INDONESIAN TAX

MANUAL BOOK
2022

INDONESIA TAX
POCKET BOOK 2022
ddtc.co.id
INDONESIAN TAX
MANUAL BOOK
2022

Editors:
Darussalam, Danny Septriadi, David Hamzah Damian,
Romi Irawan and B. Bawono Kristiaji.
 Foreword

We praise and thank God Almighty for all His grace and blessings,
Indonesian Tax Manual Book 2022 has finally been published. In the spirit
of the Asia-Pacific Pro Bono Firm of the Year Award recently received by
DDTC, the Indonesian Tax Manual Book 2022 embodies DDTC’s consistent
commitment to providing inclusive tax education and knowledge sharing
for all stakeholders of information on the Indonesian tax sector.

Indonesian Tax Manual Book 2022 comprises general normative legal reviews
on various areas of taxation, ranging from national, international to sub-
national. The contents of this book include personal income tax, corporate
income tax, value added tax, sales tax on luxury goods, withholding tax, tax
procedures, local taxes, customs, excise, stamp duty, international taxes,
transfer pricing, fiscal incentives and the latest developments.

Indonesian Tax Manual Book 2022 is also enriched with links that refer to
reliable and comprehensive information sources. The information sources
cover the legal basis, news of the latest developments, terminology,
literature books, dictionaries and so forth. These sources may also be
accessed in various DDTC products, specifically, DDTCNews and Perpajakan
ID. The presentation model is intended to facilitate and improve the readers’
tax literacy.

The editorial team would like to thank everyone in support of the publication
of the Indonesian Tax Manual Book 2022. Special thanks go to family and
members of the editorial team for their prayers and moral support in the
process of compiling the Indonesian Tax Manual Book 2022.

Finally, with the publication of the Indonesian Tax Manual Book 2022, the
authors hope to positively contribute through comprehensive and general
guidelines for all stakeholders in Indonesia’s tax sector. We look forward to
constructive suggestions and criticism from readers.

Darussalam, Danny Septriadi, David Hamzah Damian,

Romi Irawan and B. Bawono Kristiaji
 Indonesian Tax Manual Book 2022

Table of Contents

Survey of Recent Developments 1

Corporate Income Tax 6

A. How to Compute Corporate Income Tax 6
B. Income Classification 7
C. Expenses & Non-Deductible Expenses 9
D. Depreciation & Amortization 11
E. Non-Deductible Expenses 13
F. Loss Carry Forward 14
G. Corporate Income Tax Rate 14
H. Tax Instalments 15
I. Domestic Tax Credit 15
J. Foreign Tax Credit 15
K. Net CIT Underpayment or Overpayment 16
L. Taxation of Certain Businesses or 16
Certain Transactions

Individual Income Tax 22

A. Overview 22
B. How to Compute Individual Income Tax 23
C. Income Classification & Taxation 24
D. Expenses & Non-Deductible Expenses 25
E. Personal Tax Relief 25
F. Individual Income Tax Rate 26
G. Tax Instalments & Tax Credits 26
H. Net Tax Underpayment or Overpayment 27
Table of Contents

Withholding Tax 28
A. Overview 28
B. Article 21 Income Tax 28
C. Article 22 Income Tax 31
D. Article 23 Income Tax 33
E. Article 4(2) Income Tax (Final Income Tax) 35
F. Article 26 Income Tax 37

International Tax & Transfer Pricing 40

A. Tax Treaty Network 40
B. Anti-Avoidance Rules 48
C. Transfer Pricing Rules & Documentation 50
D. Transfer Pricing Audit & Dispute Resolution 54

Value Added Tax 57

A. Non-Taxable Goods & Non-Taxable Services 59
B. VAT Rate & Calculation 60
C. Input & Output VAT 60
D. VAT Invoice 62
E. Filing VAT Returns 63
F. Other Issues 63

Sales Tax on Luxury Goods 72

A. Provisions on STLGs on Luxurious 73
Motor Vehicles
B. Provisions on STLGs on Luxury Goods 74
Other Than Vehicles

General Provisions & Tax Procedures 76

A. Overview 76
B. Tax Subjects & Tax Registration 77
C. Taxpayer’s Representative & 78
Power of Attorney
 Indonesian Tax Manual Book 2022

D. Bookkeeping & Recording 79

E. Tax Payment & Tax Returns 80
F. Tax Disputes & Litigations 83

Customs & Excise 90

A. Export Duties 90
B. Import Duties 93
C. Excise 96

Fiscal Incentives 99
A. Tax Holiday 99
B. Tax Allowances 100
C. Investment Allowances 100
D. Supertax Deduction 100
E. Dividend Exemption 101
F. VAT Exemption for Certain 101
Strategic Taxable Goods
G. Foreign Income Exemption for 102
Certain Expatriates
H. Special Economic Zones 102
I. Tax Facilities for Free Trade Zones & 103
Free Port Area

Stamp Duty 104

Local Taxes 108

Survey of Recent Developments

Survey of Recent
Developments

The year 2022 marks a historic moment for Indonesia. As

the host of the G20 meeting and presidency for a full
year, not only does Indonesia showcase its economic and
development progress but also presents an opportunity
to introduce the country’s comparative advantages to the
world. The G20 event also constitutes a momentum to
disclose the tax issues of developing countries, specifically,
in terms of international tax.

In accordance with the G20 presidency theme “Recover

Together, Recover Stronger”, Indonesia’s taxation
landscape also exhibits significant improvement. In terms
of revenue collection, last year’s tax revenue realization
has exceeded the collection target for the first time in
12 years amidst the recovering business activities and
commodity market boom. The 2021 tax revenues stood at
IDR1.277,5 trillion or grow 19,2% (YoY), equivalent to 103,9%
of the targets. The high achievement of tax revenues has
even reached the pre-pandemic level. Moreover, tax
revenues have continued to indicate a positive trend since
the beginning of 2022.

The aforementioned achievement is certainly integral to

the government’s endeavour to carry on and accelerate
tax reform. One of the major reform agendas taking place
in 2022 is the implementation phase of Law Number 7 of
2021 on the Tax Harmonisation Law (UU HPP). The changes
under UU HPP have a highly significant and wide-reaching
impact on prior tax regulations (income tax, value-added

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 Indonesian Tax Manual Book 2022

tax and the general provisions and tax procedures law).

The most recent news on UU HPP can be found here.

The issuance of the regulation has become a strong

foothold to encourage the implementation of reforms by
realizing a more equitable, legally certain and efficiency-
enhancing tax system. Tax reform agendas may also
affect the relationship between taxpayers and the tax
authorities.

One notable change in UU HPP is in the VAT regime.

Starting April 2022, the increase of the statutory VAT rate
to 11% has been officially applied from the current 10%
rate, while a further increase will be applied in January
2025 at the latest. The policy was one of the drivers of the
VAT growth to double digits during the first semester of
this year. Moreover, the VAT revenue growth also indicates
a strong signal of the recovery of economic activities and
the business sector.

In addition, UU HPP has also shifted many former non-

taxable goods and services into the taxable goods and
services category that may be exempt from VAT or subject
to non-collectible VAT. For instance, basic necessities,
mining products, financial services and social services,
are now included in taxable goods.

To align with the latest business model and ensure tax

equity, various financial services, including electronic
money/wallet services, switching and financial technology
providers, are also obliged to perform VAT withholding on
taxable service transactions.

There have also been several important income-tax-

related changes. Formerly, in 2020, Government Regulation
in Lieu of Law No. 1 of 2020 lowered the corporate income
tax rate from 25% to 22%, which has been in effect since
April 2020. A further reduction in the rate to 20% was
expected in 2022. However, the provisions above were
revised based on the HPP law so that the CIT rate remains

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Survey of Recent Developments

at 22% starting in the 2022 fiscal year. The most recent

issues on corporate tax may be followed here.

For individual income tax, UU HPP has adjusted the tax

bracket along with the applicable progressive rates. Since
January 2022, a new top individual income tax rate of
35% on income over IDR5 billion has been applicable. In
addition, the upper threshold for the 5% rate has increased
from IDR50 million to IDR60 million. Most recent issues on
individual tax can be accessed here.

The introduction of fringe benefit tax (FBT) will also

change the individual income tax system. As of this year,
employee facilities will become taxable when they meet
certain criteria and thresholds. Through the FBT, the
government aims to render equal treatment between
income in the form of money and facilities received by
employees.

Another effort to expand the tax base is imposing the

withholding tax mechanism on income arising from
crypto asset exchanges, peer-to-peer lending and other
technology-supported financial applications. Accordingly,
the government has also issued the implementing
regulation concerning the appointment of third-party
income tax withholding agents, such as peer-to-peer
lending companies. This is in line with the government’s
authority to appoint withholding agents – domestically
and globally – to ensure optimum tax collection.

To prevent tax avoidance through thin capitalisation, there

is also added flexibility, i.e. the government may opt to use
the debt-to-equity ratio (DER) rule or interest expense
limitation through earning stripping rule in the future.

The General Provisions and Tax Procedures Law (UU

KUP) has also brought about several major updates to
render more fairness and certainty. The introduction of
the “Indonesian single identity number” (Nomor Induk
Kependudukan/NIK) to replace the Tax ID Number (Nomor

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 Indonesian Tax Manual Book 2022

Pokok Wajib Pajak/NPWP) for individual taxpayers is one of

the spotlights. This policy is to be fully implemented on 1
January 2024. In addition, certain administrative penalties
have been reduced to engender fairness.

Simultaneously, there have been two other fundamental

changes as a tax law enforcement effort to render
tax certainty. First, the government may establish
arrangements with other countries or a global consensus
to solve taxation issues. Second, the request for and
execution of the mutual agreement procedure (MAP) is
allowed to exist in parallel with the dispute process (tax
dispute documentation can be found here).

This year, the tax stakeholders are also preparing to

implement the carbon tax as mandated in UU HPP.
According to the law, the carbon tax will be imposed on
the purchase of carbon-containing goods or any activities
that produce a certain amount of carbon emissions.
However, the carbon tax was supposed to take effect in
April 2022, but was postponed without a specific target
implementation time.

The implementation of the Voluntary Disclosure Program

(Program Pengungkapan Sukarela/PPS) is also worth
mentioning. Held from the beginning of the year to 30
June, this program allows taxpayers to voluntarily report
or disclose assets formerly not listed in their income tax
returns. Cumulatively, 247,918 taxpayers have participated
in this program and a total income tax of IDR61,01 trillion
has been successfully collected.

The various initiatives contained in UU HPP will be

technically outlined in the derivative or implementing
regulations. However, only 15 important regulations have
been issued as of the issuance of this publication. Many
more are underway this year.

Aside from UU HPP, the government has also issued Law

No. 1 of 2022 concerning Financial Relations between

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Survey of Recent Developments

the Central Government and Local Governments (UU

HKPD). One of the major provisions under UU HKPD is the
restructuring of local taxes and the extension of local
governments’ ability to broaden the tax base. In addition
to enhancing local taxing power, UU HKPD also provides
a new local tax incentive regime to boost the regional
investment climate.

The current tax reforms holistically cover the entire

Indonesian tax landscape. To reach sustainable compliance,
digitisation muscles up the tax authorities to collect taxes
in sustainable ways. For instance, with the compliance
risk management (CRM) approach, the tax authority is
now able to apply different treatments to every taxpayer
according to their evidence-based compliance risk profile.

The increasingly intense tax reforms—like it or not—are

the answer to the current fiscal economic problems.
Accordingly, the tax reforms will also be different depending
on the various forms of contextual challenges thereof. At
least five important aspects are to be considered in the
foreseeable tax reforms, including digital developments,
tax certainty, the rapid flow of information, increased tax
bargaining and the urgency of the tax control framework
(TCF).

For the latest information on the tax law topics covered

in this publication (e.g. legislation enacted after the
publication), go to Perpajakan ID. The tax terminology
glossary can be found here.

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 Indonesian Tax Manual Book 2022

Corporate
Income Tax

Corporate income tax applies to corporate taxpayers,

including limited liability companies, limited
partnerships, firms, joint ventures, foundations
or other forms of entities that are established or
domiciled in Indonesia. A tax treatment equivalent to
corporate taxpayers, however, applies to permanent
establishments.

A. How to Compute Corporate Income Tax

Generally, the computation of corporate income tax is
based on taxable income in a tax year, wherein income
subject to tax is deducted with allowed deductions. In
addition, deemed profit applies to certain corporate
taxpayers (see Taxation of Certain Businesses or
Transactions). Moreover, final tax is imposed on certain
types of income and income not subject to tax. Certain
small medium enterprises with a gross turnover of less
than IDR4.8 billion may opt to apply a Final Tax of 0.5%
from gross turnover for a period of 3 years for limited
liability companies or 4 years for cooperatives, limited
partnerships without shared capital, or firms.

The following is an illustration of how to compute

corporate income tax under the regular method:

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Corporate Income Tax

Table 1 The Computation of Corporate Income Tax

1 Income subject to tax (excluding income subject to final tax and not
subject to tax)
2 Less: Expenses
3 Net Commercial Income
4 Plus: Non-deductible Expenses
5 Net Fiscal Income
6 Less: Loss carry forward
7 Taxable Income
8 Corporate Income Tax
(Taxable Income x Tax Rate based on Article 17 of the Income Tax
Law) i.e. 22%)
9 Less: Tax Credit and Tax Instalment
10 Net CIT Underpayment/(Overpayment)

B. Income Classification
Income tax is imposed in respect of income received
or accrued in a tax year. Income is defined broadly as
any increase in economic capacity which may be used
for consumption or increasing wealth. Income may be
classified generally as income subject to regular tax,
income subject to final tax and income not subject to tax.
Income subject to final tax should be withheld by third
parties (Article 4(2) Income Tax) and its details can be
found here.

Permanent establishments as non-resident taxpayers are

taxed only on income sourced from Indonesia. Taxable
objects of permanent establishments include:
● Income from business or activities of the permanent
establishments and held or controlled property.
● Income of the head office from business or activities,
sales of goods or provision of services in Indonesia
which are similar to those conducted or carried out
by the permanent establishment in Indonesia.
● Income referred to in Article 26 of the Income
Tax Law that is received or accrued by the

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 Indonesian Tax Manual Book 2022

head office provided that there is an effective

relationship between the permanent establishment
and the property or activities giving rise to the
aforementioned income.
For further details on the concept and application of
income taxation, see DDTC e-book Konsep dan Aplikasi
Pajak Penghasilan.

The following income is not subject to tax:

● Aid or donations, including compulsory religious
donations and grants, provided that there is no
business, employment, ownership or control
relationship between the parties.
● Assets, including cash received by an entity in
exchange for shares or capital contribution.
● Remunerations related to work or services received
or accrued in kind or fringe benefits.
● Payments received by an individual from an
insurance company.
● Dividends or other income provided that:
○ Domestically-sourced dividends received or
accrued by an individual taxpayer insofar as
the dividends are invested in Indonesia within
a certain period; received or accrued by a
corporate taxpayer.
○ Foreign-sourced dividends and income after
tax from an overseas permanent establishment
received or accrued by a corporate taxpayer or an
individual taxpayer that fulfils the requirements
set out in Article 4 (3) Sub-paragraph f.2. of the
Income Tax Law.
● Deposit funds and certain income received by Hajj
Financial Management Agency.
● Surplus received by registered social or religious
organizations which is reinvested further.
● Contributions received or accrued by an authorized
pension fund.
● Income from capital investments in certain sectors
of the abovementioned pension fund.

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Corporate Income Tax

● Profit received or accrued by members of a

cooperative, limited partnership without share
capital, alliances, firms and joint ventures, including
unit holders of collective investment contracts.
● Profit received by a venture capital company from
an investee company established and conducting
business or engaged in activities in Indonesia with
certain conditions.
● Surplus received by a registered institution or a
non-profit organization engaged in education and/
or RnD, that is further reinvested.

C. Expenses & Non-Deductible Expenses

Expenses related to the generation of business income
that is subject to income tax are deductible, except
categorized as non-deductible expenses. Expenses to
acquire asset with more than one year of useful life must
be capitalized and further depreciated or amortized.
Incurred expenses related to income subject to the final
tax, or deemed taxed income or non-taxable income are
not deductible. Further, incurred joint expenses in respect
of obtaining taxable income and income subject to final
tax or income not subject to tax must be proportionally
allocated. Expenses for remunerations given in kind and
fringe benefits are deductible since the 2022 tax year.
This was formerly disallowed.

For permanent establishments, administrative expenses of

the head office are deductible provided that such expenses
are related to the business or activities of the permanent
establishments after certain conditions are fulfilled. Non-
deductible expenses of a permanent establishment for
the head office include royalties or payments related to
the use of property, patents or other rights, management
services and interest, except for interest in respect of
banking business.

To be deductible, certain types of expenses have to fulfill

certain conditions, as follows:

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 Indonesian Tax Manual Book 2022

● Entertainment expenses incurred to generate,

collect and maintain revenue, in general, are
deductible. To be deductible, the complete
documentation of the incurred expenses must be
available and such expenses must be related to the
aforementioned objective. In addition, a nominative
entertainment list in a set format is required to be
submitted along with the annual tax return.
● Promotional expense incurred for advertising,
product exhibition, to introduce new products
or sponsorship to promote product would be
deductible. In addition, a nominative promotional
list in a set format is required to be submitted
along with the annual tax return.
● Bad debt expenses realized and incurred in
commercial profit and loss. In addition, to be
claimed as deductible, the list of uncollectible
debts must be submitted to the DGT along with
the annual tax return, and the collection efforts
of uncollectible debt have been filed to the civil
court or a certain government body; or such debt
relief has been written in an agreement between
the creditor and debtor; or it has been publicized
in general or certain publication; or the debtor has
acknowledged the write-off of the debt up to a
certain amount.
● Donations for national disasters management,
research and development and related donations,
expenses to build social infrastructure, educational
facilities and sports development. To be
deductible, such donations must fulfil the following
requirements: the preceding tax year’s tax return
was in a net fiscal profit; not causing any loss in the
current tax year; supported with valid evidence; and
the institution receiving the donation is registered
as a taxpayer, except those that are exempt from
taxpayers under the Income Tax Law. On another
note, further requirements and details can be
accessed here.

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Corporate Income Tax

Interest expenses for loans exceeding the 4:1 Debt-to-

Equity Ratio (DER) have to be proportionally adjusted.
Please note that to apply DER, several conditions must
be fulfilled and an exception from the DER requirements
may apply to certain taxpayers. In addition to the DER
requirement, interests paid to related parties must be at
arm’s length. The illustration of how to apply DER may be
seen here.

D. Depreciation & Amortization

Expenses for the purchase, establishment, addition, repair
or changes of tangible assets with a useful life of more
than one year, except for land rights, must be capitalized
and depreciated over the specified useful life using a
consistent straight line or double declining method. The
only depreciation method for buildings is the straight line.
To be deductible, such assets must be related to the
generation of business income that is subject to income
tax.

Depreciation commences in the month the costs are

incurred, except for assets that are in progress, for which
the depreciation commences in the month the assets are
finished. Subject to the DGT’s approval, taxpayers are
allowed to start the depreciation in the month the assets
are used to obtain, collect and maintain income or in the
month the assets are used in the production.

