Corporate Taxation in Indonesia

This is a brief overview of the calculation and payment of corporate tax in Indonesia.

1. Indonesia operates a self-assessed taxation system that is similar to many other countries.
2. Rates are stepped and top out at 30% of taxable income.
3. Expenses are deducted from revenue to arrive at taxable income.
4. Indonesian GAAP (Generally Accepted Accounting Principles) is very similar to those of other countries.
5. Revenues are revenues in any language and should be declared and can be subject to tax audit. Reimbursements are not considered as revenue, but any mark-up will be.
6. Expenses are normal operating expenses of a company but there are some expenses that cannot be included for tax purposes:
7. Fringe Benefits (What the company pays on behalf of the employee that the employee would normally pay for himself/herself).
8. Fines and interest for late reporting/payment of taxes.
9. Vacation airfares, housing and schooling for expatriate staff and families.
10. There are also some strange interpretations by the tax office on other expenses that need knowledge of the relevant rules to argue against.
11. Taxes are paid throughout the year to maintain even flow of funds into the State treasury and maintain a reasonably even cash flow for the company.
12. One twelfth of the tax due for the previous year is paid each month in the current year less corporate tax withheld by third parties.
13. When you import into Indonesia there is corporate tax withheld by Customs and paid to the Tax Office on your behalf.
14. When customers pay you for services there is corporate tax withheld and paid to the Tax Office on your behalf.
15. Likewise when you make payments to your suppliers there may well be corporate tax that you withhold and pay on behalf of your supplier.
16. These rates of withholding tax vary dependent upon internal Indonesia, external Indonesia and what type of service/supplies was concerned.
17. The aim of the company is to finish the year in a tax underpayment situation as to receive a tax refund or carry forward means a tax audit must be performed. Good planning ensures this.
18. On top of corporate tax there is a wide-ranging VAT/GST system mainly rated at 10% and some items will also attract a luxury sales tax. Exports are rated 0% but refunds must undergo a field audit by the tax office.
19. VAT/GST allows for monthly offsets of inputs over outputs and excess inputs can be carried forward to the subsequent months. Or a refund claimed.
20. All tax payments are made via the banking or the postal system to receive credit for them.
21. Proof must be given or received where withholding tax is involved to obtain the credit.
22. Of course there are variations in taxes within certain industries with tax facilities that are too detailed to be listed here.
23. Indonesia has Double Tax Treaties with a number of countries and with good planning your firm may well be able to utilize available benefits.
24. Tax withheld by Indonesian resident companies to overseas will be treated as prepaid tax in the recipient country.

How to find a tax consultant

Most of the large international accounting firms have staff that can help you to prepare your taxes, both Indonesian and foreign.

Expatriate Associatoins in Indonesia

Just as in your home country, joining a business association is a great way to learn more about what is going on in the local business community and to meet colleagues. In Jakarta, there are several well-established country-specific business associations with memberships of hundreds of business people.

Staying informed, learning about how Indonesian government rulings are affecting business, meeting new people and widening your business contacts is perhaps even more important in a foreign posting where the conditions that affect business will be unknown to a newcomer. Becoming involved and setting up a good network will benefit you in many ways.

Below is a listing of contact information for expatriate business associations. We encourage newcomers to contact their national association and learn about what services they offer.

American Chamber of Commerce in Indonesia (AmCham)
World Trade Center, 11th floor
Jl. Jend. Sudirman Kav. 29-31
Jakarta Pusat, Indonesia 12920
Tel. (62-21) 526-2860
Fax (62-21) 526-2861
Email info@amcham.or.id
Website www.amcham.or.id
Joe Bartlett, President
Mark Smith, Executive Director
Membership - 400

Indonesia-Australia Business Council (IABC)
World Trade Center, 11th Floor
Jl. Jend. Sudirman Kav. 29-31
Jakarta 12920 Indonesia
Tel (62-21) 521-1540
Fax (62-21) 521-1541
Email secretariat@iabc.or.id
Website Indonesia Australia Business Council (IABC)
Mr. S.D. Darmono, President
Mr. Vic Halim, Executive Director
Membership - 200

British Chamber of Commerce in Indonesia (BritCham)
Wisma Metropolitan I F/15
Jln. Jend. Sudirman Kav. 29 - 31
Jakarta 12920
Tel. (62-21) 5229453
Fax (62-21) 5279135
Email bisnis@britcham.or.id
Website www.britcham.or.id
Chairman : Mr. Malcolm Llewollyn
Executive Director: Chris Wren
Business Development Manager: Lukas Rahmidin
Membership - 800

Indonesia Canada Chamber of Commerce (ICCC)
Sampoerna Strategic Square
South Tower 17th floor
Jl. Jend. Sudirman Kav 45
Tel. (62-21) 2555-2243
Fax (62-21) 5795-1177
Email ediccc@cbn.net.id, iccc@cbn.net.id
Website www.iccc.or.id
Mr. David Beynon – President ICCC
Vita Antasari – Executive Director

Danish Business Council
Jl. Kencana Permai V no 15
Pondok Indah, Jakarta Selatan
Tel. (62-21) 750-3204
Email michael@wivvies.com
Website www.dba.co.id
Jakob Friis Sorensen and Michael Lundager
Membership -

