In Indonesia, taxes are levied under three laws that were introduced in December 1983. These cover:

• General Tax Provisions and Procedures
• Income Tax
• Value-Added Tax (VAT) on goods and services, and Sales Tax on Luxury goods (STLG).

The latest amendment to the Law on General Tax Provisions and Procedures was published by the government on July 17, 2007 and is effective from January 1, 2008. A Government Regulation in lieu of Law incorporating a minor amendment to one Article was stipulated into Law on March 25, 2009.

The latest amendment to the Law on Income Tax was published by the government on September 23, 2008 and is effective from January 1, 2009.

The latest amendment to the Law on VAT and STLG was published by the government on October 15, 2009 and is effective from April 1, 2010.

With certain exceptions, withholding tax is imposed on payments to onshore and offshore parties, including payments such as dividends, interest, royalties and fees paid for services. The government also collects taxes on land and buildings, stamp duty, import duties and a fiscal exit tax. Local governments collect various other taxes. As of January 1, 2011, the fiscal exit tax regime which collected taxes from residents on each departure from Indonesia no longer applies.

The laws are supplemented by Regulations, Decrees of the President and the Ministry of Finance (MOF) and Regulations, Decrees and Circulars of the Director General of Taxation (DGT).

The official tax year runs from January 1 to December 31. Companies may adopt different year-ends in their Articles of Incorporation and may change their financial years with prior approval. A financial year cannot exceed 12 months for tax purposes.

Indonesia has a self-assessment system under which returns are considered final if not queried by the Tax Office within 10 years under the old law. Under the new law this has become five years, starting from the 2008 fiscal year onwards. There are transitional arrangements whereby the year 2013 is the year of expiry of the statute of limitations for all tax years prior to and including 2007.

The Tax Laws rely heavily on implementing regulations and these regulations need to be considered when assessing the impact of any provision contained therein.