If a taxpayer performs an asset revaluation for tax

purposes as allowed by the DGT, the depreciation basis
for revaluated assets shall be the revaluation amount.
The revaluation is of the market value determined by a
licensed public appraiser. Please note, however, that the
DGT may restipulate the value and apply claw-back rules.
The gain difference resulting from revaluation is subject to
a final tax of 10% and may be paid in instalments subject
to the DGT’s approval.

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 Indonesian Tax Manual Book 2022

Table 2 Depreciation Rates per Group of Tangible Assets

Depreciation rates
Tangible Assets
Useful Life Straight line Double declining
Group
method method
Non-buildings
Group 1 4 years 25% 50%
Group 2 8 years 12.5% 25%
Group 3 16 years 6.25% 12.5%
Group 4 20 years 5% 10%
Buildings
Permanent 20 years 5% -
Non-permanent 10 years 10% -

Tangible assets acquired and utilized in certain business

sectors are further regulated by a Government Regulation.
This was formerly regulated under a Minister of Finance
Regulation. Although the Government Regulation has not
been issued, arguably, the former Minister of Finance
Regulation remains applicable.

Expenses for the acquisition of intangible assets and other

costs to extend the right to build, right to exploit and
right to use and goodwill with a useful life of more than
1 year must be capitalized and amortized in equal parts
or decreasing parts over the useful life. To be deductible,
such intangible assets must be related to the generation
of business income that is subject to income tax.
Table 3 Depreciation Rates per Group of Intangible Assets
Amortization rates
Intangible Assets
Useful Life Straight line Double declining
Group
method method
Group 1 4 years 25% 50%
Group 2 8 years 12.5% 25%
Group 3 16 years 6.25% 12.5%
Group 4 20 years 5% 10%

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Corporate Income Tax

If a taxpayer obtains a tax allowance, the taxpayer may be

entitled to accelerated depreciation and amortization up
to 200% for tangible assets and accelerated amortization
for intangible assets. More information on tax allowance
can be found here.

E. Non-Deductible Expenses
In addition to non-deductible expenses that are not
related to business, from which the income is subject to
regular tax, the following also constitute non-deductible
expenses for CIT purposes:
● Profit sharing in whatever name and form.
● Expenses incurred for the personal benefit of
shareholders, partners or members.
● Provisions, except for the following which will
require further conditions:
○ Bad debt allowances for banks and other
business entities that provide loans, finance
leases, consumer finance companies and
factoring companies.
○ Reserves for insurance business.
○ Guarantee reserves for the Deposit Insurance
Agency.
○ Reclamation reserves for mining businesses.
○ Reforestation reserves for forestry businesses.
○ Reserves for closing and maintaining industrial
waste for industrial waste treatment businesses.
● Certain insurance premiums which are paid by
individual taxpayers, unless the premiums are paid
by the employers, in which case, they shall be
treated as income.
● Amount exceeding the reasonable amount paid to
shareholders or related parties as the remuneration
related to the performed work.
● Grant, aid or donations and inheritance, unless
specifically regulated as deductible.
● Income taxes.

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 Indonesian Tax Manual Book 2022

● Salaries paid to members of a partnership, firm

or limited liability company whose equity is not
divided into shares.
● Tax administrative penalties.

F. Loss Carry forward

If after being deducted with allowed deductions, income
subject to tax results in a loss position, the loss is set off
against taxable income starting the following tax year for
5 consecutive years, this may be extended up to 10 years
under certain conditions.

Further, the tax loss that may be utilized will deduct

taxable income. If the tax loss is re-computed due to a
tax assessment, the re-computed tax loss is one to be
utilized.

G. Corporate Income Tax Rate

Resident corporate taxpayers and permanent
establishments are subject to a rate of 22% (twenty-
two percent). Public-listed companies with total fully
paid shares traded on the stock exchange in Indonesia
of a minimum of 40% that fulfil certain requirements are
eligible for a 3% (three percent) lower rate.

Further, small-and-medium enterprises (SMEs) with

annual revenues not exceeding IDR50 billion may apply a
50% lower tax rate of Article 31E of the Income Tax Law
that is proportionally imposed on the taxable income of a
fraction of the gross turnover of up to IDR4.8 billion.

A tax holiday facility that may reduce corporate income

tax payable by 100% or 50% related to new investments
subject to a tax holiday is available. More information on
tax holiday can be found here.

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Corporate Income Tax

H. Tax Instalments
Monthly tax instalments pursuant to Article 25 of the
Income Tax Law during the current tax year is to be self-
paid and equal to the amount of income tax payable
according to the preceding annual income tax return
deducted by allowed domestic and foreign tax credits
divided by 12 (twelve) months or the number of months in
a fraction of a tax year. Taxpayers may apply to the DGT
for a reduction of the monthly tax instalments, after 3
months of the current tax year, if the taxpayers are able
to substantiate that the hypothetical tax payable for the
current tax year will be less than 75% of the tax payable
used as the basis of the current monthly tax instalments.

Tax instalments for certain businesses, such as finance

lease companies, banks, listed companies, state-owned
enterprises and other taxpayers are based on the prepared
periodic financial statements.

I. Domestic Tax Credit

Non-final tax is withheld by third parties on certain types
of income under Article 23 of the Income Tax Law (details
can be found here) or taxes paid or collected in respect
of imports or by third parties on certain transactions (see
details on Article 22 Income Tax here) may be credited by
corporate taxpayers against corporate income tax payable.

J. Foreign Tax Credit

If a corporate taxpayer pays tax on foreign-sourced
income, such a foreign tax credit on the foreign-sourced
income is creditable against corporate income tax payable
pursuant to Article 24 of the Income Tax Law. The allowed
foreign tax credit shall be equal to income tax paid or
payable overseas but shall not exceed the calculation of
tax payable computed based on the Income Tax Law.

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 Indonesian Tax Manual Book 2022

K. Net CIT Underpayment or Overpayment

Corporate income tax payable after being deducted by tax
credits, including monthly tax instalments, that result in
nil tax or underpayment tax as per Article 29 of the Income
Tax Law must be settled before the annual income tax
return is filed, or the tax overpayment as per Article 28A
shall be refunded after an audit has been conducted.

L. Taxation of Certain Businesses or

Certain Transactions
Certain businesses or transactions are taxed using a
specifically regulated income tax treatment or as per
Article 15 of the Income Tax Law using deemed profit
margins.

Businesses are taxed on deemed profit margins as follows.

Table 4 Deemed Profit for Certain Businesses
Deemed Net
Effective
Business Profit from Gross
Income Tax Rate
Revenues
Domestic shipping companies 4% 1.2%*
Domestic airline companies 6% 1.8%*
Foreign shipping and airline
6% 2.64%*
companies
Foreign oil and gas drilling
15% 3.3%**
operations
Certain trade representative offices 1% of export value 0.44%*
*The effective income tax rate is specified in a Minister of Finance Decree.
** The effective income tax rate is not specified in the Minister of Finance
Decree, only deemed net profit is regulated. Thus the effective income tax
rate is 15% X 22% = 3.3%

Certain businesses or transactions are taxed using a

specifically regulated income tax treatment as follows.

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Corporate Income Tax

Table 5 Specifically Regulated Income Tax Treatment for

Certain Business or Transactions
Business Specific Regulated Income Tax Treatment
Financial lease ● Financial lease companies must be
companies authorized by the relevant authorities
● Financial leases with the option to
purchase
○ Lessor’s income is a portion of the
lease payment in the form of lease
service income
○ Lessor is not allowed to depreciate the
leased asset
○ Lessor is allowed to do provision for
doubtful debt capped max at 2.5%
of average beginning and ending of
receivables
● Operating lease
○ Lessor’s income is a portion of the
lease payment in the form of lease
service income
○ Lessor’s income is the total amount of
lease payment
○ Lessor depreciates the asset
Mining companies ● Taxation of mining companies depends
on whether the company is licensed to
operate based on the prevailing rules on
operating license or is under a special
contract with the government, wherein the
contract has not ended
● If the company is under such special
contract, the tax provisions in the special
contract apply
International toll- ● Special Deemed Profit to compute the
manufacturing net taxable income of international
businesses toll manufacturing is 7% of the total
manufacturing or assembling goods,
not including direct materials and is
considered the final tax
● Such special deemed profit applies
provided that the company has not
entered into APA with the DGT

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Business Specific Regulated Income Tax Treatment

Sharia transactions ● Sharia banking
○ Bonus, profit sharing, margins received
by a bank from a client constituting a
facility beneficiary is taxed according
to income tax on interest
○ Other income received by a bank other
than the abovementioned is taxed
according to applicable income taxes
○ Bonus, profit sharing, margins received
by a depositor or investor of a sharia
bank is taxed according to income tax
on interest
○ Other income received by a depositor
or investor of a sharia bank other
than the abovementioned is taxed
according to applicable income taxes
● Sharia financial service
○ Ijarah muntahiyah bittamlik is taxed
as a financial lease with the option to
purchase
○ Ijarah is taxed as an operating lease
○ Income in the form of profit margins
or gains from account receivable
financing or factoring with sharia
arrangements as wakalah bil ujrah
is taxed according to income tax on
interest
○ Income in the form of profit margins
or gains from consumer financing with
sharia arrangements as murabahah,
salam or isthisna’ is taxed according to
income tax on interest
○ Income in the form of fees or rewarsd
from sharia-principle-based credit
card business or from other sharia-
principle-based financing is taxed
according to applicable income tax
laws
○ Income received or accrued by
investor in the form of gains and/
or profit sharing from a financing
company with sharia arrangements
as mudharabah, mudharabah,
musytarakah, or musyarakah is taxed
according to income tax on interest

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Corporate Income Tax

Business Specific Regulated Income Tax Treatment

○ Asset transfers from a third party
solely for sharia principle purposes
within the financing business of a
company is not considered an asset
transfer under the Income Tax Law.
Such is deemed a direct asset transfer
from a third party to the company’s
client
Upstream oil and Tax provisions on income taxation of upstream oil
gas under gross split and gas under a gross split contract are specified
contracts in detail, the following are several important
points therein:
● Income with regards to profit sharing
is computed based on the contractor’s
portion of the realized value of oil and
gas deducted with the realized value of
domestic market obligation (DMO), added
with DMO fees and added or deducted
with the lifting price variance
● Generally, operational expenses incurred
by the contractor may be computed as a
deduction for the computation of taxable
income. Certain operational expenses,
however, are not allowed
● Foreign head office direct expenses
charged to projects in Indonesia are only
allowed for activities that can neither be
performed by domestic suppliers nor the
Indonesian workforce and are not routine
● Head office allocated expenses are
allowed provided that they are used to
support the business in Indonesia, audited
in the consolidated financial statement
of the head office and the allocation
base is submitted and the amount does
not exceed the threshold set out by the
Minister of Finance
● Uplift or similar income is taxed at 20% of
the gross amount
● Transfer of participating interest is
subject to a final tax of 5% during the
exploration period or 7% during the
exploitation period, both of the gross
amount. Transfer of participating interest
is not taxed under certain criteria

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 Indonesian Tax Manual Book 2022

Business Specific Regulated Income Tax Treatment

Built-operate and ● Built-Operate-and-Transfer is an
transfer arrangement between a land owner and
investor which stipulates that the land
owner confers the right to the investor
to construct a building within the BOT
agreement period and to transfer the
building to the land owner after the BOT
agreement ends
● Income and expenses for investors.
○ Rent income and other income related
to the use of assets
○ Income related to the operation of
buildings, such as hotels, sports
centres, entertainment centres, etc
○ Compensation or income received or
accrued from the land owner if the
BOT agreement ends earlier
○ Business expenses follow the
deductible expense rules
○ Expenses incurred by an investor to
construct a building are the acquisition
value to obtain the right to use or the
right to operate the building, such an
acquisition value is amortized in the
same amount every year during the
BOT agreement period
● Income and expenses for the land owner
○ Routine payments from the investor
during the BOT agreement period.
○ Portion of building rental
○ Portion of profit from the operation
of the building from the investor in
whatever name and form
○ Other income related to the BOT
agreement
○ Business expenses follow the
deductible expense rules.
○ Building transferred from an investor
to the land owner after the BOT period
end is subject to income tax of 5%
from the gross amount of either the
market value or property tax base
value and must be paid no later than

20
Corporate Income Tax

Business Specific Regulated Income Tax Treatment

on the 15th of the following month
after BOT period ends. The tax
is a final tax for individuals and
constitutes a tax credit for corporate
taxpayers. If the land owner is a
government institution, the tax is
exempt

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 Indonesian Tax Manual Book 2022

Individual
Income Tax

A. Overview
Individual income tax is mostly administered with
employee Article 21 Income Tax. During the COVID-19
pandemic, in FY20 Article 21 Income Tax revenue hit a
-5.20% compared to FY19, while in FY21 in line with the
recovery of workforce utilization, Article 21 Income Tax
recorded a growth of 6.16% year-on-year. Further, in FY21,
Article 21 Income Tax coupled with individual tax payable,
contributed 11.70% and 1.0% respectively with a total of
12.7% to the DGT’s total tax revenues.

Under the revision of tax laws by the Law concerning

the Harmonization of Tax Regulations, several significant
changes evidence the government’s efforts to increase
the tax revenues from individual income tax, both from
Article 21 Income Tax and annual tax payable. First,
the use of single identity number (NIK) as the taxpayer
identification number which is intended to enforce
tax compliance monitoring. Second, the revision of tax
bracket rates with the highest at 35% for taxable income
over IDR5 billion. Third, the taxation of benefits in kind
which generally applies with certain exceptions. Fourth,
to attract expatriates with certain expertise, income tax
only applies to income sourced from Indonesia for 4 years.

Generally, individual income tax is administered by the head

of the family or husband, on the income of the husband,
wife, and children (below 18 years and unmarried). A wife

22
Individual Income Tax

may administer her income tax on her own based on

certain criteria.

B. How to Compute Individual Income Tax

In general, the calculation of individual income tax
is based on taxable income in a tax year by deducting
income subject to tax with allowed deductions, including
personal tax relief. Individual taxpayers are taxed on their
worldwide income, except for expatriates with certain
expertise who are only taxed on Indonesian sourced
income for a maximum of 4 years.

The following is an illustration of how to compute

individual income tax:
Table 6 The Computation of Individual Income Tax
1 Business income and/or income from independent personal services
(with a bookkeeping obligation)
2 Less: Expenses
3 Plus: Non-deductible Expenses
4A Net Income from Business or Independent Personal Services, or
4B Deemed Net Income from Business or Independent Personal Services
5 Plus: Net Domestic Income related to work or employment
6 Plus: Net Other Domestic Income
7 Plus: Net Other Foreign Income
8 Less: Authorized Compulsory Religious Charity
9 Net Fiscal Income after Charity Deduction
Less: Loss carry forward (only applies to individual taxpayers with
10
bookkeeping)
11 Less: Personal tax relief
12 Taxable Income
Individual Income Tax
13 (Taxable Income x Progressive Tax Rate based on Article 17 of the
Income Tax Law)
14 Less: Tax Credit and Tax Instalment
15 Net Individual tax Underpayment/(Overpayment)

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 Indonesian Tax Manual Book 2022

C. Income Classification & Taxation

The above illustration covers all types of income that may
be received by an individual. Please note that for business
income or independent personal services, individuals may
opt to use deemed net income if their gross income in
a year is less than IDR4.8 billion and inform the use of
deemed net income to the DGT within the first 3 months
of the current tax year. Otherwise, the taxpayers are
required to maintain bookkeeping.

Income subject to final tax is generally withheld by third

parties. Individual taxpayers are only required to disclose
their gross income and the withheld tax. Such is not
the case if the final tax, by law, may be self-paid if the
third party does not withhold the tax. Certain individual
taxpayers with gross income of less than IDR4.8 billion
may opt to be taxed at a final tax rate of 0.5% and pay
the tax on a monthly basis (or withheld by a third party),
after the cumulative income of the current year exceeds
IDR500 million. Further, income not subject to tax is only
to be disclosed in the annual tax return.

As aforementioned, most individual income taxes are

collected by withholding tax on employment income
(Article 21 Income Tax) on monthly basis. If an individual
only receives income subject to tax (excluding income
subject to final tax and income not subject to tax), the
annual tax payable will amount to nil as it has been
collected by the employer and constitute a tax credit for
the individual. If the individual is a husband whose wife
only receives income from her employer, the amount of
income and tax withheld by the employer is treated as if
the income is subject to final tax and this does not affect
the amount of her husband’s income tax.

Please note that if the individual’s wife receives income

(i.e. employment income or other taxable income) and
the wife decides to administer her income tax separately
(Memilih Terpisah) or due to a prenuptial agreement to

24
Individual Income Tax

have separate income and assets (Pisah Harta), her

income must be consolidated with her husband’s and
the taxes will be proportionately allocated (see here for
the illustration) and filed separately in the husband’s and
wife’s tax return.

Further, since the amendment to Income Tax Law by the

Law concerning the Harmonization of Tax Regulations,
benefits in kind (BIK) received or accrued from employment
or provision of services (due to independent personal
services) are classified as income subject to tax. Certain
BIKs that are not subject to tax include food and beverages
(as well as the ingredients) provided to all employees;
BIKs provided in certain areas; BIKs that must be provided
by the employer for performing work; BIKs funded by
the government budget; and BIKs of certain types and/
or limitation. Please note that to date, the implementing
regulation of BIK taxability has not been issued and this
will lead to several issues.

D. Expenses & Non-deductible Expenses

Expenses related to the generation of business income
or independent personal services with a bookkeeping
obligation are deductible. Generally, the rules to
determine deductible and non-deductible expenses are
similar to Corporate Income Tax (For further details, see
‘Expenses and Non-deductible Expenses’ in the Corporate
Income Tax chapter). There are additional non-deductible
expenses that are incurred for the personal purpose of an
individual taxpayer or his/her dependents.

E. Personal Tax Relief

Personal tax relief (Penghasilan Tidak Kena Pajak/PTKP) is
applied as an annual deduction to compute an individual’s
taxable income. If a wife decides to administer her income
tax separately (see above), the personal tax relief for the
computation of the proportional tax of wife and husband is
the total personal tax relief of both the husband and wife.

25
 Indonesian Tax Manual Book 2022

For example, a husband and wife (with no dependents)

both receive employment income and the wife decides to
administer her income tax separately, the total personal
tax relief will be IDR54 million x 2 or equivalent to IDR108
million.
Table 7 Personal Tax Relief
IDR
Taxpayer 54,000,000
Spouse 4,500,000
Each dependent (maximum 3) 4,500,000

F. Individual Income Tax Rate

The abovementioned types of net income are calculated to
determine the taxable income. Next, the taxable income
is proportionately computed as per the tax rate according
to taxable income brackets to determine the tax payable.
Table 8 Individual Income Tax Rates
Taxable Income Rate
Up to IDR60,000,000 5%
Above IDR60,000,000 up to IDR250,000,000 15%
Above IDR250,000,000 up to IDR500,000,000 25%
Above IDR500,000,000 up to IDR5,000,000,000 30%
Above IDR5,000,000,000 35%

G. Tax Instalments & Tax Credits

Monthly tax instalments pursuant to Article 25 of the
Income Tax Law during the current tax year are to be
self-paid and equal to the amount of income tax payable
according to the preceding annual income tax return
deducted by allowed tax credits divided by 12 (twelve)
months or the number of months in a fraction of a tax
year. Taxpayers may apply for a reduction of monthly tax
instalments to the DGT, after 3 months of the current
tax year, if the taxpayers can substantiate that the
hypothetical tax payable for the current tax year is less

26
Individual Income Tax

than 75% of the tax payable used as the basis of current

monthly tax instalments.

