Opening a company in Indonesia comes with several requirements for foreign investors who must also consider the tax implications for which they can get help from our accountants in Indonesia. For this reason, getting better acquainted to the taxation system is a must before starting the company registration procedure in Indonesia.
In order to know as much as possible about the tax system, many foreign citizens request advice from our accountants in Indonesia even before moving here. We want to help our clients as much as possible, so we have prepared packages which include both accounting and company formation services in Indonesia.
| Quick Facts | |
|---|---|
| Accounting principles | Indonesian Generally Accepted Accounting Principles (GAAP) |
|
Auditing rules |
Only for certain types of companies (such as public companies) |
|
Taxable income |
– business income, – asset sales gains, – passive income |
| Corporate tax rate | 22% |
| Dividend taxation |
– no witoholding tax for dividend payments made by an Indonesian company to a resident company; – a 10% final withholdign tax can apply for dividends paid to an Indonesian resident individual, in some cases |
| Losses |
Tax losses can be carried forward for five years; subject to conditions |
| Tax year |
The calendar year |
| Consolidated returns |
Not permitted |
| Annual filing | Within 4 months from the end of the accounting year in most cases |
| Payment | The annual corporate income tax payments are made before the tax return is filed |
| Penalties for late/incomplete tax filing or underpayment |
Charged at variable rates |
| VAT registration threshold |
For delivering goods/services exceeding IDR 4.8 billion in one fiscal year |
| VAT rates |
11% (as of April 2022) |
| VAT filing |
Monthly |
| VAT payment |
Before filing the monthly VAT return |
Table of Contents
Why do I need accounting services in Indonesia?
If you want to open a company in Indonesia, you first know that this small country imposes a larger number of taxes compared to other countries. Even if the levies are not imposed at very high rates, you should consider some tax minimization solutions which can be offered by our company registration agents in Indonesia.
The opening of a company in Indonesia should be a good reason to ask for accounting services, especially for tax planning reasons. For example, the government offers various incentives when investing in certain special free zones or industries.
Please watch our video on accounting services in Indonesia:
If you are interested in immigration to Indonesia, our team can give you details about the taxes.
What are the accounting services available in Indonesia?
Our accounting services cover a wide range of needs for those who come to Indonesia. Among these are:
- the above-mentioned tax minimization and planning solutions;
- payroll and HR services for companies;
- tax filing services with the Directorate Generate of Taxes;
- drafting financial statements;
- accounts payable and accounts receivable services;
- VAT registration and filing.
Our accountants in Indonesia can offer information on all the financial services available in Indonesia.
Working with a trusted team of lawyers in Indonesia, in addition to your accountants, will allow you to rest assured that your business is fully compliant. We offer solutions for business and corporate issues, answer questions about labour law or immigration, as well as offer services for litigation. Our law firm focuses on delivering tailored solutions for each of our clients.
Separately, our immigration lawyers in Indonesia are able to answer your questions about taxation, once you derive income from the country.
A few facts on the taxation system in Indonesia
We mentioned earlier that Indonesia imposes several taxes. When it comes to the taxation of individuals the income tax is the most important one. However, companies in Indonesia must pay the following taxes:
- the corporate tax which is levied on the business profits of companies;
- the sales tax which applies to goods imported or delivered in Indonesia;
- the value-added tax (VAT) which is applicable to goods and services sold in Indonesia;
- the customs and excise taxes, however, Indonesia has signed various trade agreements which reduce these taxes;
- the withholding taxes applicable on incomes from dividend payments, interests and royalties.
Tax rates in Indonesia
The following tax rates apply in Indonesia:
| Tax | Rate |
| Corporate tax | 1%-25% |
| Personal income tax | 5%-30% |
| Withholding tax | 2%-20% |
| Value added tax | 20% |
Foreign nationals who are interested in immigration to Indonesia can find out more details about the personal income tax from our team of accountants in Indonesia.
Tax incentives in Indonesia
The following tax incentives are available for foreign investors and companies in Indonesia:
- companies can benefit from various tax concessions and incentives;
- various holiday tax benefits are also available for companies;
- foreign companies with branches can also benefit from tax cuts when reinvesting the profits of their branches;
- corporate tax reductions for small companies with an annual income below 5 million USD.
For full information on the taxation system applicable in Indonesia, please contact our accountants in Indonesia. We can also assist with the company and tax registration procedures in Indonesia.
Our immigration lawyers in Indonesia can help answer any questions about your relocation to the country.