Terms of Payment
The tax collection is based on the taxpayer s declaration supplemented by a third-party withholding system for some incomes. Most permanent establishments pay the tax monthly by the 20th of the month at the latest. This is calculated based on one-twelfth of the income declared the previous year. Taxes due must be paid before March 25th for individuals and March 31st for businesses.
The taxpayer must file his annual return within 3 months after March 31, which is the end of the fiscal year. Variable penalties are provided in case of non-compliance with these deadlines. The tax authorities reserve the right to carry out reassessments for ten years following a tax audit. The taxpayer has the opportunity to appeal within three months of notification of the decision. In case of adjustment, the payment is due at the latest one month later, whether the taxpayer objects or not.
The taxable income of the business is determined after taking into account some depreciation deductions, loss carry-overs for five years, and the integration of taxable expenses, exceptional income, and fringe benefits.
Withholding
Some categories of taxpayers (including most commercial enterprises) that make payments to other taxpayers must withhold tax for the following taxes:
- Personal income taxes
- Import tax
- Tax (up to 15%) on a range of invoiced revenues and services (Article 23). This deduction also applies to benefits provided by non-residents. It can then rise to 20% unless a tax treaty provides for a reduced rate.
Taxation of Expatriates
Under the provisions of the law, any natural person working or living in Indonesia for more than 183 days in a 12-month period is considered a resident and subject to the ordinary income tax system. (Article 2 (3)).
Expatriates must have a tax register number, called NPWP (Nomor Pokok Wajib Pajak). It is issued upon request by the tax department of the district in which they reside on the presentation of the KITAS and passport. The NPWP card is theoretically issued within 24 hours after filing the documents.
The law states that taxable income is all income received by the taxpayer directly in connection with the exercise of employment in Indonesia as well as any other income from abroad (global income), regardless of their designation. or their form (art.4).
| Slices of Annual Income | Rate |
|---|---|
| 0 - 50 M | 5% |
| 50 M - 250 M | 15% |
| 250 M - 500 M | 25% |
| Greater than 500 M | 30% |
Taxation of Non Resident Companies or Individuals
Non-resident businesses or individuals providing services are subject to a uniform PPH withholding of 20% of the invoiced amounts or their turnover. The tax is levied at the time of payment of bills by the customer.
However, companies from countries with a tax treaty with Indonesia may be subject to different rates. For instance, the French-Indonesian Convention stipulates a rate of 10% (Circular of the Director-General of Taxes SE-03 / PJ.101 / 1996).
The withholding tax also applies to dividends transferred by a foreign subsidiary to its parent company or by a shareholder to his country of origin also in the case of movable income or capital gains realized in the country.
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