Depreciation and Amortization

Depreciation/ Amortization 1    Either straight-line or declining balance method of depreciation is allowable, except for buildings, for which only the straight-line method is permitted. 2     The chosen depreciation method must be applied consistently to assets. 3     When adopting a declining balance method, the remaining book value at the end of the useful life… Read More

Controlled Foreign Company

Controlled Foreign Company (CFC) Rules 1    The Income Tax Law, through a Minister of Finance Decree,      determines the time of receipt of dividend by a resident taxpayer on capital participation in a business entity abroad other than a business entity that sells its shares on a stock exchange in these cases: ·    The amount of… Read More

Non Taxable Income

Non-Taxable Income (applies to corporate and individual taxpayers) The law specifies a number of categories of income that are exempted from tax. These are: ·     Aid, donations, zakat, religious donations or gifts received, provided there is no business, work, or ownership relationship between the parties concerned; ·     Inheritances; ·     Dividends received by… Read More

Foreign Loan

Government projects funded with foreign loans or foreign grants may be eligible for special tax treatment for the income derived from that funding. The projects that qualify are typically set out in the state Project Table of Contents (Daftar Isian Proyek/DIP) or other similar document. Main contractors, consultants and suppliers for foreign grant- funded or… 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