Tax credits for individuals mostly originate from Article

21 of the Income Tax Law withholding tax on employment
income. There are other types of tax credits depending
on the individuals’ activities in accruing the income. If
individuals import goods as their business, Article 22
Income Tax collected by the Customs authorities may
be taken into account as a tax credit. Further, if the
individual accrues foreign-sourced income which is taxed
by the foreign tax authorities, the tax may be used as a
tax credit.

H. Net Tax Underpayment or Overpayment

Individual income tax payable after being deducted by tax
credits, including monthly tax instalments, will result in nil
tax or Article 29 of the Income Tax Law tax underpayment
which must be settled before the annual income tax
return is filed or Article 28A tax overpayment shall be
refunded after an audit has been conducted.

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 Indonesian Tax Manual Book 2022

Withholding Tax

A. Overview
With respect to withholding taxes (“WHT”), it can be
argued that the Indonesian tax system is founded on the
principle of the “self-assessment system” coupled with a
withholding tax regime. Under the WHT tax regime, certain
types of income, such as salaries, interests, dividends,
etc. are subject to withholding where the payer is required
to calculate, withhold, and remit the applicable tax to the
DGT periodically.

WHT is imposed on certain payments to residents and

non-residents depending on the nature of the WHT which
may be final tax or non-final tax. In the case of the latter,
non-final tax WHT may be used as a tax credit against tax
payable.

B. Article 21 Income Tax

According to Article 21 (1) of the Income Tax Law, Article
21 Income Tax is withholding tax on income in respect of
employment, services or activities in whatever name and
for, received or accrued by reswident individual taxpayers.

The scope of Article 21 Income Tax is not limited only to

salaries received by employees of a company but includes
various types of income received by resident individual
taxpayers from various types of activities or businesses.

28
Withholding Tax

More details on the implementation of Article 21 Income

Tax can be seen here.

Article 21 Income Tax applies to the following criteria:

● Permanent employees and part-time/temporary/
contract employees.
● Non-employees or freelancers.
● Ex-employees.
● Activity participants.
● Commissioners.
● State officials and their pensioners.
● Recipients of severance payment, pensions or
pension benefits, and old-age benefits.
The employer is required to calculate income tax payable
at the following tax rates as regulated in Article 17 (1) of
the Income Tax Law:
Table 9 Taxable Income Brackets
Taxable Income Rate
Up to IDR60,000,000 5%
Above IDR60,000,000 up to IDR250,000,000 15%
Above IDR250,000,000 up to IDR500,000,000 25%
Above IDR500,000,000 up to IDR5,000,000,000 30%
Above IDR5,000,000,000 35%

An individual taxpayer without a Tax ID Number (NPWP)

is subject to a surcharge of 20% higher than the standard
rates.

The employer is required to remit and file the Monthly Tax

Return of Article 21 Income Tax by the 10th and 20th of the
month following the date WHT becomes due. The employer
is also required to give the WHT Tax Slip to employees,
which can be used to file their Annual Individual Tax
Returns since Article 21 Income Tax is creditable by the
individuals from their tax payable.

Resident individuals are entitled to have the annual PTKP

as follows:

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 Indonesian Tax Manual Book 2022

Table 10 Personal Tax Reliefs

Tax Reliefs IDR
Taxpayer 54,000,000
Spouse 4,500,000
Each dependent (max. 3) 4,500,000
Employment expenses (5% of gross income,
6,000,000
max. IDR500.000/month)
BPJS Ketenagakerjaan or JHT paid by
Full amount
employees (2% of gross income)
Pension expenses (5% of gross income, max.
2,400,000
IDR200.000/month)

The treatment for other allowances or insurance is as

follows:
Table 11 The Tax Treatment of Allowances & Insurance
Type of Allowance or Insurance For the Employer For Employees
Insurance Premiums for work
Taxable
accidents (JKK), mortality (JK) Deductible
(increases the
and health care (JPK) paid by the expenses
gross income)
employer
Insurance Premiums for work
Taxable
accidents, life, health care, dual- Deductible
(increases the
use and scholarship paid by the expenses
gross income)
employer
Insurance Premiums for work
accidents (JKK), mortality (JK) Non-deductible
Non-deduction
and health care (JPK) paid by the expenses
employee
Insurance Premiums for work
accidents, life, health care, dual- Non-deductible
Non-deduction
use and scholarship paid by the expenses
employee
BPJS Ketenagakerjaan or JHT paid Deductible
Non-taxable
by the employer expenses
Deductible Non-Taxable or
Benefits in Kind
expenses Taxable

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Withholding Tax

C. Article 22 Income Tax

Article 22 Income Tax occurs upon 4 events, as follows:
● Import activities.
● State Treasurer or State-owned enterprises
(“BUMN”) on purchases of goods.
● Local purchase of specific products.
● Purchase of extravagant luxury goods.
Article 22 Income Tax bases include the import value,
export value and buying price on the purchase of goods
by certain agencies or the selling price on the sales of
products by certain business fields at the following tax
rates:
Table 12 Article 22 Income Tax Bases
Tax Rate
Taxable Objects Tax Base
(%)
Imports of:
a. Certain goods 10 Import value
b. Certain goods other than a 7.5 (i.e., CIF value
c. Soybeans, wheat and flour wheat 0.5 plus duties
d. Goods other than a, b and c 2.5 payable)
e. Goods other than c and d without an 7.5
API (Angka Pengenal Impor)
f. Auctioned goods 7.5 Auction prices
Purchase of goods by the government
requiring payment from the State Treasury,
Purchase prices
Proxy of Budget User (Kuasa Pengguna 1.5
(exclude VAT)
Anggaran/KPA), and certain state-owned
enterprises (with certain exceptions)
Purchase of products by local distributors of:
a. Cement 0.25
b. Paper 0.1 Selling prices
c. Steel products 0.3
d. Automotive products 0.45
e. Pharmaceutical products 0.3 VAT base
Sale of certain vehicles by sole agents
(Agen Tunggal Pemegang Merek/ATPM),
agents (Agen Pemegang Merek/APM) and 0.45 VAT base
vehicle general importers, excluding heavy
equipment

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 Indonesian Tax Manual Book 2022

Tax Rate
Taxable Objects Tax Base
(%)
Purchase of products by local distributors of:
a. Oil fuel by gas stations from Pertamina 0.25
and its subsidiaries
b. Oil fuel by gas stations other than 0.3
Selling prices
Pertamina and its subsidiaries
(exclude VAT)
c. Oil fuel by parties other than gas 0.3
stations
d. Gas fuel 0.3
e. Lubricants 0.3
Purchase of forestry, plantation, agriculture,
cattle breeding and fishery products by 0.25 Selling prices
manufacturers or exporters
Purchase of coal, metal and non-metallic
minerals from companies or individuals
holding a mining license (Izin Usaha 1.5 Selling prices
Pertambangan/IUP) by an industry or a
corporate
Exports of coal, metal, and non-metallic
minerals by exporters other than those
1.5 Selling prices
engaged in a Mining Cooperation Agreement
or a Contract of Work with the Government
Purchase of gold bars 0.45 Selling prices
Sales of prepaid phone credit and SIM card
starters packs by second-layer distribution Invoice amount
0.5
agents constituting Article 22 withholding or selling prices
agents
Selling prices
Purchase of extravagant luxurious goods 5 (excluding VAT
and STLGs)

Taxpayers without a NPWP will be subject to a surcharge

of 100% higher than the standard rates.

Exemption of Article 22 Income Tax is automatically

granted with an Exemption Certificate (Surat Keterangan
Bebas/SKB) issued by the DGT, on the following:
● Imports/purchase of goods that are not subject to
income tax.

32
Withholding Tax

● Imports of goods exempt or subject to non-

collected import duties and Value Added Tax (VAT).
● Temporarily imported goods.
● Re-importations of certain goods.
● Imports of gold bullions for the production of
jewellery for export objectives.
● Sales of vehicles by the automotive industry, ATPM,
APM and vehicle general importers.
● Purchase of gold bullions by Bank Indonesia.
● Goods related to the use of the Government’s
school operations subsidy (Bantuan Operasional
Sekolah/BOS) fund;.
● Sales of grain or rice to the State Treasury, KPA and
the Bureau of Logistics (Badan Urusan Logistik/
BULOG), and
● Sales of staple foods to BULOG or appointed state-
owned enterprises.
For further information related to Article 22 Income Tax,
please click here.

D. Article 23 Income Tax

Article 23 Income Tax is income tax that is withheld
by governmental bodies, corporate taxpayers, event
organizers, PEs or foreign company representative offices
on income paid or payable or due for payments to other
taxpayers or PEs on the gross amount from:
Table 13 Article 23 Income Tax Rates
Taxable Objects Tax Rate (%)
Dividends*
Interests**
Royalties** 15
Gifts, awards, bonuses, except for those that
have been subject to Article 21 Income Tax*

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 Indonesian Tax Manual Book 2022

Taxable Objects Tax Rate (%)

Rental or compensation for the use of assets,
except those that have been subject to Article
4(2) Income Tax and finance leases*
2
Services fees (also as regulated in MoF
Regulation No. 141/2015), except those that
have been subject to Article 21 Income Tax***

*For further details, please refer to Article 23 Income Tax Taxable Objects.
**For further details, please refer to Article 23 Income Tax Non-objects.
*** For further details, please refer to Article 23 Income Tax Non-objects &
Article 23 Income Tax Service Objects.

Taxpayers without a Tax ID Number or NPWP will be

subject to a surcharge of 100% higher than the standard
rates.

In addition, related to Article 23 Income Tax, DGT has

issued DGT Circular No. SE-24/PJ/2018 (“SE-24”) regarding
the tax treatment of incentives received by buyers under
certain conditions within buy-sell transactions.

SE-24 defines sellers as parties that sell their products to

buyers, including manufacturers, distributors and agents,
whereas buyers are defined as parties that buy products
from sellers for resale objectives, including distributors,
agents and retailers.

Certain conditions covered under this regulation are as

follows:
● Achievement of certain conditions.
● Provision of space and/or certain equipment, and
● Compensation received in connection with buy-sell
transactions.
Further details can be read here.

34
Withholding Tax

E. Article 4(2) Income Tax (Final Income

Tax)
Final income tax is imposed on income as follows:
● Interest on deposits and other savings, interest
on bonds and government bonds and interest on
deposits that have been paid by a cooperative to
its members.
● Lottery prizes.
● Stock income and other securities income,
derivative transactions traded on IDX, sale of shares
transaction or sale of equity in partner company that
has been received by the venture capital company
● Transfer or rent of land and buildings.
● Other certain income.
Corporate taxpayers, PEs or representative offices are
required to withhold Final Income Tax on gross amounts
of payments to resident Indonesian taxpayers and PEs as
follows:
Table 14 Final Withholding Tax
Final Tax
Payment Events Notes
Rate (%)

Includes all service charges

Rental of land and/or
10 and build-operate-transfer
buildings
arrangement income
Lottery prizes 25
Interest or discount on
Bank Indonesia Certificates
(Surat Bank Indonesia), time 20
and saving deposits and
government bonds
Interest or discount on bonds 10
Interest on deposits paid by
cooperatives to cooperative 10
members
Transfers of land and/or 2.5/1/ Details of the tax rate can be
buildings 0.5/0 found here

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 Indonesian Tax Manual Book 2022

Final Tax
Payment Events Notes
Rate (%)

Sale of shares listed on the Tax base:

Indonesia Stock Exchange:
● Non-founder’s shares 0.1 Gross transaction amount
● Founder’s shares 0.1 + 0.5 Gross transaction amount +
0.5% from the share price at
IPO
Construction services:
● Consulting 3.5/6 Details of the tax rate can be
● Performance 1.75/2.65/4 found here
● Integrated 2.65/4

To obtain the exemption,

the dividend needs to be
10 or reinvested in Indonesia for
Dividends paid to individuals
exempt 3 consecutive years and
the reinvestment must be
reported annually
Dividends paid in connection
with cooperation and
Details of the tax rate can be
Indonesia Investment 7.5
found here
Authority (Lembaga Pengelola
Investasi/LPI)
Venture capital company
income from the transfer of 0.1
shares in its partner
According to Article 7 (2a) of
the Income Tax Law, Gross
Turnover up to IDR500 million
is not subject to Article 4 (2)
Indonesia presumptive tax
Income Tax
for individual or corporate
taxpayers (except for PEs)
0.5 Further details of the
whose total gross turnover
provisions are stipulated
does not exceed IDR4.8
under Government Regulation
billion/tax year
(GR) No. 23/2018 (“GR-23”)
concerning Final Tax on
Taxpayers with Certain Gross
Turnover

36
Withholding Tax

F. Article 26 Income Tax

Article 26 Income Tax is income tax that is withheld
by governmental bodies, corporate taxpayers, event
organizers, PEs or foreign company representative offices
on income paid to or payable to or due for payment to
foreign or non-resident taxpayers.

Article 26 Income Tax is applied to gross amounts of the

following income types:
Table 15 Article 26 Income Tax Bases
Effective
Type of Payments Tax Rate Tax Base
(%)
Dividends, royalties, rents,
and other payments related
to the utilization of assets
Services, labour and activities
fees 20 Gross amount
Pension and other periodic
payments
Gift and rewards
Swap premiums and other
hedging transactions 20 Gross amount
Gains from debt write off
Branch Profit Tax (BPT) 20 Net profit after tax
10 (For
bond
interests
income) or
Interests Gross amount
20 (Other
types of
interest
income)

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 Indonesian Tax Manual Book 2022

Effective
Type of Payments Tax Rate Tax Base
(%)

Sales of shares of a non-

listed company in Indonesia

Sales of a conduit company

located in a tax haven
country (as an intermediary of
5 of the
shares or PEs of Indonesian
selling 25% (Estimated Net Income)
Company)
price
Sales of luxurious assets with
a sale value exceeding IDR10
million, other than those
subject to Article 4(2) Income
Tax

Insurance premiums paid

to an overseas insurance
company:
● By the insured 50 10% of the premium amount
● By an Indonesian 10 2% of the premium amount
insurance company
● By an Indonesian 5 1% of the premium amount
reinsurance company

The withholding tax rates may be lowered or exempt if the recipient

of a country applies for tax treaty benefits. To apply for treaty
benefits, the following administrative requirements should be
fulfilled:
● Non-residents must provide the Certificate of Domicile either
using the DGT’s form or using the treaty partner’s CoD with
certain conditions.
● Non-residents must declare that there is no treaty abuse and
must be declared as beneficial owners (if the treaty requires
the beneficial ownership criteria).
● Non-residents using the treaty partner’s CoD must continue
to complete the DGT’s form, except for part II (competent
authority declaration).
● The withholding agent must prepare and file a withholding

38
Withholding Tax

tax certificate and tax return for the withholding,

this also applies even if there is no withholding
on income subject to Article 26 Income Tax due to
treaty benefits.

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 Indonesian Tax Manual Book 2022

International Tax &

Transfer Pricing

A. Tax Treaty Network

Indonesia’s tax treaties provide several tax benefits,
among others:
● Exemption from withholding tax for service fees
(only if the receiver does not have a PE in Indonesia),
capital gains from sale/purchase of shares, and
● Reduced rate of withholding tax for dividends,
interests, royalties and branch profit tax received
by tax residents of treaty partners.
To receive tax treaty benefits, a Certificate of Residence
(CoR) is required to be submitted in a prescribed form
commonly referred to as the DGT form. The CoR must be
submitted electronically to the DGT’s site (e-SKD). Failure
to provide CoR implies that the foreign party is not entitled
to the tax treaty benefit with the consequence that the
income will be subject to the full domestic withholding tax
rate: generally 20% or 5% for a sale/purchase of shares.

Once submitted, the CoR is valid for a period of 1 year, and

in subsequent transactions during that period, the foreign
party should only provide the withholding agent with an
electronic receipt of e-SKD.

To be entitled to tax benefits, the foreign party shall fulfil

the following anti-abuse tests which apply to all types of
income from Indonesia:

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International Tax & Transfer Pricing

● The entity has a relevant economic substance,

either in the establishment of the entity or the
execution of the relevant transaction.
● The entity has the same legal form and economic
substance, either in the establishment of the entity
or the execution of the relevant transaction.
● The entity has its own management to conduct its
business and such management has an independent
discretion.
● The entity has sufficient assets to conduct
business, other than the assets generating income
from Indonesia.
● The entity has sufficient and qualified personnel to
conduct business.
● The entity has business activities other than
receiving dividends, interests or royalties sourced
from Indonesia.
● The purpose of the transaction is not to directly or
indirectly obtain the benefits under the treaty that
is contrary to the object and purpose of the treaty.
In the case of dividend, interest or royalty types of income,
the foreign party shall also fulfill the following beneficial
ownership test:
● The entity is not acting as an agent, nominee or
conduit.
● The entity has controlling rights or disposal rights
to the income, the assets or the rights to generate
income.
● No more than 50% of the entity’s income is used to
satisfy claims by other persons.
● The entity assumes the risks of its own assets,
capital or liabilities.
● The entity has no contract which requires the entity
to transfer the income received to the resident of a
third country.
Hereunder is the summary of reduced withholding tax
rates for each treaty partner:

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 Indonesian Tax Manual Book 2022

Table 16 Withholding Tax Rates for Treaty Partners

Dividend Interest
Branch
No. Treaty Partner Government Royalty Profit
Substantial Tax
Other /Central Other
Holding
bank

1 Algeria 15% 15% 0% 15% 15% 10%

2 Armenia 10% 15% 0% 10% 10% 10%

3 Australia 15% 15% 0% 10% 15/10% 15%

4 Austria 10% 15% 0% 10% 10% 12%

5 Bangladesh 10% 15% 0% 10% 10% 10%

6 Belarus 10% 10% 0% 10% 10% 10%

7 Belgium 10% 15% 0% 10% 10% 10%

8 Brunei 15% 15% 0% 15% 15% 10%

9 Bulgaria 15% 15% 0% 10% 10% 15%

10 Cambodia 10% 10% 0% 10% 10% 10%

11 Canada 10% 15% 0% 10% 10% 15%

12 China 10% 10% 0% 10% 10% 10%

13 Croatia 10% 10% 0% 10% 10% 10%

Czech
14 10% 15% 0% 12.5% 12.5% 12.5%
Republic

15 Denmark 10% 20% 0% 10% 15% 15%

16 Egypt 15% 15% 0% 15% 15% 15%

17 Finland 10% 15% 0% 10% 15/10% 15%

18 France 10% 15% 0% 15/10% 10% 10%

19 Germany 10% 15% 0% 10% 15/10% 10%

20 Hong Kong 5% 10% 0% 10% 5% 5%

21 Hungary 15% 15% 0% 15% 15% 20%

22 India 10% 10% 0% 10% 10% 15%

23 Iran 7% 7% 0% 10% 12% 7%

24 Italy 10% 15% 0% 10% 15/10% 12%

25 Japan 10% 15% 0% 10% 10% 10%

26 Jordan 10% 10% 0% 10% 10% 20%

27 Korea (North) 10% 10% 0% 10% 10% 10%

28 Korea (South) 10% 15% 0% 10% 15% 10%

29 Kuwait 10% 10% 0% 5% 20% 10/0%

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International Tax & Transfer Pricing

Dividend Interest
Branch
No. Treaty Partner Government Royalty Profit
Substantial Tax
Other /Central Other
Holding
bank

