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… Read More

Portfolio investment for foreigners

Foreigners living in Indonesia are fully taxable on their portfolio investments derived from whatever sources. This includes: Dividends 15% Interest 15% Capital Gains Rental Income (real estate) 10% Foreigners non-resident in Indonesia for tax purposes are subject to withholding tax on their portfolio investments, which includes: Dividends 20% or treaty rateInterest 20% or treaty rateCapital… Read More

Corporate taxation

A corporation, for tax purposes, is classified as “resident” or “nonresident”. Residency is determined on the basis of place of incorporation. A corporation is therefore considered “resident” if incorporated in Indonesia and non-resident if incorporated elsewhere. Resident corporations are taxed on their worldwide income. Tax credits are allowed for income that has been taxed outside… Read More

Setting up and running business organizations

Establishing and running a representative office Including legalization of deed of statutory head office. Preparation of application forms. Obtain business licences of Rep. Office (SIUP3A). Registration with the relevant Ministry. Obtaining a tax registration number (NPWP). Obtaining an assertion letter of the utilized office space. Obtaining a letter of domicile. Establishing and running a foreign-investment… Read More

Business organizations available to foreigners

Under various ministerial regulations a foreign company may set up a representative office. (“Rep. Office”). As a rule, a Rep. Office may only perform auxiliary services: acting as an intermediary, handling promotional activities and gathering information for a head office abroad. Generally it is not permitted to perform operational business or trading activities including entering… Read More