Tax is liable to be withheld from dividends as follows:

a. Resident recipients

Dividends received from an Indonesian company by a limited liability company incorporated in Indonesia (Perseroan Terbatas/PT), a cooperative, or a state owned company, are exempt from income tax if the following conditions are met:

• the dividends are paid out of retained earnings; and

• for PTs and state owned companies, the company earning the dividends holds at least 25% of the paid-in capital in the company distributing the dividends.

If these conditions are not met, the dividends are assessable to the company earning the dividends at the ordinary tax rate together with the company’s other income. Upon declaration, dividends are subject to Article 23 income tax withholding at 15%. The amount withheld constitutes a prepayment of the CIT liability for the company earning the dividends. Dividends received by resident individual taxpayers are subject to final income tax at a maximum rate of 10%.

b. Non-resident recipients:

20% (lower for treaty countries) final withholding tax is due on dividends paid to a non-resident recipient.