Taxable income is computed by first adding together all proceeds or value derived from various sources of income, a sum which is called gross income. ‘Gross income’, less allowable ‘deductions’ (i.e. the cost of obtaining, collecting, and conserving gross proceeds and expenses burdening that income), equals net income or ‘taxable income’.
Losses may generally be carried forward for a maximum of five years.
The Taxable income is subject to the following gradual tax rates:
· For a resident individual :
·5% for the first Rp 25 million ;
·10% for income above Rp 25 million to Rp 50 million ;
·15% for income above Rp 50 million to Rp 100 million ;
·25% for income above Rp 100 million to Rp 200 million ; and
·35% for income above Rp 200 million
· For a resident entity and permanent establishment :
· 10% for the first Rp 50 million ;
· 15% for income above Rp 50 million to Rp 100 million ; and
· 30% for income above Rp 100 million.
Taxes which have been paid provisionally, or which have been withheld, are credited against the final payment. If the amount of tax collected or withheld is more than the final amount calculated, the excess is to be refunded. However, as to certain income (e .g . interest income from deposits), the government imposes ‘final’ withholding tax in which the amount withheld:
· is not credited to the taxpayer’s (payee’s) final payment;
· is not deducted as cost; and
· does not need to be reported in the payee’s annual tax return .
The payment of tax with respect to self-assessment or withholding is on a monthly basis, and it is made to specifically authorized banks or the Post and Gyro Office, at the latest by the tenth (or fifteenth, for certain taxes) day of the following month, and reported to the Tax Service Office by submitting a monthly tax return at the latest by the twentieth day of the following month .
Returns and Records
An annual tax return must be filed at the latest three months after the end of the tax year (31 March). Tax payment, if any, in connection with the annual tax return must be made at the latest by 25 March (before the annual tax return is filed). Administrative sanctions are Rp 50.000 for late filling of the monthly tax return and Rp 100 .000 for late filling of the annual tax return.
Accounts and records must be kept in Indonesia, denominated in rupiahs and composed in Indonesian or a foreign language approved by the Minister of Finance . Foreign investment companies, joint venture companies, permanent establishments of foreign companies, entities with production-sharing contracts or contracts of works and other entities with foreign affiliations are allowed to record only in English and keep accounts in U .S. dollars with the approval of the Director General of Taxes on behalf of the Minister of Finance. This requires an application by the taxpayer not later than 30 days before the beginning of the tax year (except for new taxpayers) . The tax returns, however, must be denominated in rupiah and composed in Indonesian.