30 Laos 10% 15% 0% 10% 10% 10%

31 Luxembourg 10% 15% 0% 10% 12.5% 10%

32 Malaysia* 10% 10% 0% 10% 10% 12.5%

33 Mexico 10% 10% 0% 10% 10% 10%

34 Mongolia 10% 10% 0% 10% 10% 10%

35 Morocco 10% 10% 0% 10% 10% 10%

36 Netherlands 5% 10/15% 0% 10/5% 10% 10%

37 New Zealand 15% 15% 0% 10% 15% -**

38 Norway 15% 15% 0% 10% 15/10% 15%

39 Pakistan 10% 15% 0% 15% 15% 10%

Papua New
40 15% 15% 0% 10% 10% 15%
Guinea
41 Philippines 15% 20% 0% 15/10% 15% 20%

42 Poland 10% 15% 0% 10% 15% 10%

43 Portugal 10% 10% 0% 10% 10% 10%

44 Qatar 10% 10% 0% 10% 5% 10%

45 Romania 12.5% 15% 0% 12.5% 15/12.5% 12.5%

46 Russia 15% 15% 0% 15% 15% 12.5%

47 Serbia 15% 15% 0% 10% 15% 15%

48 Seychelles 10% 10% 0% 10% 10% 20%

49 Singapore 10% 15% 0% 10% 8/10% 10%

50 Slovakia 10% 10% 0% 10% 15/10% 10%

51 South Africa 10% 15% 0% 10% 10% 10%

52 Spain 10% 15% 0% 10% 10% 10%

53 Sri Lanka 15% 15% 0% 15% 15% 20%

54 Sudan 10% 10% 0% 15% 10% 10%

55 Suriname 15% 15% 0% 15% 15% 15%

56 Sweden 10% 15% 0% 10% 15/10% 15%

57 Switzerland 10% 15% 0% 10% 10% 10%

58 Syria 10% 10% 0% 10% 20/15% 10%

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 Indonesian Tax Manual Book 2022

Dividend Interest
Branch
No. Treaty Partner Government Royalty Profit
Substantial Tax
Other /Central Other
Holding
bank

59 Taiwan 10% 10% 0% 10% 10% 5%

60 Tajikistan 10% 10% 0% 10% 10% 10%

61 Thailand 20/15% 20/15% 0% 15% 15% 20%

62 Tunisia 12% 12% 0% 12% 15% 12%

63 Turkey 10% 15% 0% 10% 10% 10%

64 Ukraine 10% 15% 0% 10% 10% 10%

United Arab
65 10% 10% 0% 5% 5% 5%
Emirates

United
66 10% 15% 0% 10% 15/10% 10%
Kingdom

United States
67 10% 15% 0% 10% 10% 10%
of America

68 Uzbekistan 10% 10% 0% 10% 10% 10%

69 Venezuela 10% 15% 0% 10% 20% 10%

70 Vietnam 15% 15% 0% 15% 15% 10%

71 Zimbabwe 10% 20% 0% 10% 15% 10%

*Companies under the Labuan Offshore Business Activity Tax Act 1990 are not
entitled to tax treaty benefits.
** The tax treaty is silent on the rate. DGT usually applies a 20% BPT.

A.1 PE Time Test

Hereunder is the time-test period for certain activities
conducted in Indonesia that may trigger the creation of a
PE:

Table 17 Time-Test Period

Building Site Installation

No. Treaty Partner Assembly Supervisory Services
Construction Assembly

1 Algeria 3 months 3 months 3 months 3 months 3 months

2 Armenia 6 months 6 months 6 months 6 months 120 days

3 Australia 120 days 120 days 120 days 120 days 120 days

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International Tax & Transfer Pricing

Building Site Installation

No. Treaty Partner Assembly Supervisory Services
Construction Assembly

4 Austria 6 months 6 months 6 months 6 months 3 months

5 Bangladesh 183 days 183 days 183 days 183 days 91 days

6 Belarus 6 months 6 months 6 months 6 months 120 days

7 Belgium 6 months 6 months 6 months 6 months 3 months

8 Brunei 183 days 3 months 3 months 183 days 3 months

9 Bulgaria 6 months 6 months 6 months 6 months 120 days

10 Cambodia 183 days 183 days 183 days 183 days 183 days

11 Canada 120 days 120 days 120 days 120 days 120 days

12 China 6 months 6 months 6 months 6 months 6 months

13 Croatia 6 months 6 months 6 months 6 months 3 months

Czech
14 6 months 6 months 6 months 6 months 3 months
Republic

15 Denmark 6 months 6 months 6 months 6 months 3 months

16 Egypt 6 months 4 months 4 months 6 months 3 months

17 Finland 6 months 6 months 6 months 6 months 3 months

18 France 6 months - 6 months 183 days 183 days

19 Germany 6 months 6 months - - -

20 Hong Kong 183 days 183 days 183 days 183 days 183 days

21 Hungary 3 months 3 months 3 months 3 months 4 months

22 India 183 days 183 days 183 days 183 days 91 days

23 Iran 6 months 6 months 6 months 6 months 183 days

24 Italy 6 months 6 months 6 months 6 months 3 months

25 Japan 6 months 6 months - 6 months -

26 Jordan 6 months 6 months 6 months 6 months 1 month

12
27 Korea (North) 12 months 12 months 12 months 6 months
months
28 Korea (South) 6 months 6 months 6 months 6 months 3 months

29 Kuwait 3 months 3 months 3 months 3 months 3 months

30 Laos 6 months 6 months 6 months 6 months 6 months

31 Luxembourg 5 months 5 months 5 months 5 months -

32 Malaysia 6 months 6 months 6 months 6 months 3 months

33 Mexico 6 months 6 months 6 months 6 months 91 days

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 Indonesian Tax Manual Book 2022

Building Site Installation

No. Treaty Partner Assembly Supervisory Services
Construction Assembly

34 Mongolia 6 months 6 months 6 months 6 months 3 months

35 Morocco 6 months - 6 months 6 months 60 days

36 Netherlands 6 months 6 months 6 months 6 months 3 months

37 New Zealand 6 months 6 months 6 months 6 months 3 months

38 Norway 6 months 6 months 6 months 6 months 3 months

39 Pakistan 3 months 3 months 3 months 3 months -

Papua New
40 120 days 120 days 120 days 120 days 120 days
Guinea
41 Philippines 6 months 3 months 3 months 6 months 183 days

42 Poland 183 days 183 days 183 days 183 days 120 days

43 Portugal 6 months 6 months 6 months 6 months 183 days

44 Qatar 6 months 6 months 6 months 6 months 6 months

45 Romania 6 months 6 months 6 months 6 months 4 months

46 Russia 3 months 3 months 3 months 3 months -

47 Serbia 6 months 6 months 6 months 6 months 6 months

48 Seychelles 6 months 6 months 6 months 6 months 3 months

49 Singapore 183 days 183 days 183 days 6 months 90 days

50 Slovakia 6 months 6 months 6 months 6 months 91 days

51 South Africa 6 months 6 months 6 months 6 months 120 days

52 Spain 183 days 183 days 183 days 183 days 3 months

53 Sri Lanka 90 days 90 days 90 days 90 days 90 days

54 Sudan 6 months 6 months 6 months 6 months 3 months

55 Suriname 6 months 6 months 6 months 6 months 91 days

56 Sweden 6 months 6 months 6 months 6 months 3 months

57 Switzerland 183 days 183 days 183 days 183 days -

58 Syria 6 months 6 months 6 months 6 months 183 days

59 Taiwan 6 months 6 months 6 months 6 months 120 days

60 Tajikistan 6 months 6 months 6 months 6 months 91 days

61 Thailand 6 months 6 months 6 months 6 months 6 months

62 Tunisia 3 months 3 months 3 months 3 months 3 months

63 Turkey 6 months 6 months 6 months 6 months 183 days

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International Tax & Transfer Pricing

Building Site Installation

No. Treaty Partner Assembly Supervisory Services
Construction Assembly

64 Ukraine 6 months 6 months 6 months 6 months 4 months

United Arab
65 6 months 6 months 6 months 6 months 6 months
Emirates
United
66 183 days 183 days 183 days 183 days 91 days
Kingdom
United States
67 120 days 120 days 120 days 120 days 120 days
of America
68 Uzbekistan 6 months 6 months 6 months 6 months 3 months

69 Venezuela 6 months 6 months 6 months 6 months -

70 Vietnam 6 months 6 months 6 months 6 months 3 months

71 Zimbabwe 6 months 6 months 6 months 6 months 183 days

A.2 Multilateral Convention to Implement Tax

Treaty Related Measures to Prevent Base
Erosion and Profit Shifting
Indonesia includes 47 tax treaties as Covered Tax
Agreements (CTA) for the Multilateral Instrument (MLI).
The MLI was signed on 7 June 2017 and ratified on 12
November 2019. It has been in force since 1 August 2020.
Indonesia submitted a notification the OECD to confirm
the completion of internal procedures for the tax treaties
on 26 November 2020.

Synthesised text of the MLI and tax treaties are published

by DGT via Circulars. All of Indonesia’s CTA adopts the
principal purpose test (PPT) provision.

A.3 Tax Information Exchange Agreements

Indonesia has established Tax Information Exchange
Agreements with the following jurisdictions:
● Bahamas
● Bermuda
● Guernsey
● Isle of Man

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 Indonesian Tax Manual Book 2022

● Jersey
● San Marino

A.4 Mutual Administrative Assistance in Tax

Matters
Indonesia has ratified the Convention on Mutual
Administrative Assistance in Tax Matters through
Presidential Decree No. 159 since 2014. In addition,
Indonesia signed the Multilateral Competent Authority
Agreements on the automatic exchange of:
● Country-by-Country Reports in 2017.
● Financial Account Information using the Common
Reporting Standard with information exchange
starting in 2018.

B. Anti-Avoidance Rules
Since the enactment of the Harmonization of Tax
Regulations Law, General Anti Avoidance Rules (GAAR)
have been included in the Elucidation of Article 18 of the
Income Tax Law although the text of the Law itself is silent
on GAAR. The elucidation states that the government
is authorized to prevent tax avoidance practices as an
effort made by taxpayers to reduce, avoid or delay the
payment of taxes that should otherwise be payable that
are contrary to the intent and purpose of the provisions of
tax laws and regulations.

B.1 Thin Capitalization

Effective from the 2016 fiscal year, the Minister of Finance
Regulation (MoFR) No. 9/2015 determines the maximum
debt-to-equity ratio (DER) for a company to be 4:1. Finance
expenses related to the part of a debt exceeding the debt-
to-equity ratio shall be deemed non-deductible. Included
in the meaning of finance expenses are interest on loans,
discount and premium on loans, additional expenses to
acquire the loans (arrangement of borrowings), finance

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International Tax & Transfer Pricing

charges in financial lease transactions, costs related to

obtaining loan repayment guarantees and foreign exchange
differences resulting from translating foreign currency
loans.

Exceptions for the thin capitalization rules are provided

for:
● Banks, including the Bank Indonesia.
● Financing institutions of leasing companies that
engage in providing funds and/or capital goods.
● Insurances and reinsurances, including Shariah-
compliant insurance and reinsurance companies.
● Oil and gas mining, general mining and other mining
companies under a PSC, contract of work or mining
exploitation work agreement with the government
with specific provisions on DER (if such provisions
are not specified in the agreements, the taxpayer is
not exempt from the thin capitalization rules).
● Companies subject to the final income regime.
● Companies engaged in the infrastructure business.
DGT Regulation No. 25/2017 clarifies that intra-group
interest expenses must fulfil the arm’s length principle, in
addition to the thin capitalization rules.

B.2 Controlled Foreign Corporation

A Controlled Foreign Corporation (CFC) is defined as
a foreign entity that is at least, directly or indirectly,
50% owned by an Indonesian taxpayer or at least 50%
collectively owned by Indonesian taxpayers. The following
income of a CFC is subject to Indonesia’s deemed dividend
rules:
● Dividends, except those received from other CFCs.
● Interests, except those received by the CFC of
an Indonesian resident taxpayer with a banking
license. However, this exception does not apply if
the interest income is received from an Indonesian
resident taxpayer that is related to the said CFC.

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 Indonesian Tax Manual Book 2022

● Income arising from land and/or building rental and

other rental income from related parties.
● Royalties.
● Capital gains.
The CFC rules do not apply if the CFC’s shares are listed
on a stock exchange.

B.3 Indirect Transfer of Shares

A sale or transfer of shares of a “special purpose vehicle”
or “conduit” company shall be deemed a sale of shares of
an Indonesian company or a PE in Indonesia if:
● The “special purpose vehicle” or “conduit” company
is established or domiciled in a tax haven country,
and
● The “special purpose vehicle” or “conduit” company
is a related party of a resident Taxpayer, including
permanent establishments in Indonesia.
Such a sale or transfer shall be subject to a 5% withholding
tax in Indonesia. Tax treaty benefits may exempt this tax.

C. Transfer Pricing Rules & Documentation

C.1 Legal Basis
The legal basis of the arm’s length principle is stipulated
under Article 18(3) of the Income Tax Law (ITL) which
states that transactions between taxpayers with a special
relationship must be consistent with the arm’s length
principle. If the arm’s length principle is not followed,
the Directorate General of Taxation (DGT) is authorized
to recalculate taxable income or deductible costs arising
from such transactions by applying the arm’s length
principle.

According to Article 18(4) of the Income Tax Law (ITL),

the definition of “a special relationship” applies to
circumstances where:

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International Tax & Transfer Pricing

● A taxpayer directly or indirectly owns at least 25%

of the equity of another taxpayer, or a relationship
exists between two or more taxpayers through
ownership of at least 25% of the equity of two or
more residents.
● A resident directly or indirectly “controls” another
resident or two or more residents, or
● A family relationship exists either through blood
or marriage, within one degree of direct or indirect
lineage.
Further, the Minister of Finance Regulation Number 22/
PMK.03/2020 (MoF 22/2020) provides that a special
relationship is deemed to exist if:
● One party controls or is directly and/or indirectly
controlled by another party.
● Two or more of the parties are directly and/or
indirectly under the control of the same party.
● The same persons are directly and/or indirectly
involved or participating in the managerial or
operational decision-making for two or more parties.
● The parties are commercially or financially known
or declared to belong to the same group, or
● One party claims to have a relationship with other
parties.
As of the issuance of MoF 22/2020, the arm’s length
principle shall also be applied to transactions that are
affected by related parties which include uncontrolled
transactions where an affiliate of one or both parties
determine(s) the counterparty and the transaction price.
Hereinafter “related party transactions” refer to the
transactions governed by transfer pricing rules, including
both related party transactions and uncontrolled
transactions.

The transfer pricing rules apply to related party

transactions. As of the issuance of the Minister of
Finance Regulation PMK 213/PMK.03/2016 (MoF 213/2016)

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 Indonesian Tax Manual Book 2022

concerning transfer pricing documentation requirements

that came into force on 30 December 2016, the obligation to
prepare transfer pricing documentation and the obligation
to apply the arm’s length principle must be distinguished.
The obligation to apply the arm’s length principle is on all
related party transactions (there is no threshold), whereas
the obligation to perform transfer pricing documentation
has specific thresholds.

DGT Regulation PER-22/PJ/2013 further specifies the types

of transactions covered under the Indonesian transfer
rules, which include:
● Transactions of sales, purchases, alienations and
exploitation of tangible assets.
● Transactions of rendering of intra-group services.
● Transactions of alienation and exploitation of
intangible assets.
● Transactions of loan payments of intra-group loans.
and
● Transactions of sales or purchases of shares.

C.2 Transfer Pricing Documentation

Since the 2016 tax year, Indonesia has adopted a three-
tiered transfer pricing documentation obligation, in line
with the agreed standards set out in Action 13 of the
OECD Base Erosion and Profit Shifting (BEPS) Action Plan.
The transfer pricing documentation obligation is governed
under MoF 213/2016. Transfer pricing documentation
consists of a master file, local file and country-by-country
report (CbCR).

Master and local file documentation obligations are

imposed on taxpayers that perform related-party
transactions in the current tax year and fulfil the following
criteria:
● Taxpayers with gross revenues of more than 50
billion rupiah in the previous tax year.
● Taxpayers with related-party transactions in the
previous tax year exceeding 20 billion rupiahs or

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International Tax & Transfer Pricing

exceeding 5 billion rupiahs if the related-party

transactions concern intangible assets, services
and interest payments, or
● The related-party transactions are conducted with
low-tax countries (i.e., jurisdictions with a statutory
tax rate lower than 25 percent).
Article 4(1) of MoF 213/2016 states that both master file
and local file must be available no later than four months
after the end of a taxpayer’s fiscal year. However, the
regulation does not require that these files need to be
filed in the annual tax return. Instead, under Article 7 of
MoF 213/2016, a summary of these files using a prescribed
form must be submitted as an attachment to the annual
tax return. The title of this form is Ikhtisar Dokumen Induk
dan Dokumen Lokal. While the document is referred to as
a “summary”, the actual content of the form is, in fact, a
statement letter indicating that the taxpayer has prepared
the master and local file documentation, including the
date when such a document has become available.

CbCR reporting obligations are imposed on taxpayers that

fulfil the following criteria:
● Taxpayers considered the ultimate parent entity of
a group with consolidated gross revenues in one tax
year of at least 11 trillion rupiah; or
● Taxpayers not constituting ultimate parent entities
but are member entities of a group with an ultimate
parent entity constituting a tax resident in a country
that:
○ Does not impose the obligation to file CbCRs;
○ Does not have an exchange-of-information
agreement with Indonesia; or
○ Despite having a CbCR reporting obligation and
an exchange-of-information agreement in place
with Indonesia, does not make CbCRs available
to the DGT.
CbC reporting taxpayers or nonreporting taxpayers are all
required to file an online notification to the DGT via an

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 Indonesian Tax Manual Book 2022

online platform. The online notification must identify which

entity in the group has a CbCR prepared, including the
country where this is submitted. In addition to the online
notification, CbCR reporting entities must file the actual
CbCR via the same online platform. Taxpayers that have
completed the online notification or online submission of
the CbCR will receive a receipt. This receipt must be filed
along with the tax return. The CbCR notification and CbCR
itself must be submitted to the DGT within 12 months
after the end of the taxpayer’s fiscal year.

The transfer pricing documentation which includes the

master file, local file and CbCR must be written in the
Indonesian language. A taxpayer that has obtained prior
approval to use the English language needs to submit the
documentation in the English language attached with the
Indonesian translation.

D. Transfer Pricing Audit & Dispute

Resolution
D.1 Transfer Pricing Audit
The DGT has specifically issued guidance on audits in
relation to transfer pricing disputes, DGT Regulation
PER-22/PJ./2013 and Circular SE-50/PJ./2013. One of
the procedures that must be performed by the DGT in
conducting transfer pricing audits is to identify the risks
in the related party transaction performed by taxpayers.
Since 1984, Indonesia has applied a self-assessment
system in which taxpayers are required to calculate, pay
and file their own taxes in accordance with prevailing
tax laws and regulations. In respect of related party
transactions, taxpayers are expected to prepare a transfer
pricing report containing the information required by
the DGT. The role of the taxpayers in any tax audit is to
assist in the process by appearing for investigations and
producing books of accounts, documents or other relevant
records as requested by the DGT for inspection within the

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International Tax & Transfer Pricing

specified time limit.

