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.
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
Deductible Expenses
Calculation of Income – Deductible Expenses Under the new Income Tax Law, all legitimate business expenses directly or indirectly related to earning, collecting, or maintaining income are deductible from the assessable income to calculate the taxable income. These expenses include but are not limited to: 1. Expenses that are directly or indirectly related to business… Read More
Tax Rates
Normally, corporate income tax that is used in Indonesia is as much as 25%. This rate starts for the fiscal year of 2010 onward. Public companies that satisfy a minimum listing requirement of 40% and other special conditions are entitled to a tax cut of 5% off the standard rate. Thus, it gives them a… Read More
Tax Holiday
New corporate taxpayers in certain pioneer industries may enjoy a CIT exemption for a period of five to ten years from the start of commercial production. After the end of the CIT exemption, the company will receive a 50% CIT reduction for two years. To be eligible for the above facilities, taxpayers should be newly… Read More
Corporate Tax Facilities
Companies investing in certain business sectors and/ or in certain less developed regions having high priority on a national scale can be granted tax facilities in the form of: · Additional net income reduction, up to a maximum of 30% of the amount of investment; · Accelerated depreciation and amortization; · The period of loss… Read More
Business Profits
Taxable business profits are calculated on the basis of normal accounting principles as modified by certain tax adjustments. Generally, a deduction is allowed for all expenditures incurred to obtain, collect, and maintain taxable business profits. A timing difference may arise if an expenditure recorded as an expense for accounting can not be immediately claimed as… Read More
INDONESIAN TAX 