Depreciation and Amortization

Depreciation/ Amortization 1    Either straight-line or declining balance method of depreciation is allowable, except for buildings, for which only the straight-line method is permitted. 2     The chosen depreciation method must be applied consistently to assets. 3     When adopting a declining balance method, the remaining book value at the end of the useful life… Read More

Corporate Tax for Certain Industries

The tax provisions for the oil and gas, geothermal, and general mining (including coal) industries and for shariah-based industries shall be stipulated separately through Government Regulations.

Controlled Foreign Company

Controlled Foreign Company (CFC) Rules 1    The Income Tax Law, through a Minister of Finance Decree,      determines the time of receipt of dividend by a resident taxpayer on capital participation in a business entity abroad other than a business entity that sells its shares on a stock exchange in these cases: ·    The amount of… Read More

Tax Payments – Corporate

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… Read More

Special Industries and Activities

Companies engaged in upstream oil and gas and geothermal industries typically have to calculate CIT in accordance with their production sharing contracts (PSCs). Certain companies engaged in metal, mineral and coal mining are governed by a contract of work (CoW) for the CIT calculation. Different provisions may apply to them pertaining to corporate tax rates,… Read More

Non Taxable Income

Non-Taxable Income (applies to corporate and individual taxpayers) The law specifies a number of categories of income that are exempted from tax. These are: ·     Aid, donations, zakat, religious donations or gifts received, provided there is no business, work, or ownership relationship between the parties concerned; ·     Inheritances; ·     Dividends received by… Read More

Indirect sale of Indonesian Shares Involving Special Purpose Company

The sales of shares of a conduit company (SPC) owning Indonesian shares located in a tax haven country by a non- Indonesian tax resident can be deemed as a sale of shares of Indonesian party by the non-Indonesian tax resident so long as there is a special relationship between the SPC and the Indonesian party.… Read More

Foreign Loan

Government projects funded with foreign loans or foreign grants may be eligible for special tax treatment for the income derived from that funding. The projects that qualify are typically set out in the state Project Table of Contents (Daftar Isian Proyek/DIP) or other similar document. Main contractors, consultants and suppliers for foreign grant- funded or… Read More

Corporate Tax Facilities

Companies investing in certain business sectors and/ or in certain less developed regions having high priority on a national scale can be granted tax facilities in the form of: ·    Additional net income reduction, up to a maximum of 30% of the amount of investment; ·    Accelerated depreciation and amortization; ·    The period of loss… Read More

Business Profits

Taxable business profits are calculated on the basis of normal accounting principles as modified by certain tax adjustments. Generally, a deduction is allowed for all expenditures incurred to obtain, collect, and maintain taxable business profits. A timing difference may arise if an expenditure recorded as an expense for accounting can not be immediately claimed as… Read More