The DGT’s starting point of the analysis is based on the

information provided in the transfer pricing documentation
prepared by the taxpayers. However, if the taxpayers
do not provide transfer pricing documentation and the
explanation thereto, the DGT may establish the facts and
analysis based on the information available to the DGT.
In this case, the DGT is authorized to propose transfer
pricing adjustments and the burden of proof lies on the
taxpayer to demonstrate that the notice of assessment is
incorrect.

D.2 Dispute Resolution

Three instruments may be used by taxpayers in transfer
pricing disputes: Advance Pricing Agreement (APA), Mutual
Agreement Procedure (MAP) and appeals to the Tax Court,
which may be extended to Supreme Court civil review
requests. The tax litigation process in Indonesia takes 12
months each for the objection and appeal, whereas the
civil review takes six months. However, in the appeal and
civil review processes, some periods may be longer than
stipulated.

MAP may be used by taxpayers as a form of alternative

dispute resolution, in accordance with the rules contained
in the tax-treaty clauses between Indonesia and the
partner countries included in the transactions and may
be initiated by taxpayers or the DGT. As a general rule,
the MAP process may commence if an action of the
contracting state results or will result in taxation not
in accordance with the provisions under a tax treaty.
In practice, taxpayers may initiate a MAP following the
issuance of the notification of a tax audit; therefore, the
exhaustion of domestic dispute resolution remedies is not
necessary to commence a MAP. In domestic proceedings, it
is possible to request the commencement of a MAP when
the taxpayer is involved in a litigation process challenging
the DGT in court (i.e., filing an objection or tax appeal).

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 Indonesian Tax Manual Book 2022

APAs may be concluded unilaterally or bilaterally, whereas

a multilateral APA is not specifically regulated. Unilateral
and bilateral APAs may cover a period of up to five tax
years. Pursuant to MoF 22/2020, APAs can now also cover
a rollback period for tax years that have not yet expired to
be assessed by the DGT (i.e., five years under the current
regulations). In addition to MoF 22/2020, DGT Regulation
Number PER-17/PJ/2020 has been intentionally enacted
to specify procedures for the application settlement,
implementation and evaluation of APA.

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Value Added Tax

Value Added Tax

Value Added Tax (VAT) is imposed on supplies of taxable

goods and/or utilization of taxable services occurring in
the Indonesian Customs Area. The definition of a supply
of Taxable Goods itself is broad; it includes the following
events:
● Supplies of rights to Taxable Goods due to an
agreement.
● Transfers of Taxable Goods under a hire-purchase
agreement and/or a leasing agreement.
● Supplies of Taxable Goods to intermediary traders
or through auctioneers.
● Personal use and/or free of charge provision of
Taxable Goods.
● Taxable Goods in the form of inventories and/or
assets that, according to their original purpose, are
not for sale and are remaining at the dissolution of
a company.
● Supplies of Taxable Goods from the head office to
branches or vice versa and/or supplies of Taxable
Goods between branches, and
● Supplies of Taxable Goods by Taxable Persons
for VAT Purposes in the context of a financing
agreement based on sharia principles, these
supplies are considered direct supplies by the
Taxable Persons for VAT Purposes to the parties
requiring the Taxable Goods.
Further, entrepreneurs conducting supplies of taxable
goods/services which exceed IDR4.8 billion in the

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 Indonesian Tax Manual Book 2022

following year are obliged to report their businesses to be

registered as Taxable Persons for VAT Purposes and are
obliged to collect, remit and file VAT. However, business
entities or individuals that gain less than IDR4.8 billion
may also apply to be deemed as Taxable Person Persons
for VAT Purposes.

In further detail, VAT shall be imposed on:

● Supplies of Taxable Goods within the Customs Area
by entrepreneurs.
● Imports of Taxable Goods.
● Supplies of Taxable Services from outside the
Customs Area by entrepreneurs.
● Utilization of Intangible Taxable Goods from outside
the Customs Area within Customs Area.
● Utilization of Taxable Services from outside the
Customs Area within the Customs Area.
● Exports of Tangible Taxable Goods by Taxable
Persons for VAT Purposes.
● Exports of Intangible Taxable Goods by Taxable
Persons for VAT Purposes, and
● Exports of Taxable Services by Taxable Persons for
VAT Purposes.
Taxable supplies of goods must fulfil the following
requirements:
● The supplied tangible goods constitute Taxable
Goods.
● The supplied intangible goods constitute Taxable
Intangible Goods.
● The supplies are carried out within the customs
area, and
● The supplies are carried out in the context of
business or work.
Excluded from the definition of supplies of Taxable Goods
are:
● Supplies of Taxable Goods to a broker as referred to
in the Indonesian Commercial Code.

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Value Added Tax

● Supplies of Taxable Goods to guarantee debts.

● Supplies of Taxable Goods as referred to in paragraph
1 sub-paragraph f in the event that Taxable Persons
for VAT Purposes centralize the place where taxes
are payable.
● Transfers of Taxable Goods in the context of
a merger, consolidation, spin-off, split-up and
acquisition and transfers of Taxable Goods for paid-
up capital in lieu of shares, provided that the parties
transferring and receiving such transfers constitute
Taxable Persons for VAT Purposes, and
● Taxable Goods in the form of assets that, according
to their original purpose, are not for sale and are
remaining at the company’s dissolution and whose
input VAT on acquisitions is non-creditable.

A. Non-Taxable Goods & Non-Taxable

Services
Non-Taxable Goods are:
● Food and beverages served in hotels, restaurants,
eateries, food stalls and the like, including food and
beverages, either consumed on the premises or not,
including food and beverages supplied by catering
businesses that constitute taxable objects of local
taxes and charges pursuant to statutory provisions
on local taxes and charges, and
● Money, gold bullion for state foreign exchange
reserves and securities.
Non-Taxable Services are:
● Religious services.
● Arts and entertainment services, including all types
of services performed by artists and entertainers,
that constitute taxable objects of local taxes and
charges pursuant to statutory provisions on local
taxes and charges.
● Hospitality services, including bedroom rentalservices
and/or room rental services in hotels that constitute

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 Indonesian Tax Manual Book 2022

taxable objects of local taxes and charges pursuant

to statutory provisions on local taxes and charges.
● Services provided by the government in the context
of running the government in general, including
all types of services in connection with service
activities that may only be carried out by the
government in accordance with its authority based
on statutory provisions and such services cannot
be provided by other forms of business.
● Parking space services, including the provision
of parking spaces by parking lot owners and/
or parking lot entrepreneurs to parking lot users
that constitute taxable objects of local taxes and
charges pursuant to statutory provisions on local
taxes and charges, and
● Catering services, including all services of providing
food and beverage that constitute taxable objects
of local taxes and charges pursuant to statutory
provisions on local taxes and charges.

B. VAT Rate & Calculation

VAT rates amount to 11% effective from 1 April 2022 and
will be increased to 12% no later than 1 January 2025.
However, the 0% VAT rate continues to apply to exports of
goods and services as further regulated under a Minister
of Finance Regulation (MoF).

VAT payable is calculated by multiplying the aforesaid

rate by the Tax Base, which includes the Selling Price,
Consideration, Import Value, Export Value or other values.

C. Input & Output VAT

VAT Liabilities in respect of which a Taxable Person for
VAT Purposes may collect, remit and file VAT payable are
usually settled using the input and output method. Input
VAT implies that when a Taxable Person for VAT Purposes
claims to have bought taxable goods or utilized services
from another Taxable Person for VAT Purposes. Output

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Value Added Tax

VAT, on the other hand, occurs when a Taxable Person

for VAT Purposes supplies goods or renders services to a
counter-party. The Taxable Person for VAT Purposes may
claim Input VAT as a tax credit which reduces the total
Output VAT as the result. If in a Taxable Period, Output VAT
is greater than Input VAT, the difference constitutes Value
Added Tax that must be remitted by the Taxable Persons
for VAT Purposes. If in a Taxable Period, the creditable
Input VAT is greater than the Output VAT, the difference
constitutes tax overpayment which is carried forward to
the next Taxable Period or an application for a refund may
be submitted at the end of the year or every month by
certain Taxable Persons for VAT Purposes.

However, there are some terms and conditions in how

Input VAT may be credited such as:
● Input VAT that is credited must use a Tax Invoice
that fulfils the requirements under the VAT Law.
● Input VAT cannot be applied to expenses for:
○ Acquisitions of Taxable Goods or Services not
related to business.
○ Acquisitions of Taxable Goods or Services related
to business which render VAT non-collected/
exempt goods or VAT non-collected/VAT exempt
services.
○ Acquisitions of Taxable Goods or Taxable
Services for which the Tax Invoice does not
fulfil the provisions or does not include the
name, address and Tax Identification Number of
the buyer of Taxable Goods or the recipient of
Taxable Services.
○ Utilization of Intangible Taxable Goods or
utilization of Taxable Services from outside the
Customs Area within the Customs Area for which
the Tax Invoice does not fulfil the provisions.
● Creditable Input VAT but not yet credited against
Output VAT in the same Taxable Period is creditable
in the next Taxable Period no later than 3 (three)

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 Indonesian Tax Manual Book 2022

● Taxable Periods after the end of the Taxable Period

when the Tax Invoice is prepared provided that it
has not been expensed or has not been capitalized
in the acquisition prices of Taxable Goods or Taxable
Services and fulfils the provisions on crediting
under this Law.

D. VAT Invoice
Taxable Persons for VAT Purposes are obliged to prepare
a Tax Invoice for each:
● Supply of Taxable Goods and/or Services.
● Export of Intangible Taxable Goods and/or export of
Taxable Services.
Tax Invoices must include information on supplies of
Taxable Goods and/or supplies of Taxable Services which
at least contain:
● The name, address and Taxpayer Identification
Number of the supplier of Taxable Goods or Taxable
Services.
● The identity of the buyer of Taxable Goods or Taxable
Services which includes:
○ The name, address and Taxpayer Identification
Number or single identity number or passport
number for individual non-residents, or
○ The name and address, in the event that the
buyer of Taxable Goods or the recipient of
Taxable Services is a corporate non-resident or
is not a tax subject as referred to in Article 3 of
the Law on Income Tax.
○ Types of goods or services, the amount of Selling
Price or Consideration and discount.
○ Collected Value Added Tax.
○ Collected Sales Tax on Luxury Goods.
○ Code, serial number and preparation date of the
Tax Invoice, and
○ Name and signature of the person entitled to
sign the Tax Invoice.

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Value Added Tax

Further provisions on procedures for the preparation of Tax

Invoices and procedures for the rectification or replacement
of Tax Invoices shall be stipulated by or based on an MoF.

E. Filing VAT Returns

VAT Periodic Returns must be filed to the DGT by the end
of the following month after the taxable period ends.
Although technically, a Taxable Person for VAT Purposes
may only upload Tax Invoices to the system (e-faktur) by
the 15th of every month after the taxable period ends at
the latest.

F. Other Issues
Post UU HPP, there have been major changes in the VAT
Regulation. No fewer than 14 MoFs have been issued to
regulate VAT Imposition on specific matters, as follows:
● MoF No. 58/PMK.03/2022 concerning the
Appointment of Other Parties as Withholding Agents
and Procedures for the Withholding, Remittance
and/or Filing of Taxes Withheld by Other Parties for
Procurement Transactions of Goods and/or Services
through the Government Procurement Information
System.
This MoF regulates Taxable Persons for VAT
Purposes may constitute the party to withhold
VAT instead of the Government. This MoF focuses
on rendering legal assurance to counterparties
conducting transactions with the Government.
● MoF No. 59/PMK.03/2022 concerning the Amendment
to MoF 231/PMK.03/2019 concerning Procedures for
Taxpayer Identification Number Registration and
Deregistration, VAT Registration and Deregistration
and Withholding, Remittance and Filing of Taxes for
Government Agencies.
This MoF focuses on regulating how Government
Agencies may be deemed Taxable Persons for VAT
Purposes.

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 Indonesian Tax Manual Book 2022

● MoF No. 60/PMK.03/2022 concerning Procedures

for the Appointment of Withholding Agents,
Withholding, Remittance and Filing of Value Added
Tax on the Utilization of Intangible Taxable Goods
and/or Taxable Services from Outside the Customs
Area Within the Customs Area Through Electronic
Commerce.
The MoF stipulates how a marketplace may be
deemed as a Taxable Person for VAT Purposes. If
a marketplace or platform is deemed as a Taxable
Person for VAT Purposes, it is required to withhold,
remit and fileVAT based on the Indonesian VAT Law.
● MoF No. 61/PMK.03/2022 concerning Value Added
Tax on Independent Construction.
From the MoF, several points concerning VAT on
independent construction can be concluded as
follows:
○ Independent construction refers to the
construction, both of new buildings and the
expansion of old buildings, which is not carried
out in the course of business or work by
individuals or entities and whose results are for
personal use or used by other parties.
○ Buildings are in the form of 1 (one) or more
technical constructions which are permanently
planted or attached to one unit of land and/or
body of water with the following criteria:
■ The main construction consists of wood,
concrete, masonry or similar materials and/
or steel.
■ Designated for residence or a place of
business, and
■ The area of the constructed building is at
least 200 m2.
○ VAT is calculated, withheld and remitted by an
individual or entity that carries out independent
construction of a certain amount which is the

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Value Added Tax

product of the multiplication of 20% by the

effective VAT multiplied by the tax base.
○ Tax base is in the form of a certain value
amounting to the total costs incurred and/or
paid to construct a building for each Taxable
Period until the building is completed, excluding
land acquisition costs.
● MoF No. 62/PMK.03/2022 concerning Value Added
Tax on Supplies of Certain Liquefied Petroleum Gas.
From the MoF, several points can be concluded as
follows:
○ Value Added Tax payable on supplies of Certain
LPG of which part of the price is not subsidized
at:
■ The point of supply of the Business Entity,
is calculated by multiplying the Value Added
Tax rate by Other Values as the Tax Base, and
■ The point of supply of the Agent or Base, is
withheld and remitted at a certain amount.
○ Other Values are calculated using the following
formula:
100
x Retail Selling Price
(100 + t)

where t is the figure of the applicable Value

Added Tax rate.
○ A certain amount of Value Added Tax payable on
supplies of Certain LPG is stipulated:
■ At the point of supply of the Agent:
□ To amount to 1.1/101.1 which will take
effect on 1 April 2022, and
□ To amount to 1.2/101.2 which will take
effect when the application of VAT rates
is enacted,
of the difference between the Agent Selling
Price and the Retail Selling Price.

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 Indonesian Tax Manual Book 2022

■ At the point of supply of the Base:

□ To amount to 1.1/101.1 which will take
effect on 1 April 2022, and
□ To amount to 1.2/101.2 which will take
effect when the application of VAT rates
is enacted,
of the difference between the Base Selling
Price and the Agent Selling Price.
● MoF No. 63/PMK.03/2022 concerning Value Added
Tax on Supplies of Tobacco Products.
From the MoF, several points can be concluded as
follows:
○ Supplies of:
■ Tobacco Products produced domestically by
Manufacturers, or
■ Tobacco Products produced overseas by
Importers,
are subject to Value Added Tax.
○ VAT imposed on supplies of Tobacco Products is
calculated by multiplying the VAT rate by Other
Values as the Tax Base.
○ Other Values are determined by the formula of
100/(100+t) multiplied by the Retail Selling Price
of Tobacco Products, for supplies of Tobacco
Products, in which t is the figure of the effective
VAT rate.
○ Based on the VAT Rate and Other Values ​​as the
Tax Base, VAT on supplies Tobacco Products is
payable based on rounding is calculated:
■ 9.9% multiplied by the Retail Selling Price of
Tobacco Products, for supplies of Tobacco
Products which will take effect on 1 April
2022, and
■ 10.7% multiplied by the Retail Selling Price
of Tobacco Products, for supplies of Tobacco

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Value Added Tax

Products which will take effect when the

application of the Value Added Tax rates
stipulated under Article 7 (1) Sub-paragraph
b of the Value Added Tax Law is enacted.
● MoF No. 64/PMK.03/2022 concerning Value Added
Tax on Supplies of Certain Agricultural Products.
From the MoF, several points can be concluded as
follows:
○ Taxable Persons for VAT Purposes supplying
certain agricultural products may use a certain
amount to withhold and remit Value Added Tax
payable.
○ Certain amount referred to in Article 2 (1) is
stipulated to:
■ Amount to 1.1% of the Selling Price which will
take effect on 1 April 2022, and
■ Amount to 1.2% which will take effect when
the application of the Value Added Tax rates
stipulated under Article 7 (1) Sub-paragraph
b of the Value Added Tax Law is enacted.
● MoF No. 65/PMK.03/2022 concerning Value Added
Tax on Supplies of Used Motor Vehicles.
From the MoF, several points can be concluded as
follows:
○ Taxable Persons for VAT Purposes conducting
certain businesses in the form of supplies of
used motor vehicles are obliged to withhold and
remit Value Added Tax payable on supplies of
used motor vehicles at a certain amount
○ Certain amount is stipulated to:
■ Amount to 1.1% of the Selling Price, which
will take effect on 1 April 2022, and
■ Amount to 1.2%, which will take effect when
the application of Value Added Tax rates
stipulated under Article 7 (1) Sub-paragraph
b of the Value Added Tax Law is enacted.

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 Indonesian Tax Manual Book 2022

● MoF No. 66/PMK.03/2022 concerning Value Added

Tax on Supplies of Subsidized Fertilizers for the
Agricultural Sector.
○ Supplies of Subsidized Fertilizers by Taxable
Persons for VAT Purposes are subject to VAT. To
VAT on supplies of Subsidized Fertilizers applies
the following provisions:
■ For the subsidized part of the price, VAT is
paid by the Government, and
■ For the unsubsidized part of the price, VAT
is paid by the buyer.
○ The Tax Base for calculating the VAT shall use
Other Values.
○ Other Values on the part of the price of
Subsidized Fertilizers receiving subsidies shall
be calculated using the formula:
100
x Amount of Subsidy Payment, including VAT
(100 + t)

where t is the figure of the applicable VAT rate.

