Deductible Expenses

Calculation of Income – Deductible Expenses Under the new Income Tax Law, all legitimate business expenses directly or indirectly related to earning, collecting, or maintaining income are deductible from the assessable income to calculate the taxable income. These expenses include but are not limited to: 1. Expenses that are directly or indirectly related to business… Read More

Tax Rates

Normally, corporate income tax that is used in Indonesia is as much as 25%. This rate starts for the fiscal year of 2010 onward. Public companies that satisfy a minimum listing requirement of 40% and other special conditions are entitled to a tax cut of 5% off the standard rate. Thus, it gives them a… Read More

Tax Holiday

New corporate taxpayers in certain pioneer industries may enjoy a CIT exemption for a period of five to ten years from the start of commercial production. After the end of the CIT exemption, the company will receive a 50% CIT reduction for two years. To be eligible for the above facilities, taxpayers should be newly… Read More

Profit Distribution

Tax is withheld from dividends as follows: 1. 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 The company… Read More

Investment Incentives

The DGT, on behalf of the Minister of Finance (MoF) and based on the recommendation of the Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) Chairman, may provide the following tax concessions to PT companies following their investment in certain designated business areas or in certain designated regions:   A reduction in net income of up… Read More

Gains Resulting from Revaluations of Fixed Assets

Gains resulting from a DGT-approved revaluation of fixed assets are subject to final tax at a rate of 10%.

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