Taxation

Today I will cover some key taxation requirements.

Income Tax: All residents are required to pay income tax, which is progressive with top tax rate @ 30% applicable on the income over IDR 500 million per annum (appx USD 45k).

Corporate Tax: The rate of corporate tax on profits is 25%. The regime encourages share listing, as the corporate tax rate is lower at 20% for entities with 40% or more shares listed. SMEs with a turnover of less than IDR 50 billion (appx USD 4.5 million) are entitled to a discount of 50% of the tax rate.

Withholding Tax: There are varieties of withholding taxes. Generally @ 20% is applicable on payments to non-residents.

VAT is applicable @10% on transactions involving goods and services with few notable exceptions mentioned on the following link (http://www.kpmg.com/global/en/issuesandinsights/articlespublications/vat-gst-essentials/pages/indonesia.aspx).

Stamp Duty is minimal at IDR 3000 to 6000

Property Tax is 0.5% of the property value. However, effective rate would be 0.1% (if property value is below IDR 1 billion) or 0.2% (if the value is above IDR 1 billion).

Land and Building transfer attracts 5% of gross transfer value as income tax payable by the seller and 5% as acquisition duty payable by the purchaser.