As a foreigner, the first question before setting up a company, PT PMA in Bali, is to understand the corporate tax in Indonesia related to the activity. Indonesia offers some tax facilities and lower taxes than some western countries. Only 16% of the GDP is transited by the Indonesian government.
PT PMA and Obligations
A company such as a PT PMA has several obligations in Indonesia. The obligations are to several institutions such as the Ministry for Investment (BKPM), the tax office (KPP), local government or social security (BPJS).
Difference between LKPM and Tax
The LKPM report has to be submitted by a PT PMA in OSS every quarter. This report is not in relation to the tax office but to the BKPM. The purpose of this report is to follow the activities of the companies in Indonesia (not only PMA) financially and understand their assets, employees, and environmental impact.
Social security (BPJS)
Companies in Indonesia need to have employees and register at least 2 employees to the social security system (BPJS). The company has an obligation to pay each month a contribution with a calculation based on the gross salary of the employees. The amount is due the following month.
Local tax (NPWPD) and National tax (NPWP)
Depending on its activity a company has to pay taxes to the local government and to the national government. The company has to get a tax identification number and report its taxes to the appropriate tax office. The tax number for the local tax is called NPWPD while the tax number for the national tax office is NPWP.
Understanding PT PMA Corporate Taxes in Indonesia
Corporate Income Tax (CIT)
The corporate income tax rate in Indonesia is set at 22% although certain industries may encounter a special rate. This rate is applicable on the taxable income deducted from the deductible charges (result).
For companies with a turnover under 50 billion IDR, the government provides a discounted rate of 50% of the standard rate. The rate is progressive on the part up to 4.8 billion IDR.
The government also facilitates business for small enterprises with a turnover of under 4.8 billion IDR per year. The tax rate is set at 0.5% on the turnover during the first 3 years.
Final Income Tax Article 4(2)
Some incomes in Indonesia are subject to a final tax, which is a crucial aspect of Indonesia corporate tax. This means that the company doesn’t integrate this income into the CIT calculation, and the tax is applied separately. For example, the rental of land or buildings, such as a leasehold, is taxable at 10% and is not taxed again in the Annual Corporate Income Tax declaration.
| Example of final income tax | Rate |
| Land and building rental | 10% |
| Sales – Transfer of Lands and Building rights | 2.5% |
| Construction tax | 1.75 to 6% |
| Consulting on construction | 3.5 to 6% |
Local Tax
There are several types of local tax. The tax rate may vary depending on the activity of the company and on the region. Bali and Jakarta can apply different tax rates. The local tax is sometimes set at the same rate as the rental tax (10%) but can be different for activities such as spas or entertainment.
We advise you to consult with us or a tax consultant before starting your activity to learn how tax can affect your business.
Withholding Tax (WHT) on service
The withholding tax principle is a tax paid by the company on behalf of the seller of the service. The withholding tax on service is set at 2%. On an invoice at 100 the company has to pay 98 to the seller and 2 to the tax office. The payment is made the following month. It is important to request the NPWP of the seller in order to be able to pay the tax on behalf of the seller of the service.
Employee and Personal Income Tax (PIT)
As part of the Indonesia corporate tax obligations, each month the company has an obligation to withhold the tax on the gross salary of the employee. In other words, the company pays the personal income tax related to the salary on behalf of the employee.
| Yearly Income | Tax rate |
| Up to IDR 60 million | 5% |
| IDR 60 million – IDR 250 million | 15% |
| IDR 250 million – IDR 500 million | 25% |
| IDR 500 million – IDR 5 billion | 30% |
| Over IDR 5 billion | 35% |
Value Added Tax (VAT)
The VAT rate in Indonesia is at 11% in 2024 (some activities have a tax rate of 15%). Small enterprises don’t invoice VAT on some activities as long as their turnover does not exceed 4.8 billion IDR per year. The VAT has to be paid by the end of the following month.
The VAT can be offset in the next month if the VAT collector has a negative balance.
Land and Building tax (PPB)
The tax known as Pajak Bumi dan Bangunan (PBB) is at a rate of 0.5% of the property valued by the tax office. The tax office defines a property value (NJKP) in relation to the average of the property transactions (NJOP). The PBB is equal to 0.5% of the NJKP.
Stamp Duty
Indonesia imposes a stamp duty on most of the official documents. The tax is paid on purchase of the stamp (materai).
Also read: Final Income Tax for Construction Services in Indonesia
Planning of tax in Indonesia
The taxes in Indonesia are paid at different moments during the year. Some taxes are paid monthly, while others are paid annually.
| Tax | Payment |
| CIT | Between January and April 30th following the fiscal year |
| Local tax | By the 10 of the following month |
| Withholding tax | By the 10 of the following month |
| Tax on Salaries and BPJS | By the 10 of the following month |
| VAT | By the end of the following month |
| Land Building tax | 6 months after the issuance of the SPTT (notice letter) – (currently end of August in Bali) |
Never worry about taxes and accounting again
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