○ Other Values for the part of the price of
Subsidized Fertilizers not receiving subsidies
shall be calculated using the formula:

100
x Highest Retail Price
(100 + t)

where t is the figure of the applicable Value

Added Tax rate.
● MoF No. 67/PMK.03/2022 concerning Value Added
Tax on Supplies of Insurance Agent Services,
Insurance Brokerage Services and Reinsurance
Brokerage Services.
From the MoF, several points can be concluded as
follows:
○ VAT is payable on supplies of:

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Value Added Tax

■ Insurance agency services by Insurance

Agents to Insurance Companies or Sharia
Insurance Companies.
■ Insurance brokerage services by insurance
brokerage companies to Insurance Companies
and/or Sharia Insurance Companies, and
■ Reinsurance brokerage services by
reinsurance brokerage companies to
reinsurance companies and/or sharia
reinsurance companies.
○ VAT payable shall be withheld and remitted at a
certain amount. Certain amount means:
■ 10% of the VAT rate multiplied by the
commission or remuneration in whatever
name and form paid to the Insurance Agent,
or
■ 20% of the VAT rate multiplied by the
commission or remuneration in whatever
name and form received by the insurance
brokerage company or reinsurance brokerage
company.
● MoF No. 68/PMK.03/2022 concerning Value Added
Tax and Income Tax on Crypto Asset Trading
Transactions.
From the MoF, several points can be concluded as
follows:
○ Supplies of intangible Taxable Goods in the form
of Crypto Assets by Crypto Asset Sellers are
subject to VAT. The VAT payable is withheld and
remitted at a certain amount.
○ Certain amount referred to in paragraph (1) is
stipulated to amount to:
■ 1% of the VAT rate multiplied by the value
of Crypto Asset transaction, in the event
that the Electronic Commerce Operator is a
Crypto Asset Physical Trader, or
■ 2% of the VAT rate multiplied by the value of

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 Indonesian Tax Manual Book 2022

Crypto Asset transaction, in the event that

the Electronic Commerce Operator is not a
Crypto Asset Physical Trader.
● MoF No. 69/PMK.03/2022 concerning Income Tax
and Value Added Tax on the Implementation of
Financial Technology.
The MoF focuses on how to tax Financial Technology
activities as a whole. This MoF not only elucidates
VAT but also outlines the imposition of several
income taxes.
● MoF No. 70/PMK.03/2022 concerning the Criteria
and/or Details of Food and Beverages, Arts and
Entertainment Services, Hotel Services, Parking
Space Services and Catering Services Not Subject
to Value Added Tax.
The MoF basically further explains the criteria of
goods and services supplied by hotels that are
exempt from VAT.
● MoF No. 71/PMK.03/2022 concerning Value Added
Tax on Supplies of Certain Taxable Services.
The focus of the MoF is to address the so-called
certain amount as the VAT base in calculating VAT
Payable. This MoF applies to certain services, such
as:
○ Package delivery services pursuant to statutory
provisions in the postal sector.
○ Travel agency services and/or travel agent
services in the form of tour packages, means
of transport booking and accommodation
booking, the supply of which is not based on
the provision of commission/remuneration for a
supply of sales intermediary services.
○ Freight forwarding services in which the invoice
for freight forwarding services includes freight
charges.
○ Pilgrimage services that also organize trips to

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Value Added Tax

other places pursuant to statutory provisions on

the criteria and/or details of religious services
not subject to Value Added Tax, and
○ Organization services of:
■ Marketing using the voucher media.
■ Payment transaction services in connection
with voucher distribution, and
■ Consumer loyalty and reward programs, the
supply of which is not based on the provision
of commission and there is no margin,
pursuant to statutory provisions on the
calculation and withholding of Value Added
Tax and income tax on supplies/income
in connection with sales of mobile phone
credit, starter packs for SIM cards, tokens
and vouchers.

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 Indonesian Tax Manual Book 2022

Sales Tax on
Luxury Goods

Sales Tax on Luxury Goods (STLGs) is a tax imposed on

taxable goods (BKP) classified as luxurious. STLGs is
only imposed once upon the supply of BKP classified as
luxurious by the manufacturer or BKP producer or upon
imports of BKP classified as luxurious. Therefore, supplies
at the next level are no longer subject to STLGs.

The imposition of STLGs is regulated under the Value

Added Tax Law of 1984 as amended by Law No. 7 of 2021
concerning the Harmonization of Tax Regulations (UU
HPP), hereinafter referred to as the VAT Law. Pursuant to
the VAT Law, four considerations underlie the imposition
of STLGs by the government.

First, the balance of tax burden between low-income

consumers and high-income consumers. Second, the
control of consumption patterns on BKP classified
as luxurious. Third, protection against small-scale or
traditional producers. Fourth, securing state revenues.

The STLGs Law also stipulates four criteria for BKP

classified as luxurious. The four criteria include: (i) goods
that do not constitute staple goods; (ii) goods that are
consumed by certain people; (iii) goods that are generally
consumed by high-income people; and/or (iv) goods
consumed to show status.

Pursuant to the STLGs Law, STLGs rate is set at a

minimum of 10% and a maximum of 200%. The STLGs

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Sales Tax on Luxury Goods

rates are set differently depending on the classification

of luxurious goods. The classification of goods classified
as luxurious and the respective rates are mainly based
on the ability level of the groups of people utilizing these
goods, in addition to being based on their use value for
society in general. Goods subject to STLGs are classified
after consultation with the House of Representatives of
the Republic of Indonesia in charge of finance.

Further regulation of the classification of goods subject

to STLGs and the imposed rates are stipulated by
government regulations. In this regard, the government
generally issues government regulations concerning the
imposition of STLGs on luxurious motor vehicles and
government regulations concerning the imposition of
STLGs on luxurious goods other than motor vehicles.

A. Provisions on STLGs on Luxurious Motor

Vehicles
Details of the provisions on the imposition of STLGs on
motor vehicles classified as luxurious are regulated under
Government Regulation No. 73 of 2019 as amended by
Government Regulation No. 74 of 2021 and Minister of
Finance Regulation No. 141/PMK.010/2021 as amended by
Minister of Finance Regulation No. 42/PMK.010/2022.

Based on the regulations, the STLG rates imposed on

luxurious motor vehicles vary, namely 15%, 20%, 25%,
40%, 50%, 60%, 70% and 95%. The imposition of STLGs
rates depends on the type of vehicle, cylinder capacity,
fuel consumption or carbon dioxide emission level and the
technology used. Details of the STLGs rates imposed on
both four-wheeled and two-wheeled vehicles are listed in
the appendix of MoF Reg. No. 141/PMK.010/2021.

To encourage the use of energy-efficient and eco-friendly

motor vehicles, the government not only differentiates
the STLGs rates on eco-friendly motor vehicles but also

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 Indonesian Tax Manual Book 2022

the tax base. The tax base (DPP) is set in various ways,
ranging from 20% of the selling price to 80% of the selling
price. The percentage of DPP is set depending on the type
of technology used, engine capacity, fuel consumption
and the level of carbon dioxide emissions produced per
kilometer.

The provisions on rates and the percentage of DPP for

vehicles with low carbon emissions apply to groups of motor
vehicles that fulfill the requirements set by the minister of
industry after coordinating with the coordinating minister
for economic affairs, coordinating minister for maritime
affairs and investment and the minister of investment.

Not all motor vehicles classified as luxurious are subject

to STLGs. The government has stipulated a number
of vehicles that are exempt from the STLGs, including
ambulances, fire engines, vehicles for state protocols
and the Indonesian National Defense Forces or the State
Police of the Republic of Indonesia patrols.

B. Provisions on STLGs on Luxury Goods

Other Than Vehicles
Details of the provisions on the imposition of STLGs on
goods classified as luxurious other than motor vehicles
are regulated under Government Regulation No. 61 of 2020
and Minister of Finance Regulation No. 96/PMK.03/2021.
Based on the regulation, the list of luxurious BKP subject
to STLGs and their respective rates are as follows:
Table 18 Sales Tax on Luxury Goods Rates
No Goods Description STLGs Rate
1 Luxurious residential groups, such as luxury homes,
apartments, condominiums, townhouses and the 20%
like with a selling price of IDR30 billion or more.
2 ● Air and piloted air balloon groups, other
aircraft without propulsion.
● Bullets for firearms and other firearms, 40%
except for state purposes: Bullets and parts
thereof, excluding air rifle cartridges

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Sales Tax on Luxury Goods

No Goods Description STLGs Rate

3 ● Aircraft groups other than those subject
to the 40% rate, except for state purposes
or commercial air transport: helicopters or
other aircraft and air vehicles, other than
helicopters
50%
● Firearms and other firearm group, except for
state purposes: artillery guns; revolvers and
pistols; firearms (other than artillery guns,
revolvers and pistols); and similar equipment
operated by firing explosives
4 Luxury yacht groups, except for state purposes or
public transport:
● Yachts, excursion boats and similar vessels,
specifically those primarily designed for
the transport of people, ferries of all 75%
types except for state purposes or public
transport.=
● Yachts, except for state purposes or public
transport or tourism businesses
Source: Minister of Finance Regulation No. 96/PMK.03/2021.

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 Indonesian Tax Manual Book 2022

General Provisions &

Tax Procedures

A. Overview
Indonesian taxation is based on the self-assessment
system wherein taxpayers are required to compute, file
and pay the tax payable without relying on the issuance
of tax assessments. The tax payable stated in the tax
returns filed by taxpayers shall comply with statutory
tax provisions. Such an obligation commences since the
requirements for constituting a taxpayer (or a Taxable
Person for VAT Purposes) are fulfilled, even if the person
or entity has not registered for a taxpayer ID or as a
Taxable Person for VAT Purposes. The DGT confirms
the aforementioned with DGT circular number S-393/
PJ.02/2016.

Further, if the Director General of Taxes obtains evidence

that the amount of tax payable in the filed tax return
is incorrect, the DGT shall determine the amount of tax
payable. The preceding sentence is articulated in Article
12 (3) of the General Provisions and Tax Procedures Law
(GPRTL) and sets the principle that the burden of proof
lies with the DGT provided that the taxpayer abides by
statutory tax provisions. The statute of limitations for
the DGT to issue a tax assessment is 5 years, however,
under tax-crime-related Articles in GPRTL, the statute of
limitations is 10 years.

DDTC has published a book on selected details concerning

guidelines of tax procedures that may be accessed here.

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General Provisions & Tax Procedures

DDTC has also consolidated GPTRL up to the amendment

by the Law on the Harmonization of Tax Regulations and
translated GPTRL into English, both may be found here.

B. Tax Subjects & Tax Registration

Any person, including an entity, that has fulfilled subjective
and objective qualifications as stipulated in income tax
law is obliged to register to the office of the DGT to be
registered as a Taxpayer and obtain a Taxpayer Identification
Number. The subjective qualification determines the type
of tax subject of the person or entity.

Resident tax subjects consist of individuals, entities

established or domiciled in Indonesia as well as undivided
inheritance represented by the beneficiaries. An individual
constituting a resident tax subject is an individual, either
an Indonesian citizen or a foreign citizen.

The criteria to be determined as resident tax subjects for

foreign citizens, including those who reside in Indonesia,
or have been present in Indonesia for more than 183 days
within any 12 months period, or have been residing in
Indonesia within a particular tax year and intend to reside
in Indonesia (i.e. having a permanent stay card, visa or
any documents that may indicate the intention to reside
in Indonesia for more than 183 days). An individual not
fulfilling such criteria is considered a non-resident tax
subject, including a permanent establishment used by a
foreign citizen to conduct business in Indonesia. A foreign
entity constitutes a non-resident tax subject if it conducts
a business or activities in Indonesia, regardless of whether
through a permanent establishment or not.

Objective requirements are fulfilled if tax subjects, both

resident or non-resident, receive income or are obliged to
withhold taxes pursuant to the Income Tax Law. Resident
tax subjects are taxed on worldwide income, except
for certain individual resident tax subjects (e.g. migrant

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 Indonesian Tax Manual Book 2022

workers). Non-resident tax subjects are taxed only on

income sourced from Indonesia.

Under Indonesian tax laws, resident individuals that have

fulfilled objective requirements and entities established
or domiciled in Indonesia are referred to as taxpayers.

C. Taxpayer’s Representative & Power of

Attorney
In exercising their rights and fulfilling their obligations,
taxpayers may represent themselves, be represented
by their representatives or appoint a power of attorney
to act on the taxpayers’ behalf in exercising their rights
and obligations. Further, if taxpayers fail to fulfil their
obligations, particularly in respect of tax liabilities or tax
penalties, the taxpayers’ representatives may be held
liable and accountable, unless they can prove and assure
the DGT that within their position, it is not possible to
assume such a responsibility.

An individual taxpayer’s representatives include the

individual taxpayer himself/herself, spouse (if tax
administratively consolidated), the individual’s heir/heiress
and so for, further details of whom can be seen here. A
corporate taxpayer’s representatives generally include the
director, commissioner, C-suite and the person authorized
to make decisions for the entity. Further details concerning
corporate taxpayers’ representatives based on different
types of entities can be accessed here.

With regards to a taxpayer’s power of attorney, in general,

licensed tax consultants may be appointed by taxpayers
as their power of attorney. There are 3 levels of tax
consultant licenses that determine the type of taxpayers
the tax consultants may represent as power of attorney.
Level A licensed tax consultants may represent individual
taxpayers, except for those domiciled in a tax treaty
partner country. Level B tax consultants may represent

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General Provisions & Tax Procedures

individual and corporate resident taxpayers, except for

foreign investment companies, PEs and those domiciled in
a tax treaty partner country. Finally, level C tax consultants
may represent all types of taxpayers. The DGT has also
published a list of licensed tax consultants on the DGT’s
website, thereby, taxpayers may confirm tax consultants’
level of license. Further, a Constitutional Court Decision
with implications on the criteria of taxpayers’ power
of attorney has been issued. In general, this decision
broadens the criteria of taxpayers’ power of attorney
stipulated under a Minister of Finance Regulation.

D. Bookkeeping & Recording

Individual taxpayers conducting business or independent
personal services and corporate taxpayers in Indonesia
are obliged to maintain bookkeeping. Excluded from the
bookkeeping obligation but obliged to maintain recording
are individual taxpayers taxed using deemed profit and
those not conducting business or independent personal
services (i.e. employees). The difference between the
obligation of maintaining bookkeeping and recording can
be seen here.

The obligation to maintain recording consists of data

on turnover or gross revenues/income, including income
not subject to tax or subject to final tax. Bookkeeping
must be maintained properly together with supporting
documentation, including transfer pricing documentation
and information (if required). For further details regarding
transfer pricing documentation and information can be
found here.

Recording and bookkeeping must be prepared in

Indonesian and denominated in IDR, based on the
Indonesian accounting standards, unless statutory tax
provisions stipulate otherwise. Bookkeeping using a foreign
language (English) and USD as the functional currency
may apply to foreign investment companies, permanent
establishments, listed companies and certain taxpayers,

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 Indonesian Tax Manual Book 2022

with prior approval from the DGT. Certain taxpayers

may be obliged to prepare audited financial statements
as required by certain laws or regulations (i.e. Law on
Corporations). Records, books of account and supporting
documents must be maintained in Indonesia for 10 years,
including the results of data processing using electronic
bookkeeping or online application programs.

E. Tax Payment & Tax Returns

Tax returns serve as a means for filling and validating
the income tax payable function for taxpayers subject to
income tax or Value Added Tax/Sales Tax on Luxury Goods
for Taxable Persons for VAT Purposes or taxes withheld/
collected by withholding agents. Tax returns must be filed
correctly, completely and clearly to the DGT. Generally,
tax returns use electronic applications to be completed
and submitted within the statutory deadline. The DGT
may allow the manual filing of tax returns under certain
conditions. The DGT, however, may deem the filed tax
return as not filed. The DGT must notify the taxpayer of
this issue. Please note that there are specific guidelines
on how to complete each type of tax return.

Tax payable computed in the abovementioned tax returns

must be paid to the state treasury through certain tax-
payment banks, the deadlines of which are specified in
the tax laws. If the payment deadline falls on a holiday
(Saturday, Sunday, national holidays, days off to organize
general elections or national collective leave), taxes can
be paid or remitted no later than the next working day.
Generally, taxes are paid electronically using the DGT’s
e-billing system, except for taxes on imports (for which
the payment is administered by the customs e-billing
system and taxes for which the payment procedures are
specifically regulated).

Each type of tax payment requires certain codes to

identify the type of payment for tax purposes. Taxpayers
may not be able to file tax returns or may be subject to

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General Provisions & Tax Procedures

the risk of being assessed by the DGT due to incorrect

use of payment codes. However, a refund or overbooking
may be requested for any incorrect payment by following
certain procedures.

The following is the summary of the tax payment and tax

return obligations.
Table 19 Monthly Tax Obligations
Type of Tax Payment Deadline Filing Deadline
15 of the following
th
Article 25 Income Tax N/A
month
Withholding Article 15 10th of the following 20th of the following
Income Tax month month
Self-remit Article 15 15th of the following 20th of the following
Income Tax month month
Withholding Article 10th of the following 20th of the following
21/26 Income Tax month month
Withholding Article 10th of the following 20th of the following
23/26 Income Tax month month
Withholding Article 10th of the following 20th of the following
4(2) Income Tax month month
Self-remit Article 4(2) 10th of the following 20th of the following
Income Tax month month
VAT taxable person - before the Periodic VAT End of the following
VAT and STLGs Return is filed month
15th of the following End of the following
Self-remit VAT
month month
no later than 7
days after the date
Tax Collector
of payment to a
– government/ End of the following
government partner
expenditure treasurer - month
Taxable Person for VAT
VAT and STLGs
Purposes through the
state treasury office
Tax Collector – non-
government / non- 15th of the following End of the following
expenditure treasurer month month
- VAT and STLGs

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Table 20 Monthly Tax Obligations

Type of Tax Payment Deadline Filing Deadline
No later than the end
of the fourth month End of the fourth
Corporate Income Tax after the accounting month after the tax
year end before the year ends
tax return is filed
No later than the end
of the third month
End of the third month
Individual Income Tax after the year ends
after the tax year ends
before the tax return
is filed

Individual taxpayers or corporate taxpayers may submit a

notification to extend the filing of the annual income tax
return for a maximum of two months after the statutory
deadline. Taxpayers may apply to the DGT for instalments
or deferral of tax payable based on the annual income
tax return by applying to the DGT no later than the filing
due date of the annual tax return. Taxpayers allowed to
install or defer tax payments are subject to administrative
penalties in the form of interest with monthly rates
determined by the Minister of Finance.

Late payments of the above-mentioned taxes and tax

payable due to voluntary rectifications of tax returns shall
be subject to interest penalties at a monthly reference
interest rate stipulated by the Minister of Finance,
computed from the payment due date to the actual
payment date for a maximum of 24 months. A fraction of
a month is treated as 1 full month.

Penalties for late filing are IDR500 thousand for VAT

returns, IDR100 thousand for other monthly tax returns,
IDR100 thousand for annual individual income tax returns
and IDR1 million for annual corporate income tax returns.

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General Provisions & Tax Procedures

F. Tax Disputes & Litigations

F.1 Data & Explanation Request
The DGT monitors taxpayers’ compliance on regular
basis. To some extent, the DGT may issue a Letter of
Inquiry (Surat Permintaan Penjelasan atas Data dan/
atau Keterangan/SP2DK) to obtain an explanation, data
and information from a taxpayer regarding the allegation
of non-compliance based on the initial analysis by the
DGT. The taxpayer may respond to such a request and
substantiate that the presumption of non-compliance is
arbitrary and the taxpayer may prove otherwise, or if the
presumption of non-compliance is justifiable, either fully
or to some extent, the taxpayer can revise the related tax
returns, pay any tax payable discrepancies (if any) and
file the tax returns. Please note that the payment of tax
payable discrepancies is subject to an interest penalty.

If the DGT, after reviewing the taxpayer’s response, is not

satisfied or the taxpayer does not file any response, the
DGT may raise the level of enforcement into a tax audit or
even worse, a preliminary investigation.

F.2 Tax Audits

A tax audit is generally initiated by a taxpayer’s request
for a refund. Every tax refund request is followed by a tax
audit prior to receiving the refund except for an advance
refund request, whereby the tax audit takes place later
after the refund. The tax refund audit timeline is 12
months from the date the tax return requesting a refund
is filed. A taxpayer’s refund request is deemed granted if
the DGT fails to issue a notice of tax assessment within
12 months. In a non-tax refund audit, while there is a
procedural timeline, an audit exceeding such a timeline
cannot be invalidated. A taxpayer that fulfills certain
criteria may receive an advance tax refund, but the DGT
remains authorized to audit and issue an assessment. In
the case of a notice of tax assessment issued in relation

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to the previously administered advance tax refund, if the

issued notice of tax assessment shows that the taxpayer
has underpaid, a penalty of 75 percent is added to the
unpaid tax.

