Value-Added TaxA person or body, in whatever form, which in the course of its operations, produces, imports or exports taxable goods, conducts trading activities or renders taxable services, is required to register as a Taxable Entrepreneur with the DGT. However, only a resident or a PE can obtain a VAT registration. Registration by non-residents is… Read More
Taxation of Individuals
An employer is obligated to withhold, remit and report tax on income received by an employee in connection with employment. Individuals who are resident in Indonesia for tax purposes are required to obtain a personal tax registration number (NPWP) and file an individual return, unless he or she receives net income below the non-taxable income… Read More
Anti-avoidance Rules
The income tax law contains specific anti-avoidance provisions. Where the Indonesian DGT considers that transactions have not been conducted at arm’s length due to the existence of a “special relationship” between the parties, the consideration paid may be adjusted. The DGT’s power extends to all domestic and cross border transactions. In addition to the power… Read More
International Tax
Double Tax Relief Indonesia grants a credit for withholding taxes directly paid on income received or accrued in a foreign country. There is no credit for taxes on underlying profits. The credit is only granted if the income is taxable in Indonesia as being part of worldwide earned income. The credit is limited to the… Read More
Tax Incentives
Takeovers, Mergers and AcquisitionsAssets may be transferred at book value as part of a merger or in the context of certain other reorganizations, subject to prior approval from the DGT. In addition, there may be partial relief from the five percent transfer of title tax on land and buildings and full relief from the five… Read More
Foreign Exchange Controls
The MOF and Bank Indonesia (the central bank) are responsible for the banking system, and foreign exchange regulations. Indonesia has no foreign exchange controls and foreign investors may freely transfer funds to and from abroad, although certain reporting requirements exist with respect to certain transfers. However, there are restrictions on the transfer of Rupiah overseas.… Read More
Setting Up Business
According to the prevailing laws and regulations, several methods are available to foreign companies that wish to do business in Indonesia, including: Establishment of a Foreign Investment Company Establishment of a Foreign Company Representative Office Investment in the Oil and Gas Sector. Establishment of a Foreign Investment CompanyForeign investment companies can generally be categorized into… Read More
Other taxpayers Partnerships
The profits of a partnership are taxed at the partnership level. The flow-through income is exempt at the partner level. TrustsTrusts (including unit trusts) do not exist under Indonesian law. Non-profit organizations will generally be established in the form of a foundation (Yayasan). A foundation is subject to the normal taxation rules and tax is… Read More
Tax Administration
RegistrationAll taxpayers are required to register for income tax purposes. A non-resident foreign company is only obliged to register if it has a PE as defined in the domestic tax law or applicable DTA. Upon registration, a taxpayer identification number (NPWP) is obtained. The DGT may register any person who, in its opinion, should be… Read More
Taxation of Companies
Indonesian companies are required to register at the relevant DGT’s office for their location/status on or shortly after establishment. Companies must file annual returns to support the computed income tax payable. The income to be reported includes all overseas income as Indonesian tax law adopts the worldwide income basis. Tax paid offshore in relation to… Read More
INDONESIAN TAX 