Taxable business profits are calculated on the basis of normal accounting principles as modified by certaintax adjustments. Generally, a deduction is allowed forall expenditure incurred to obtain, collect and maintain taxable business profits. A timing difference may arise if an expenditure recorded as an expense for accounting cannot be immediately claimed as a deduction for… Read More
Tax payments
Resident taxpayers and Indonesian PEs of foreign companies have to settle their tax liabilities either by direct payments, third party withholdings, or a combination of both. 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 the income.… Read More
Tax residence
A company is treated as a resident of Indonesia fortax purposes by virtue of having its incorporation or its domicile is in Indonesia. A foreign company carrying out business activities through a permanent establishment (PE) in Indonesia will generally have to assume the same tax obligations as a resident taxpayer.
Monthly Tax Obligation
Type of Tax Tax Payment Deadline Tax Return Filing Deadline Article 21/26 Income Tax The 10th of the following month The 20th of the following month Article 23/26 Income Tax The 10th of the following month The 20th of the following month Article 25 Income Tax The 15th of the following month The… Read More
Tax Residence – Corporate
When a company has its establishment or place of management in Indonesia, then that certain company is treated as a resident of Indonesia for the tax purpose. Those foreign companies that carry out business activities through a permanent establishment (PE) in Indonesia will generally have the same tax obligations as a resident taxpayer.
Tax Neutral-Mergers
Transfers of assets in business mergers, consolidations, or business splits must generally be at market value. Gains resulting from this kind of restructuring are assessable while losses are generally claimable as a deduction from income. However, a tax-neutral merger or consolidation, under which assets are transferred at book value, can be conducted but subject to… Read More
Sale of Land and Building
Final tax at 5% is generally imposed on corporate taxpayers, while transfer of basic houses (rumah sederhana) and basic apartments (rumah susun sederhana) by a taxpayer whose main business is to engage in transfer of land and buildings is subject to 1% final tax. Transfer duty of 5% is payable by the purchaser (See ―Land… Read More
Loss Carried Forward
Losses may be carried forward for a maximum of five years. However, for a limited category of businesses in certain regions or businesses subject to certain concessions, the period can be extended for up to ten years. The carrying-back of losses is not allowed. Tax consolidation is not available.
Indirect Purchase of Indonesian Shares or Assets Involving Special Purpose Companies
The indirect purchase of shares or assets of an Indonesian taxpayer by another Indonesian party through an entity established especially for such purpose (Special Purpose Company – SPC) can be stipulated as the purchase of shares or assets by the other Indonesian party if the SPC has a special relationship with the other Indonesian party… Read More
Non-Deductible Expense
Disallowed deductions There are a number of non-deductible expenses. These non- deductible expenses are specified in the law or in associated regulations and pronouncements. Major categories of non- deductible expenses include: Benefits-in-kind (BIKs) (e.g., free housing, 50% of the acquisition and maintenance costs of certain company provided cars), except food and drink provided to all… Read More
INDONESIAN TAX 