Attractions of investment in IndonesiaIndonesia can brag about its 2009 decent economic performance when most other countries around the world experienced severe contraction, and in spite of political turbulence that always comes with general elections, the nation can still take pride that it was by and large a peaceful democratic process. The government continues to… Read More

A permanent establishment is a non-resident tax subject treated as an Indonesianresident tax subject. A permanent establishment’s head office administrative cost is an allowable deduction for the purpose of calculating its taxable income. However, such cost should be comparable with the principal’s overall operations and evidenced by the principal’s audited consolidated financial report on its… Read More

‘Resident tax subject’ means any organization established or domiciled in Indonesia, and any permanent establishment of organizations not established or domiciled in Indonesia. ‘Organization’ means a limited-liability company, limited partnership, other form of company, state-owned corporation, regional-owned corporation regardless of name and form, partnership, firm [firma], association [kongsi], co-operative, foundation, or similar body, institute, pension… Read More

The Tax Service Office has the right, within the 10-year statute of limitation applying from the year 1995 onwards, to issue: · a tax assessment if, after an audit, it considers that the taxpayer has not self assessed the correct amount or if a tax return has not been filed within the stipulated period ;… Read More

Taxable income is computed by first adding together all proceeds or value derived from various sources of income, a sum which is called gross income. ‘Gross income’, less allowable ‘deductions’ (i.e. the cost of obtaining, collecting, and conserving gross proceeds and expenses burdening that income), equals net income or ‘taxable income’. Losses may generally be… Read More

GENERAL PRINCIPLES The taxation principles in Indonesia are set out by the Constitution of the Republic of Indonesia of 1945. Article 23(2) of the Constitution stipulates that every tax needed by the state must be arranged through the law. Consequently, no tax can be imposed except through law. The constitution embodies the principle that taxes… Read More

Overview of Accounting Practice and Environment The history of Indonesian Generally Accepted Accounting Principles began when the Indonesian Accountants Association (abbreviated to IAI), established in 1957, was appointed by the Government of Indonesia in 1984 to develop accounting standards in Indonesia to be used mostly for Limited Liability Partnership. IAI then established a committee to… Read More

Tax system New lawsThe current framework of Indonesia’s tax laws dates from 1983 with subsequent revisions, most recently in 2007. There are separate laws covering income tax, value added tax (VAT) and sales tax on luxury goods. Other tax laws include the law on the taxing of land and buildings and the law on stamp… Read More