Finnish Business Council
Embassy of Finland, Menara Rajawali, 9th floor
Jl Mega Kuningan, Lot 5.1, Kuningan, 12950 Jakarta
Tel. +62-21-576 1650
Email sanomat.jak@formin.fi
Website www.finland.or.id
President Risto Poskiparta
Members: 23

Indonesian French Chamber of Commerce and Industry (IFCCI)
Jalan Wijaya II No. 36
Kebayoran Baru, Jakarta 12160
Tel. (62-21) 739-7161
Fax (62-21) 739-7168
Email contacts@ifcci.com
Website www.ifcci.com
President: Mr. Alain-Pierre Mignon
Director: Nora Guitet
Membership - 130

German Indonesian Chamber of Commerce & Industry (EKONID)
Jl. H. Agus Salim No. 115
Jakarta 10310 Indonesia
(P.O. Box 3151/JKT, Jakarta 10031)
Tel. (62-21) 315-4685
Fax (62-21) 315-5276
Email info@ekonid.or.id
Website www.ekonid.com or www.ekonid.org
Mr. Jan Rönnfeld, Director
Membership - 530

Economic Association of Indonesia and India (ECAII)
Intarti (Iin)
c/o PT Tripar Multivision Plus
Komplek Perkantoran Roxy Mas Blok C2 No. 27-34
Jln. K.H. Hasyim Ashari Kav. 125B
Jakarta Pusat – 10150
Tel. +62-21-6335050 Ext 219, +62-21-6324329
Fax +62-21-6324370
Website www.ecaii.org
Chairman Marzuki Usman
Membership - 80 Corporate Members

European Business Chamber of Commerce in Indonesia (Eurocham)
World Trade Center, 8th Floor
Jl. Jend. Sudirman Kav. 29-31
Jakarta 12920
Phone (62 21) 521-1650
Fax (62 21) 521-1651
Email info@eurocham.or.id
Website www.eurocham.or.id
President, Patrick Jonathan

Italian Business Association Indonesia (IBAI)
Wisma BRI II, 15th Floor, Suite 1501
Jl. Jend. Sudirman No. 44-46
Jakarta 10210 Indonesia
Tel. +62 (21) 571-3540
Fax +62 (21) 571-9013
Email luigicarlo.gastel@pirelli.com
Dr. Luigi Carlo Gastel, President

Japan External Trade Organization (JETRO)
Summitmas I, 6th Fl.
Jl Jen. Sudirman Kav. 61-62
Jakarta 12190 Indonesia
Tel. (62-21) 520-0264 / 5251-3650
Fax (62-21) 520-0261
Website www.jetro.or.id
Mr. Kusaoke Sadonoobu
Membership -

Korea Trade Center (KOTRA)
Wisma GKBI, 21st Floor, Suite 2102
Jl. Jend. Sudirman Kav. 28
Jakarta 10210
Tel. 62-21-574-1522
Fax 62-21-572-2187, 572-2204
Email: kotrajkt@kotra.or.id
Website www.kotra.or.id
Mr. Kim Byung Kwon, Director General

Indonesian-Netherlands Association (INA)
Indonesian-Benelux Chamber of Commerce
Menara Jamsostek, Tower A - 20th floor, Room 2002
Jl. Jend. Gatot Subroto No. 38
Jakarta 12710
Tel. (62-21) 5290-2177
Fax. (62-21) 5290-2178,
Email ina@ina.or.id
Website www.ina.or.id
Mr. Elmar Bouma, Director
Membership -

Indonesian Norwegain Business Council
c/o Tirta Samudera Caraka
Cordova Tower, Lt. 2
Jl. Pasir Putih Raya Blok E No. 3
Ancol - Jakarta Utara 14430
Tel. 62-21-645 7624
Fax 62-21-645 7628
Email inbc_sec@ inbc.or.id
Website www.inbc.or.id
Mr. Tor Fjæran, President
Membership -

Swedish Business Association in Indonesia
Swedish Business Association c/o Embassy of Sweden
Menara Rajawali, 9th floor 3, Mega Kuningan Lot #5,1
Kawasan Mega Kuningan Jakarta 12950
Fax (021) 4261033
Email michael_olsson@bmolsson.net
Website www.sba.or.id
Mr. Michael Olsson, Secretary
Membership - 36 Members

Taiwan Business Club
Jl Raya Kelapa Hibrida Block QH
Kelapa Gading
Jakarta 14240 Indonesia
Tel. (62-21) 451-3525
Fax (62-21) 451-3524
Email tbcjkt@indosat.net.id
Mr. Frank Lee, Director
Membership -
Indonesian Business Associations Overseas

American-Indonesian Chamber of Commerce (AICC)
317 Madison Ave., Suite 1619
New York, NY 10017 USA
Tel. (212) 687-4505
Fax (212) 687-5844
Email aiccny@bigplanet.com
Website www.aiccusa.org
Mr. Wayne Forrest, Executive Director
Membership - 195

Australia Indonesia Business Council (AIBC)
Website www.aibc.com.au

Indonesia New Zealand Business Community
Website www.indonz.com