There is no concept of Indirect or Beneficial Ownership in Indonesia. Indonesia will only look at the direct ownership in determining tax. Foreign trusts would be treated as a separate legal entity for local tax purposes. With this said, Indonesia does have a separate law dealing with foundations, or what are commonly called Yayasans. Recent… Read More

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

Value added tax Value added tax applies to the import and delivery of most goods and services. Insurance and banking services are not subject to VAT. VAT is collected at a standard rate of ten percent (10%) but for some services, the VAT effective rate is one percent (1%). For export of goods, the VAT… Read More

Indonesia has Double Tax Treaties with a number of countries. All funds are included in the definitions of persons to which treaty protection applies. However, restrictions on funds assets mean that treaties only affect funds to the extent that the fund participants and shareholders may benefit. Indonesia currently has 57 tax treaties in operation. Notes:Interest:… Read More

Scope of taxation For taxation purposes, an individual is classified as “resident” or “nonresident”. An individual is considered a resident taxpayer if staying in Indonesia for more than 183 days in any 12-month period, or if intending to reside in Indonesia. Naturally, if the individual comes from a treaty country, the determination of tax residency… Read More

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

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

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

For all investment projects of PMA, the following facilities will be granted: a. Import DutiesRelief from import duty or tariffs: 5% or lower. b. Export Manufacturing Reimbursement (drawback) of import duty on the import of goods and materials needed to manufacture finished products for export. Exemption from VAT and sales tax on luxury goods for… Read More

The legal aspects to be considered when the investors set up investments: a. Foreign Direct Investment.Further referred to as Penanaman Modal Asing (“PMA”), is a foreign investment activity to conduct business in the territory of the Republic of Indonesia, which is made by a foreign investor, whether using foreign capital or in a form of… Read More