During an audit, a tax audit officer will perform direct and

indirect tests as governed by the DGT’s audit procedures.
In some cases, a tax audit officer will perform indirect
testing, such as reconciliation of tax accounts with
financial accounts on a tax adjustment basis. During a
tax audit, taxpayers may voluntarily disclose errors in
their tax returns by applying Article 8 (4) of the GTPRL.
If the submission of voluntary disclosure results in tax
underpayment, the tax underpayment is subject to interest
equal to the reference interest rate based on a Minister
of Finance decree for a maximum period of 24 months.
Taxpayers may only disclose errors in the preparation of
tax returns before the DGT issues a Notification of Tax
Audit Findings.

Prior to the final findings of a tax audit, taxpayers may

request a quality assurance review at the higher level
of the DGT. The basis for requesting a quality assurance
review is if there is a violation of the law and its application
by the tax audit officer. The quality assurance team will
issue a legally binding decision as a basis for the final
findings of a tax audit and its notice of tax assessment.
At the end of a tax audit process, the DGT will issue a
notice of tax assessment which may be nil, overpayment
or underpayment. In the event of an underpayment tax
assessment, the underpaid tax is subject to interest
equal to the reference interest rate based on a Minister of
Finance decree for a maximum period of 24 months.

F.3 Administrative Remedies

Following the DGT’s notice of tax collection, a taxpayer
may file for administrative remedies pursuant to Article
36 of the GTPRL as follows:

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General Provisions & Tax Procedures

● A penalty reduction or write-off (Article 36 (1a) of

the GTPRL).
● A reduction or cancellation of the notice of tax
collection (Article 36 (1c) of the GTPRL), or
● A cancellation of the notice of tax collection
resulting from a tax audit completed without the
taxpayer receiving temporary audit findings and the
final audit closing conference letter (Article 36(1d)
of the GTPRL).
Following the DGT’s notice of tax collection, the taxpayer
may file administrative remedies pursuant to Article 36 of
the GTPRL as follows:
● A penalty reduction or write-off (Article 36 (1a) of
the GTPRL).
● A reduction or cancellation of the notice of tax
collection (Article 36 (1b) of the GTPRL), or
● Cancellation of the notice of tax collection resulting
from a tax audit completed without the taxpayer
receiving temporary audit findings and the final
audit closing conference letter (Article 36 (1d) of
the GTPRL).
Further, following the DGT’s notice of tax collection
and withholding tax receipt, a taxpayer can request
administrative remedies pursuant to Article 25 of the
GTPRL by filing an objection to the DGT within three
months since the notice of tax collection is sent or the
date of the withholding tax receipt. The three-month
timeline does not apply when the taxpayer is able to
demonstrate a force majeure situation. Upon filing a tax
objection, the administrative remedies set out in Article
36 (1) of the GTPRL will be denied when the two remedies
are closely related.

The taxpayer’s objection will be deemed granted if the

DGT fails to issue an objection decision letter within 12
months since the objection letter is received. Upon the
DGT’s objection decision, the taxpayer may file an appeal

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to the Tax Court. The DGT’s objection decision may be in

the form of fully accepted, partially accepted or denied or
may increase the amount of taxes.

Unpaid taxes or penalties set out in a notice of tax

collection, except for one related to a dispute being filed
for a tax objection, should be followed by active tax
collection efforts, including those that end in a seizure
letter. On the other hand, the collection of unpaid taxes
and penalties set out in the notice of tax assessment
should be postponed pursuant to the taxpayer’s objection
to the DGT. However, such unpaid taxes and penalties are
subject to a 30 percent penalty of the unpaid amount if
the DGT issues a decision partially granting or denying the
taxpayer’s objection. The 30 percent penalty is not imposed
if the taxpayer pays the unpaid taxes and penalties prior
to objection or if the taxpayer has filed a tax appeal to
the Tax Court. The interest on an unpaid notice of tax
assessment will not be imposed if the taxpayer files an
objection to the DGT.

F.4 Tax Appeal (Banding)

Upon the DGT’s Tax Objection Decision Letter, a taxpayer
may file an appeal to the Tax Court. The request letter
for an appeal must be submitted latest by three months
since the Tax Objection Decision Letter is received (this is
defined by the Tax Court Law as the date the letter is sent
by the DGT). The three-month timeline does not apply
when the taxpayer is able to demonstrate a force majeure
situation.

When filing a tax appeal, the unpaid taxes in dispute are

not required to be paid, as the unpaid taxes are postponed
until one month after the Tax Court decision is made
(Article 27 (5a) of the GTPRL). Prior to an appeal on the
DGT objection decision, a taxpayer is only required to pay
the amount of unpaid taxes agreed during the tax audit
which would have been paid by the taxpayer as such is
also required prior to filing the tax objection to the DGT.

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General Provisions & Tax Procedures

In the case of a Tax Court decision that denies or partially

grants an appeal, the taxpayer is subject to a penalty of 60
percent of the amount of unpaid taxes less the taxes paid
prior to filing an objection to the DGT. Payments made
after filing an objection to the DGT will not be considered
in the penalty computation. On the other hand, if a Tax
Court decision partially or fully grants an appeal on an
underpaid objection decision, the taxpayer cannot request
interest on the taxes paid prior to the objection or appeal.
Interest for taxpayers is available if a refund is not granted
for the overpaid tax in a tax return during a tax audit,
but a refund is granted during the tax objection or appeal
or civil review. If the DGT is late in issuing a tax refund
instruction letter, the taxpayer may also request interest
for a maximum period of 24 months.

F.5 Lawsuits (Gugatan)

Typically, upon the DGT’s decision letter (i.e. the decision
on a taxpayer’s application of Article 36 (1) of the GTPRL),
the taxpayer may file a lawsuit to the Tax Court appealing
the decision. Other letters issued by the DGT to the
taxpayer may be resolved by filing a lawsuit to the Tax
Court. Generally, the Tax Court will consider the case and
decide whether such a letter is subject to resolution in
the Tax Court provided that certain criteria are fulfilled,
specifically, if such a letter has resulted in specific tax
consequences for the taxpayer. A lawsuit regarding such
letters should be filed within 30 days from the date the
letter is sent.

A seizure letter as a result of tax collection forces a

taxpayer to surrender an amount of money or assets to
settle the taxes owed. The taxpayer may file a lawsuit
on the seizure letter within 14 days since the date of the
letter in the following situations: where the taxpayer
has filed for dispute resolution on the taxes due and
is in financial distress, and thus requests that any tax
collection, including seizure, be halted until the relevant

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dispute resolution has been issued; or where the process

of seizure is procedurally flawed, which may result in the
reprocessing of the seizure.

F.5 Civil Review (Peninjauan Kembali)

If the Tax Court decision is considered unfavourable to
either the taxpayer or the DGT, either or both may file a
civil review application only once to the Supreme Court.
Under Article 91 of the Tax Court Law, the grounds for
such applications are:
● The Tax Court’s decision was based on deception by
the counterparty, which was only known after the
case was decided, or the Tax Court decision was
made based on evidence judged to be inauthentic
by a civil court.
● There is new written evidence that is decisive and
that, if known during the Tax Court’s proceedings,
would have resulted in a different decision.
● An ultra petita decision.
● Part of the requisition has been decided without
consideration, and
● The Tax Court’s decision clearly violated the
applicable laws.
A civil review application is required to be filed within
three months since:
● The discovery of deception or a civil court decision
adjudicating that there is inauthentic evidence
(Article 91a of the Tax Court Law).
● The discovery of new evidence of which the date of
discovery must be made under oath and authorised
by a competent authority (Article 91b of the Tax
Court Law), or
● The Tax Court decision being sent (Article 91c–e of
the Tax Court Law).

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General Provisions & Tax Procedures

F.6 Tax Crime

In addition to the use of tax audits for official assessment,
tax audits can be used to collect preliminary evidence
where a tax crime is suspected. Where a tax audit has
been completed, provided that a tax crime investigation
has not commenced, a taxpayer may voluntarily disclose
an inaccuracy and pay any underpaid tax along with a
penalty of 100 percent of the underpaid tax. Thus, a tax
crime investigation will not commence provided that the
DGT accepts such voluntary disclosure.

The punishments for a tax crime would be imprisonment

and a financial penalty. Generally, the individual taxpayer
or the director of a company and his or her accomplices
will be held accountable for the tax crime, and only
the person or company charged with the tax crime will
bear the punishment. Not filing a tax return or filing an
incorrect or incomplete tax return, or attaching incorrect
information in the tax return, are generally considered tax
crimes.

The tax investigation may be terminated if the taxpayer

pays the underpaid tax plus a fine. If the tax crime is due
to negligence, the taxpayer shall pay the underpaid tax
plus a fine equal to the amount of the underpaid tax. If the
tax crime is found to be caused by deliberate actions, the
taxpayer shall pay the underpaid tax plus a fine of three
times the amount of the underpaid tax. If the tax crime
relates to producing fictitious tax invoices or withholding
slips, the taxpayer shall pay the underpaid tax plus a fine
of four times the amount of the underpaid tax.

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Customs &
Excise

A. Export Duties
Export is the activity of releasing goods from the customs
area. The government may impose export duties on
exported goods. The imposition of export duties is intended
to ensure the fulfillment of domestic needs, conserve
natural resources, anticipate fairly drastic price increases
of certain export commodities on the international market
or maintain the stability of certain commodity prices.

A.1 Exported Goods Subject to Export Duties

Export duties are not imposed on all types of goods, but
only on certain specified goods. Exported goods subject
to export duties are stipulated by the Minister of Finance
after receiving consideration and/or recommendations
from the minister of trade and/or ministers/heads of non-
departmental government institutions/heads of related
technical agencies. In addition, the Ministry of Finance
generally stipulates certain exported goods that may be
excluded from the imposition of export duties.

Currently, exported goods subject to export duties consist

of: (i) leather and wood; (ii) cocoa beans; (iv) palm oil,
Crude Palm Oil (CPO) and its derivative products; (v)
metallic mineral processing products; and (vi) metallic
mineral products with certain criteria.

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Customs & Excise

The export duty rates imposed on these goods may be

determined based on a percentage of the export price (ad
valorem) or specifically. In the event that the export duty
rate is determined based on ad valorem, the highest rate
is 60% of the export price. On the other hand, if the export
duty rate is specifically determined, the highest rate is set
at a certain nominal value equivalent to 60%.

Generally, the Ministry of Finance periodically issues a

ministerial regulation stipulating the list of goods subject
to export duties and the respective applicable rates.

Furthermore, export duties are calculated using the

following formula:
● Ad valorem
Export Duty = Export Duty Rate x Number of Goods x
Export Price per Unit of Goods x Currency Exchange
Rate
● Specific
Export Duty = Export Duty Rate per Unit of Goods
in Certain Currency Units x Number of Goods x
Currency Exchange Rate

A.2 Export Customs Procedures and Export

Procedures
Exporters are required to declare the goods to be exported
to the Customs and Excise Office at the place of loading
using the Export Declaration/PEB (BC 3.0). The obligation
to submit PEB, however, does not apply to: (i) passengers’
personal belongings; (ii) goods belonging to crew members
of the means of transport; (iii) goods belonging to border-
crossers; or (iv) goods sent by post weighing not more
than 100 kilograms.

PEB is prepared by exporters based on supporting

customs documents, including: (i) invoices; (ii) packing
lists; and other required documents. Next, PEB must be
submitted by the exporters or their power of attorney

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 Indonesian Tax Manual Book 2022

to the customs office of loading no later than 7 days

before the estimated date of export and no later than
before being admitted into the customs area. In respect
of exports of bulk goods, the exporters or their power
of attorney may submit PEB before the departure of the
means of transport. Even though PEB has been submitted,
the exporters may rectify PEB in the event of data errors
insofar as the time limit stipulated in PER-32/BC/2014 as
amended by PER-07/BC/2019 has not been exceeded.

Exporters are also required to comply with the provisions

on export prohibitions and/or restrictions stipulated
by the relevant technical agencies. Next, the exporters
must pay export duty payable at the latest when PEB or
other export customs declarations are registered with the
Customs Office. However, the Minister of Finance may
stipulate exported goods with certain characteristics for
which export duty is paid after PEB is submitted to the
Customs Office. The payment of export duties and the
calculation are carried out by the exporters themselves
(self-assessment).

In summary, export procedures are as follows:

● The exporter/power of attorney submits the PEB
document to the Customs Office of the place of
loading.
● The documents for the exported goods declared in
PEB shall be verified. Furthermore, if the verification
of PEB documents shows that the PEB data is filled
in:
○ Incompletely and/or unaccordingly, a Rejection
Notification Note (NPP) is issued.
○ Completely and accordingly, but includes goods
for which exports are prohibited or restricted
and export requirements have not been fulfilled,
a Notification of Document Requirements Note
(NPPD) is issued.
○ Completely and accordingly, and does not
include goods for which exports are prohibited

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Customs & Excise

or restricted, or includes goods for which

exports are prohibited or restricted but the
export requirements have been fulfilled, and
the exported goods have not been physically
inspected, PEB shall be given a number and
date of registration and an Export Service Note
(NPE) is issued.
○ Completely and accordingly, and does not
include goods for which exports are prohibited
or restricted, or includes goods for which
exports are prohibited or restricted but the
export requirements have been fulfilled, and
the export goods are physically inspected, PEB
shall be given a number and date of registration
and a Goods Inspection Notice (PPB) is issued.

A.3 Facilities
The government through the Directorate General of
Customs and Excise provides a number of facilities and
facilities related to exports and the imposition of export
duties. These facilities include the provision of payment
deferral of export duties for exporters experiencing
financial difficulties. In addition, there are also import
facilities for export (KITE) exemption, KITE drawback and
Small and Medium Industries (IKM) KITE.

Further provisions on the imposition of export duty

and the provisions on export customs can be seen in:
Customs Law; Government Regulation No. 55/2008; MoF
Reg. 145/2007 as amended by MoF Reg. 21/2019; MoF
Reg. 106/2022; MoF Reg. 39/2022 as amended by MoF
Reg. 123/2022; PER-32/BC/2014 as amended by PER-07/
BC/2019; PER No. P-41/BC/2008 as amended by PER-34/
BC/2016; MoF Reg. 122/2017; and MoF Reg. 141/2020.

B. Import Duties
Goods admitted into the customs area are treated as
imported goods and are subject to import duty payable.

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 Indonesian Tax Manual Book 2022

Import duties imposed on imported goods may be

determined based on a percentage of the export price (ad
valorem) or specifically. The majority of imported goods
are subject to ad valorem rates. Meanwhile, specific rates
are only imposed on a small number of imported goods,
such as rice, sugar and some cinematographic products.

Furthermore, import duties are calculated using the

following formula:
● Ad valorem
Import Duty = Import Duty Rate x Customs Value
● Specific
Import Duty = Rate per Unit of Goods x the Number
of Unit of Goods
Some import duty rates are statutory (most favoured
nation) and some are different from the MFN rates. MFN
rates are imposed on all imports that are not covered by
a free trade area agreement (FTA) or other international
treaties or agreements. Imports equipped with a Certificate
of Origin (CoO), but the CoO is not accepted or cancelled
will also be subject to MFN rates. Details of MFN rates are
outlined in the Indonesian Customs Tariff Book (BTKI).

In addition to the most favoured nation/MFN rates, the

Customs Law authorizes the Minister of Finance to set
import duty rates that differ from the MFN rates. These
different tariffs may apply to imported goods subject
to import duty rates based on international treaties or
agreements or commonly referred to as the preferential
rates.

The use of these preferential rates must be equipped

with a CoO. An imported product may obtain a CoO if it
fulfills the rules of origin. The Indonesian government has
entered into many international agreements for the use of
preferential rates. These international agreements include
Asean Trade in Goods (ATIGA), Asean-China FTA (ACFTA),

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Customs & Excise

Asean-Korea FTA (AKFTA), Asean-Australia-New Zealand

FTA (AANZFTA), Indonesia-Australia CEPA (IACEPA) and
D8 FTA. The amounts of preferential import duty rates
are determined separately under a minister of finance
regulation.

Further, import duty rates that are different from MFN

rates may also apply to imported goods carried by
passengers, crew members of means of transport, border
crossers or goods sent by post or by courier services.

In addition to import duties, imported goods may also

be subject to additional import duties. These additional
import duties consist of anti-dumping import duties,
countervailing import duties, safeguard import duties and
discriminatory import duties. As the name implies, this
additional import duty will increase the amount of import
duty that must be paid. In contrast to preferential rates,
their use replaces MFN rates. Imported goods subject to
additional import duties are still required to pay import
duties, either using MFN rates or preferential rates.

B.1 Customs Procedures in the Import Sector

In summary, the flow of customs procedures in the import
sector commences from the arrival of the means of
transport, unloading and stockpiling of imported goods,
import declaration, inspection and release of goods.
Each party involved in the import process has customs
obligations to be fulfilled.

In respect of the arrival of the means of transport, the

carrier must submit the Inward Notice (RKSP) or the
Inward Schedule (JKSP) to the Officials at the destination
Customs Office before the arrival of the means of
transport. In addition, the carrier must also submit a
customs declaration in the form of a manifest of the
imported goods being transported to the Officials at the
destination Customs Office.

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 Indonesian Tax Manual Book 2022

Next, the unloading process may be carried out in the

customs area or other places after obtaining a permit.
Stockpiling, on the other hand, may be carried out in a
temporary stockpiling site (TPS) or other places equivalent
to TPS after obtaining a permit.

These imported goods are also subject to selective

customs inspections. The customs inspection includes
document verification and physical inspection of goods.
Selective inspections include the determination of the
red, yellow, green and main partner (Mita) lines.

Further, imported goods may be released based on a

number of purposes, namely imported for use, temporary
imports, stockpiled in bonded storage places (TPB),
transported to TPS in other customs areas, transited and
transshipped.

The Directorate General of Customs and Excise (DGCE)

provides various import conveniences and facilities,
including trucklossing, rush handling, release of goods with
payment deferral of import duties and taxes on imports
(PDRI). In addition, the government provides government-
borne import duties (DTP) for certain industries as well
as exemptions or relief from import duties for certain
imports.

C. Excise
Excise has always been one of the government’s revenues.
Based on the data from the Ministry of Finance, the
realization of excise revenue in Indonesia throughout
2021 was IDR195,92 trillion, comprising more than 15%
of taxation revenues. As a positive signal, the Ministry of
Finance puts extra effort to reach the revenue target from
excise by IDR203,92 trillion, an increase of 8% from the
previous year’s target.

Notably, the government does not treat excise solely

for fiscal purposes but primarily aims to control the

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Customs & Excise

consumption of certain goods. In the future, excisable goods

will be determined based on the Excise Law. Excisable
goods, in general, have the nature and characteristics that
potentially lead to negative externalities.

The government, therefore, also plans to expand the

scope of excisable objects and provide a clear roadmap
for cigarette excise.

