taxpayers And PEs:

Description

Tax Rate

Rental of Land and/or Buildings

10%

Proceeds from Transfers of Land and Building Rights

5%

Sale Of Simple Houses And Basic Apartments By Taxpayers Whose Main Business is to Engage in Transfer of Land and/or Buildings

1%

Fees for Construction Work Performance

2%/3%/4%

Fees for Construction Work Planning

4%/6%

Fees for Construction Work Supervision

4%/ 6%

Interest On Time Or Saving Deposits And On Bank Indonesia Certificates (SBIS) Other Than That Payable To Banks Operating In Indonesia And To Government-Approved Pension Funds

20%

Interest On Bonds Other Than That Payable To Banks Operating In Indonesia And Government-Approved Pension Funds

15%

Sale Of Listed Shares (Of The Gross Proceeds)

0.1%

Additional Tax On Sale Of ‘Founder Shares’ At IPO Price

0.5%

Income From Lottery Prizes

25%

Forward Contract Derivatives

2.5%

Gain On Approved Asset Revaluation

10%

 

Article 15 – Final Income Tax

Type of Income

On Gross Revenues

Effective Income Tax Rate

Domestic Shipping Operation

4%

1.20%  *)

Domestic Airline Operation

6%

1.80%

Foreign Shipping and Airline Operation

6%

2.64% *)

Foreign Oil and Gas Drilling Operation

15%

3.75% **)

Certain Ministry of Trade Representative Offive

1% Export Value

0.25% **)

Note:

*) The Effective Income Tax Rate is Calculated Using The Old Tax Rate of 30% Because The Minister Of Finance (Mof) has not Revised The Decrees Which Regulate The Deemed Profit Margins.

**) The Effective Income Tax Rate is Calculated Using The Current Tax Rate of 25%, BPT Rate Varies According To Availability of A Reduced Rate Based on Tax Treaties.

 

 

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