There are three ways to settle tax liabilities for resident taxpayers and Indonesian PEs of foreign companies: direct payments, third party withholding, or a combination of both. However, foreign companies without a PE in Indonesia have to settle their tax liabilities for their Indonesian-sourced income through withholding of the tax by the Indonesian party paying the income (Article 26 income tax) constitutes a final settlement of their income tax due.

PE will also be a subject to 20% branch profit tax which is applied to the PE’s net profit after tax. The tax base of the branch profits ax shall be the taxable income (after fiscal adjustment) less the amount of final income tax if PE earns income that is subject to final income tax. This common rate of 20% may be deducted pursuant to the applicable tax treaty.

As stated in article 25 income tax, monthly tax installment constitute the first part of tax payment to be made by resident taxpayers and Indonesian PEs as a prepayment of their current year Corporate Income ax (CIT) liability.  This monthly installment is generally calculated based on the most recent corporate tax return. Some special installment calculations apply for the new taxpayers, bank, finance lease companies, and state-owned companies.
Certain income tax withheld by third party (as stated in Article 23 income tax) or tax to be paid in advance on certain transactions (such as: Tax for Import as stated in Article 22 income tax) also constitute prepayments for the current year CIT liability of the income recipient on the party that conducts the import.
If the total amounts of tax paid in advance through the year (Articles 22, 23, and 25 income taxes) and the tax paid abroad (Article 24 income tax) are less than the total CIT due, the company has to settle the shortfall before fling its Corporate Income Tax Return (CITR); such a payment is referred to as Article 29 income tax.
Some particular income earned by resident taxpayers or Indonesian PEs are subjects to final income tax. The tax is withheld by the third parties (referred to Article 4(2) income ax) constitutes the final settlement of the income tax for that particular income.
An exemption from branch profits tax applies if all the net profit after tax of PE is reinvested in Indonesia in the form of:
a.    Capital contribution in a newly established company domiciled in Indonesia as a founder or a member of the founders;
b.    Capital contribution in an existing company established and domiciled in Indonesia;;
c.    Fixed assets to be used by the PE to do business or conduct activities of the PE in Indonesia;
d.    Investment in intangible goods to be used by the PE to do business or conduct activities of the PE in Indonesia.
Certain requirements must be met in relation to the reinvestment and/or purchase of assets or intangible goods, among other:
a.    The timeline to reinvest in Indonesia;
b.    The length for which the reinvestment/ fixed assets/ intangible goods must be held by the PE;
c.    Reporting requirement to the Tax Authority.