The Indonesian government imposes excise duty on

products such as ethyl alcohol, beverages containing ethyl
alcohol (MMEA), ethyl alcohol concentrate and tobacco
products. The following table details the excise rates that
apply to these products:
Table 21 Excise Rates
Products Excise Rate
Ethyl alcohol IDR20,000/litre
MMEA IDR15,000 toIDR139,000/litre
Ethyl alcohol concentrate IDR1,000/gram
Tobacco products IDR10 to IDR110,000/stick or gram

In further detail, excise on tobacco products are classified

based on their tier and category (see the full regulations
here).
Table 22 Minimum Price and Excise Rate of Tobacco Products
Classification of Minimum
Tobacco Products Factory Excise
No Retail
(IDR)
Type Category Price (IDR)

Machine-made clove I 1,905 985

1 cigarettes (Sigaret Kretek
Mesin/SKM) II 1,140 600

Machine-made white I 2,005 1,065

2 cigarettes (Sigaret Putih
Mesin/SPM) II 1,135 635

1,635 440
Hand-rolled clove cigarettes I
(Sigaret Kretek Tangan/ 1,135 345
3 SKT) or hand-rolled white II 600 205
cigarettes (Sigaret Putih
Tangan/SPT) III 505 115

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For electric cigarettes (e-cigarettes) and other tobacco

products, the following excise is applicable (see the full
regulations here).
Table 23 Excise Rates for E-cigarettes and Other Tobacco Products
Minimum Retail
Excise
Price
No Tobacco Product Type
Value Value
Unit Unit
(IDR) (IDR)
E-cigarette:
Solid e-cigarette 5,190 Per gram 2,710 Per gram
Liquid e-cigarette with Per Per
1 785 445
open system mililitre mililitre
Liquid e-cigarette with Per Per
35,250 6,030
closed system cartridge mililitre
Other Tobacco Products:
Molasses tobacco 215 Per gram 120 Per gram
2
Snuff tobacco 215 Per gram 120 Per gram
Chewing tobacco 215 Per gram 120 Per gram

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Fiscal Incentives

Fiscal Incentives

A. Tax Holiday
Up to 100% corporate income tax exemption may be
given to investments that fulfil certain criteria of pioneer
industries. The application may be submitted through the
Online Single Submission (OSS) (learn more about OSS
here). More information on the regulation can be found
here.
Table 24 Tax Holiday Regime in Indonesia
Regulation Mini Tax Holiday Full Tax Holiday

50% for new invest-

% corporate 100% for new investment
ment IDR100-Rp500
tax reduction minimum IDR500 billion
billion

IDR500 billion – 1
5
trilllion
Period of tax 7 IDR1–5 trillion
reduction 5
10 IDR5–15 trillion
(years)
15 IDR15-30 trillion
20 > IDR30 trillion
25% corporate tax 50% of corporate tax
Period of
reduction for the reduction for the next 2
transition
next 2 fiscal years fiscal years
Applicable 18 sectors of pioneer industry and other sectors that
industry fulfil the criteria of a pioneer industry

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B. Tax Allowances
Capital investments, either new or spin-offs of existing
businesses in certain sectors and/or regions that fulfill
certain criteria are entitled to the following facilities:
● Reduction of taxable income by 30% of the capital
investment for 6 years (5% reduction each year).
● Accelerated depreciation up to 200% for tangible
fixed assets and accelerated amortization for
intangible assets.
● Loss carry-forward for more than 5 years (maximum
10 years).
Tax allowances may be given to investments that fulfil
certain criteria. The application may be submitted through
the Online Single Submission (OSS). More information on
the regulation can be found here. The most recent update
about the facility can be accessed here.

C. Investment Allowances
Certain capital investments are eligible for taxable income
amounting to 60% of the capital investments for 6 years
(10% of reduction each year). The investments must be in
the form of fixed assets that are used for main business
activities that produce certain goods in certain regions
and employ more than 300 Indonesian workers. Other
requirements and further information can be found here.

D. Supertax Deduction
Supertax deduction may be given for activities with certain
characteristics as follows.

Deductibility of a maximum of 300% may be given for

costs incurred for certain research and development
activities performed in Indonesia. The activities should
aim for new inventions, based on original hypotheses,
contain uncertainties, be well-planned and budgeted and
should be aimed at creating transferrable or exchangeable

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Fiscal Incentives

products. Analysis of incentives for research activities can

be accessed here.

Deductibility of a maximum of 200% may be given for costs

incurred for vocational activities. They include working
practice activities, internships and/or learning processes.
Other requirements can be found here.

E. Dividend Exemption
Dividend income may be tax exempt, whether it is
received from within or outside Indonesia. The exemption
treatment is given on the condition that the dividends are
invested domestically for at least three years (the list of
applicable investment instruments can be found here). If
the dividends are received domestically, only the amount
invested domestically will be exempt from income tax.
The remaining amount will be taxed pursuant to prevailing
regulations.

The same treatment is applicable for foreign dividends,

where the shares are traded on the stock exchange in
a particular country. If they are not listed on the stock
exchange, the total amount of invested dividends should
be at least equal to 30% of the taxpayer’s income after
tax. Should the amount of investment fall short of the
threshold, the gap will be taxed according to the laws.
On the contrary, if the investment amount exceeds the
requested level, the whole dividends are exempt from
income tax.

Tax-exempt dividends should be reported by taxpayers

afterwards and included in the tax returns.

F. VAT Exemption for Certain Strategic

Taxable Goods
Certain imports or domestic procurement of strategic
taxable goods may be VAT exempt. They include:

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 Indonesian Tax Manual Book 2022

● Machinery and factory tools.

● Goods that are generated from business activities
in the marine and fishery sectors.
● Untanned raw skins.
● Certain livestock.
● Seeds and/or seeds from agricultural, plantation,
forestry or fishery.
● Animal feeds.
● Raw materials for animal feeds.
● Craft raw materials in the form of granulated silver
and/or silver bars.
● Liquified natural gas.
Information on how to obtain the facility can be read here.

G. Foreign Income Exemption for Certain

Expatriates
Expatriates constituting resident tax subjects (subjek pajak
dalam negeri/SPDN) may obtain tax exemption for their
foreign-source income for 4 years. They have to be either
foreign workers who hold certain positions or researchers
with expertise in certain knowledge, technology, and/or
mathematics. The list and procedures can be found here.

Analysis of foreign income exemption for certain

expatriates can be accessed here.

H. Special Economic Zones

Businesses performed in Special Economic Zones
(Kawasan Ekonomi Khusus/KEK) may obtain the following
tax incentives:

● Tax holiday.
● Tax allowance.
● Non-collectible Article 22 Income Tax for import
activities.
● Non-collectible VAT and Sales Tax for Luxury Goods.

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Fiscal Incentives

● Duty exemption and other non-collectible Taxes for

import activities, and/or
● Excise exemption.
More information, including how to obtain the facilities can
be found here. The requirements to obtain the facilities
may be submitted through certain applications provided
by the government.

I. Tax Facilities for Free Trade Zones &

Free Port Area
Transfer of goods within or into the free trade zone and
free port (Kawasan Perdagangan dan Pelabuhan Bebas/
KPBPB) are entitled to the following tax facility:
● VAT exemption.
● Non-collectible VAT and Sales Tax on Luxury Goods.
● Excise exemption.
More info about the facilities can be found here.

The most updated news on tax incentives can be followed

here.

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 Indonesian Tax Manual Book 2022

Stamp Duty

Stamp duty is a tax on documents. In response to

information technology developments, the forms of
documents subject to stamp duty are not only printed
documents. In the recent regulation, documents subject
to stamp duty include handwritten, printed or electronic
form documents, which may be used as evidence or
information.

Provisions on stamp duty are regulated under a number of

regulations, including Law No. 10 of 2020 concerning Stamp
Duty (Stamp Duty Law); Minister of Finance Regulation
No. 4/PMK.03/2021; Minister of Finance Regulation No.
133/PMK.03/2021; and Minister of Finance Regulation No.
134/PMK.03/2021.

Broadly speaking, stamp duty is imposed on two types

of documents, namely: (i) documents prepared as a tool
to explain a civil incident; and (ii) documents used as
evidence in court. A detailed explanation of the types of
documents subject to stamp duty payable can be found
in this article.

Not all documents, however, are subject to stamp duty.

The Stamp Duty Law stipulates a number of documents
that are not subject to stamp duty. In addition, the Stamp
Duty Law provides the stamp duty exempt facility for
certain documents. A detailed explanation of the stamp
duty exempt facility can be found in this article.

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Stamp Duty

Stamp duty is imposed once for each document at a fixed

rate of IDR10,000. Although it is permanent, under the
Stamp Duty Law, the stamp duty may increase or decrease
according to national economic conditions and the people’s
income levels. Moreover, the government may also set
different fixed rates for certain documents to implement
government programs and support the implementation of
monetary and/or financial sector policies. The government
may revise the stamp duty rate after consulting with the
Commission in charge of finance and banking of the House
of Representatives of the Republic of Indonesia.

The time when stamp duty becomes payable may vary

depending on the type of document. The Stamp Duty Law
classifies when stamp duty becomes payable based on 5
momentums, as follows:
Table 25 The Times When Stamp Duty Becomes Payable
When Stamp Duty
Document Type
Becomes Payable
Agreement letters and copies
thereof; notarial deeds and the
Documents are affixed with a
tenor, copy and extract thereof;
signature
conveyancer deeds and the copy
and extract thereof
Securities in whatever name and
form; documents of securities
Documents are completed transactions, including documents
of futures contract transactions, in
whatever name and form
Agreement letters, certificates,
statement letters or other similar
Documents are submitted to the letters and copies thereof; auction
party for whom they are prepared documents; documents stating
an amount of money above IDR5
million
Documents used as evidence in
Documents submitted to the court
court
Civil documents that are prepared
Documents used in Indonesia
overseas
Source: Stamp Duty Law

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 Indonesian Tax Manual Book 2022

In addition to when stamp duty becomes payable, the

Stamp Duty Law stipulates parties liable to stamp duty.
Parties liable to stamp duty are determined by the
beneficiary of the documents. For documents that are
prepared unilaterally, stamp duty becomes payable to the
party receiving the document.

For documents prepared by two or more parties, on

the other hand, stamp duty becomes payable to each
party for the documents they receive. However, special
exceptions apply to documents in the form of securities
because stamp duty becomes payable to the party issuing
the securities, instead of the recipient.

Further, for documents used as evidence in court, stamp

duty becomes payable to the party submitting the
documents. For documents prepared overseas and used
in Indonesia, stamp duty becomes payable to the party
constituting the beneficiary of the documents.

Parties liable to stamp duty may pay stamp duty payable

using a stamp duty or tax payment slip (SSP). In further
detail, three types of stamp duties may be used to settle
stamp duty payable, namely: (i) adhesive stamps; (ii)
electronic stamps; or (iii) stamp duties in other forms as
stipulated by the Minister of Finance, namely a stamp made
using a digital stamping machine, computerized system,
printing technology and other systems or technologies.

Stamp duty may be paid using SSP in the event that the
mechanism for paying stamp duty using a stamp is deemed
inefficient or even impossible. For example, documents
that will be used as evidence in court in large quantities,
the payment for which is through post-dated stamp duty.

Each stamp duty payment method has its own procedures.

Stamp duty is paid using an adhesive stamp by affixing
an adhesive stamp that is valid, in effect and has never
been used. Further, stamp duty payment using an
electronic stamp duty may be performed by accessing the
e-meterai.co.id webpage.

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Stamp Duty

Payment of stamp duty using stamp duties is subject to

prior approval to produce stamp duties in other forms.
Details of the procedures for the settlement of stamp
duty can be found in MoF Reg. 134/2021.

Another provision to be taken into account in respect of

stamp duty is post-dated stamp duty. Post-dated stamp
duty is necessary if there are documents that will be used
as evidence in court or documents whose stamp duty is
not paid or is underpaid.

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 Indonesian Tax Manual Book 2022

Local Taxes

To efficiently allocate national revenues through the

relationship between the central and local governments,
the government has issued Law No. 1 of 2022 regarding
Financial Relations between the Central Government and
Local Governments (UU HKPD).

UU HKPD has been issued to improve the existing

provisions, namely Law No. 33 of 2004 concerning Fiscal
Balance (UU 33/2004) and Law No. 28 of 2009 regarding
Local Taxes and Charges (UU 28/2009). Primarily, it is
aimed to reinforce local tax revenue performance and
increase regions’ fiscal capacity. The study on the local
tax efforts and performance can be accessed here.

In general, three changes are enshrined in UU HKPD.

First, the simplification of the local tax structure. One
of the simplifications is evident in the merger between
the restaurant tax and hotel tax into the tax on certain
goods and services. This effort aims to optimize local tax
collection and streamline the costs that must be borne by
taxpayers in carrying out their tax obligations.

Second, the introduction of the surcharge tax scheme. This

mechanism allows local governments to collect additional
taxes on one tax base. This scheme applies to three types
of taxes, namely motor vehicle tax, motor vehicle duty
and non-metallic mineral and rock tax. The most recent
information concerning surcharges can be followed here.

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Local Taxes

Third, the introduction of a new type of tax. The UU

HKPD introduces a new type of tax, the heavy equipment
tax. This tax has been introduced as a follow-up to the
mandate of the Constitutional Court Decision No. 15/PUU-
XV/2017. More information about heavy equipment tax can
be found here.

UU HKPD also stipulates the types of local taxes and their

applicable rates (regional regulations may be accessed
here). Applicable local taxes may vary across regions,
but the scope and applicable rates must comply with the
provisions on the ceiling set out in the UU HKPD. A more
comprehensive analysis of how UU HKPD may direct the
future of local taxes can be read here in chapter 10.

Applicable local taxes may vary across regions, but the

scope and applicable rates have to be within the scope of
Table 8 and Table 9.
Table 26 Local Taxes at the Provincial Level
Tax Type Rate
Motor vehicle tax 1,2 - 6%/
(Pajak Kendaraan Bermotor/PKB) 2 - 10%*
Transfer of motor vehicle title fee
12%/ 20%*
(Bea Balik Nama Kendaraan Bermotor/BBNKB)
Heavy equipment tax
0,2%
(Pajak Alat Berat/PAB)
Motor vehicle fuel tax
10% - 50%
(Pajak Bahan Bakar Kendaraan Bermotor/PBBKB)
Surface water tax
10%
(Pajak Air Permukaan/PAP)
Cigarette tax
10%
(Pajak Rokok)
Non-metal mineral and rock tax surcharge
25%
(Opsen Pajak Mineral Bukan Logam dan Batuan/MBLB)
*) The higher rates are applicable for provincial regions that are not divided
into autonomous cities/municipalities.

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 Indonesian Tax Manual Book 2022

Table 27 Local Taxes at the Regency/Municipality Level

Tax Type Rate
Property tax (rural & urban)
(Pajak Bumi dan Bangunan Perdesaan dan Perkotaan/ 0,5%
PBB-P2)
Acquisition duty on rights to land and buildings
5%
(Bea Perolehan Hak Atas Tanah dan Bangunan/BPHTB)
Certain goods and services tax
1,5% - 75%
(Pajak Barang dan Jasa Tertentu/PBJT)
Advertisement tax
25%
(Pajak Hiburan)
Groundwater tax
20%
(Pajak Air Tanah/PAT)
Non-metal mineral and rock tax
20% / 25%*
(Pajak Mineral Bukan Logam dan Batuan/PMBLB)
Swiftlet nest tax
10%
(Pajak Sarang Burung Walet)
Motor vehicle tax surcharge
66%
(Opsen Pajak Kendaraan Bermotor/PKB)
Transfer of motor vehicle title fee surcharge
66%
(Opsen Bea Balik Nama Kendaraan Bermotor/BBNKB)
*) The higher rates are applicable for provincial regions that are not divided
into autonomous cities/municipalities.

Local governments have two years from the promulgation

of the UU HKPD to implement changes and adjustments to
the new provisions. Thus, local governments have to revise
their regional regulations by 5 January 2024. Onwards, we
may also expect local governments to provide more tax
incentives targeted to improve the economy and social
welfare.

110
 Contacts

Darussalam Danny Septriadi

darussalam@ddtc.co.id danny@ddtc.co.id

Areas of Expertise: Areas of Expertise:

All Taxes All Taxes

David Hamzah Damian Romi Irawan

david@ddtc.co.id romi@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Corporate Income Tax, Corporate Transfer Pricing Documentation,
Restructuring, Tax Dispute and Transfer Pricing Policy Design,
Litigation Transfer Pricing Control Framework,
Business Restructuring

B. Bawono Kristiaji Yusuf Wangko Ngantung

kristiaji@ddtc.co.id yusuf@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Tax Policy and System Design, Tax International Tax, Arbitration, Cross
Advisory, International Tax and Border Project Management, Dispute
Transfer Pricing Resolution, MAP and APA
 Deborah Ganda C. Tobing
deborah@ddtc.co.id christian@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Mergers and Acquisition, Indirect International Tax, Financial
Taxes, Tax Dispute and Litigation Transactions, Business
Restructuring, Tax Litigation

R. Herjuno Wahyu Aji Anggi P. I. Tambunan

herjuno@ddtc.co.id anggi@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Transactional Tax, Valuation for International Tax, Indirect
Tax Purpose, Tax Dispute, Tax
Taxes
Litigation

Cindy Kikhonia Febby Veronica Kusumawardani

cindy@ddtc.co.id veronica@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Transfer Pricing Controversy, Transfer Pricing Controversy,
Litigation and Audit Support, Litigation and Audit Support,
Dispute Resolution Dispute Resolution
 Rinan Auvi Metally Khisi Armaya Dhora
auvi@ddtc.co.id khisi@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Corporate Income Tax, Tax Indirect Tax, International
Dispute and Litigation Tax, Tax Advisory and Risk
Management

Denny Vissaro Pretty Wulandari Erika

denny@ddtc.co.id pretty@ddtc.co.id erika@ddtc.co.id

Areas of Expertise: Areas of Expertise: Areas of Expertise:

Tax Facility Support, Tax Transfer Pricing Issues in Specific Individual Income Tax,
Advisory, Local Taxes Industry: Automotive, Electronics, Corporate Income Tax, Tax
Pharmacy, Logistics, Consumer Due Diligence
Goods

M. Putrawal Utama Flouresya Lousha

putrawal@ddtc.co.id flouresya@ddtc.co.id

Areas of Expertise: Areas of Expertise:

Transfer Pricing Issues in Specific Transfer Pricing Issues in Specific
Transactions: Financing, IP Licensing, Industry: Commodity, Oil and Gas,
Cost Sharing Arrangement Chemical, Digital and Technology,
Media and Telecommunications
 Overview

Bearing the officium nobile mandate inherent in the tax

consultant profession, DDTC consistently focuses on
how to promote inclusive tax education and a better tax
system for all elements of society. We hereby present
this basic tax manual, in particular, to provide guidelines
for external parties keen on the Indonesian tax system,
either in respect of investing or doing business in
Indonesia, and in the long run, to improve tax literacy.

Penned by authors adept at their respective fields, this

tax pocket manual book outlines tax-related key issues
in the Indonesian tax system as of July 2022. Engaging
topics are concisely reviewed therein, ranging from the
survey of recent developments, excise, fiscal incentives,
local taxes, corporate income tax, withholding tax, value
added tax, international taxation to transfer pricing.

The information contained therein constitutes general

elucidation that refers to Indonesia’s statutory provisions
and regulations. The contents of this manual, however,
are not binding and subject to the reader’s circumstances
or context. Thereby, further professional advice is
required for any possible issue.
Menara DDTC
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Phone: +6221 2938 2700
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Fax: +6231 8252 0999

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