Managed by the Directorate General of Taxes (DGT) under the Ministry of Finance.
Self-assessment: the onus is on taxpayers to compute, pay and report all taxes accurately.
Income Tax Law, VAT & Luxury-Goods Sales Tax Law, General Tax Provisions & Procedures Law, plus related government regulations.
• Scope: resident companies (incorporated in Indonesia or having a PE) are taxed on worldwide income.
• Filing: annual return + quarterly instalments.
• Residents (>183 days or domicile) pay on worldwide income; non-residents only on Indonesian-source income.
• Resident rates: progressive 5–30 %.
• Non-resident flat rate: 20 % (gross, no deductions).
• Bonuses, allowances, dividends, interest, etc. are aggregated.
• Certain payments trigger WHT: salaries, fees, rent, dividends, interest, royalties.
• Domestic rates: 2–15 %.
• Non-resident payments: 20 % (may be reduced under a DTA).
• Failure to withhold attracts penalties and interest.
• Service payments > threshold subject to 2 % PPh 23 WHT.
• Indonesia has DTAs with >70 countries.
• Benefits: reduced WHT on dividends, interest, royalties.
• Certificate of Domicile (CoD) must be lodged before payment; late submission may forfeit relief.
• Standard rate: 11 %.
• Registration: mandatory for enterprises with turnover > IDR 5 billion.
• Exempt: basic goods, medical, education, financial services.
• Certain sectors operate a “final VAT” regime.
• Valid tax invoices are compulsory; non-compliance triggers heavy penalties.
• Additional to VAT on high-end cars, yachts, private jets, luxury homes, etc.
• Rates: 10–95 %, depending on item.
• Import tariffs 0–40 % by HS code.
• Excise: tobacco, alcohol, sugary beverages.
• Proper customs compliance and COO certification are essential for preferential duty treatment.
• Levied on agreements, deeds, land titles, securities, auction documents, etc.
• Purpose: legalisation and evidence.
• Annual property tax on land & buildings.
• Rate: 0.5 % of government-assessed taxable value.
• Owners or actual users liable; possible reductions for projects in special economic zones.
Tax Concessions
The Indonesian government offers a variety of tax incentives to encourage investment and innovation.
Investment Tax Holiday: Investments in specific industries can enjoy full exemption from corporate income tax for up to 20 years.
Investment Allowance (Tax Allowance) : Investment projects that meet the conditions can enjoy tax base deductions.
Additional deduction for research and development expenses: Research and development expenses that meet the regulations can be deducted by an additional 300%.
These are the key policies for reducing the actual tax burden and enhancing the IRR of the project.
The application and maintenance of preferential eligibility must be approved by the Investment Coordination Board (BKPM). There are strict procedures and documentation requirements, which need to be precisely managed to ensure compliance and enjoyment.
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Settle in the Wanxinda Industrial Park of the Batang National Economic Special Zone in Indonesia
In the current context of the global trade landscape’s reconstruction, waiting and seeing is the most expensive strategy!
As the largest economy in ASEAN, Indonesia is providing a “zero-delay” production start-up solution for its manufacturing industry with a combination of national-level special economic zones and spot standardized factories.
1. Tariff breakthrough
Relying on the Indonesia-ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), enjoy zero-tariff export treatment for 90% of goods within the region.
2. Cost-locked win
Tax policies: Enterprises in special economic zones enjoy 15 years of corporate income tax reduction and exemption (exemption for the first 5 years and halving for the following 10 years), and all tariffs on imported equipment in bonded zones are waived.
Labor costs: The proportion of workers under the age of 25 is 38%, and the average monthly salary in the manufacturing industry is only one third of that in China.
Energy security: The electricity price is approximately 0.5 RMB, with a peak price of 0.75 RMB.
Employee social security: The medical insurance premium is paid by both the enterprise and the employee at 1% of the salary, the endowment insurance is paid by the enterprise at 8.4% of the salary, and the work-related injury insurance is paid by the enterprise at 0.24% of the salary. (Less than 10% in total
3. Spot goods get a head start
1 million square meters of high-standard factory buildings in Batang Special Economic Zone, Central Java Province, are available for immediate use.
Complete supporting facilities
Close to the expressway
Green and energy-saving factory building
“One-stop” service
At this moment, what is scarcer than “cost depressions” is the resource of “strategic springboards”.
Please contact the Wanxinda investment promotion team immediately to obtain a customized implementation plan – starting when others are hesitant is the true dimension reduction competition!
