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EY
Mail address:
P.O. Box 1973
Jakarta 10019
Street address:
Indonesian Stock Exchange Building
Tower 1, 12th to 14th Floors
Jl. Jend. Sudirman Kav. 52-53
Indonesia Jakarta 12190
Executive contacts
Bambang Suprijanto
Kartina Indriyani
Immigration contacts
Kartina Indriyani
Vera Widiawati
A. Income tax
Indonesia
+62 (21) 5289-5000
Email: bambang.suprijanto@id.ey.com
+62 (21) 5289-5000
Email: kartina.indriyani@id.ey.com
+62 (21) 5289-5000
Email: kartina.indriyani@id.ey.com
+62 (21) 5289-5292
Email: vera.widiawati@id.ey.com
Who is liable. In general, Indonesian-resident taxpayers are subject to tax on worldwide income. Nonresidents are subject to tax on Indonesian-source income only. Diplomats and representatives of certain international organizations are excluded from Indonesian tax if the countries they represent provide reciprocal exemptions.
Indonesian citizens or foreign citizens are considered resident for tax purposes if they are present in Indonesia for more than 183 days within a 12-month period or if, within the calendar tax year, they reside in Indonesia with the intent to stay.
Foreign citizen individuals who are resident taxpayers in Indonesia will be taxed only on Indonesian-source income for the four years after becoming a tax resident if they possess certain expertise.
Foreign individuals with certain expertise include the following:
• Foreign workers who are in certain professions and have satisfied the Ministry of Manpower requirement to employ foreign workers
• Foreign researchers as appointed or determined by the Ministry of Research and Technology or the Head of the National Research and Innovation Agency (Badan Riset dan Inovasi Nasional, or BRIN)
Twenty-five professions could be eligible for this exemption, mostly as experts in the areas of science, engineering, and/or mathematics, and include the following:
• Chemical experts (International Standard Classification of Occupation [ISCO] code 2113)
• Geology and Geophysics expert (ISCO code 2114)
• Chemical engineering expert (ISCO code 2145)
considered to be final. The gross turnover includes a local branch’s gross income, except for income from outside Indonesia.
An individual taxpayer with a gross turnover of less than IDR4.8 billion per year is exempted from final tax on gross income up to IDR500 million.
The following types of income are excluded from this final tax imposition:
• Income received or earned by individual taxpayers from independent personal services (see below)
• Income received or earned abroad whose taxes are payable or paid abroad
• Income that has been subject to final income tax under provisions of separate tax laws and regulations
• Income that is excluded as a tax object
Business income covered by the final tax regime does not include income from independent personal services, such as services provided by lawyers, accountants, medical doctors, notaries and insurance agents.
The following taxpayers are excluded from this final tax imposition:
• Taxpayers who choose to be subject to income tax based on the normal tax rates
• Corporate taxpayers in the form of limited partnerships or firms formed by several individual taxpayers who have special expertise in providing services similar to services in connection with independent personal services as described above
• Corporate taxpayers that obtain income tax facilities
• Taxpayers in the form of permanent establishments
Taxpayers qualifying for a different final tax regime (for example, construction companies) are not eligible for this 0.5% final tax.
Income derived by qualifying taxpayers other than business income that is subject to this 0.5% final tax, is taxed according to the prevailing tax rules.
The maximum period of imposition of the final income tax is the following:
• Seven tax years for individual taxpayers
• Four tax years for taxpayers in the form of cooperative bodies, partnerships or firms
• Three tax years for corporate taxpayers in the form of a limited liability company
The period referred to in the paragraph above begins in the tax year when the taxpayer is registered for taxpayers who registered since the applicable government regulation was issued. For taxpayers who registered before the issuance of the government regulation, the period begins in the tax year of issuance of the government regulation.
Taxation of employer-provided stock options. In general, employerprovided stock options are not taxable to an individual at the time of grant. At the time of exercise, if the exercise price paid by
Rates. The following are the tax rates for individuals.
Above 5,000,000,000 35 —
If a resident individual does not have a required Tax Identification Number, the tax rates for withholding tax on employment income are increased by 20%. As a result, the rates range from 6% to 42%.
The effective tax rate (Tarif Efektif Rata-rata, or TER) is applied to calculate employee withholding income tax by the employer for the period of January to November or the month before the last working period. Monthly TER ranges from 0% to 34%, calculated based on monthly gross income and categorized based on the marital status and dependents as of the beginning of tax year. The progressive tax rates on the total annual income are used for the tax calculation for December or the last working period of the employee.
The following final withholding tax rates apply to termination pay.
First 50,000,000 0
0 Next 50,000,000 5 2,500,000 2,500,000 Next 400,000,000 15 60,000,000 62,500,000
Above 500,000,000 25 —
The following final withholding tax rates apply to lump-sum payments of pensions.
First 50,000,000 0 0 0
Above 50,000,000 5 —
Nonresident taxpayers are subject to tax at a flat rate of 20% on all Indonesian-source income.
Credits. If foreign non-employment income is already taxed in the country in which it arises, a foreign tax credit is allowed in computing the Indonesian tax. The credit equals the lesser of the amount of income tax that should be payable, paid or withheld overseas by considering the provision in tax treaty, foreign tax paid or payable, and the Indonesian tax applicable to that income.
Relief for losses. In general, losses may be carried forward for up to five years.
A spouse’s business losses may be offset against the business profits of the other spouse.
B. Other taxes
Duty on the acquisition of land and building rights. In general, a transfer of land and building rights is subject to duty on the
An ITAS for working is renewable up to five times with a maximum stay of six years. Each extension is valid for one year.
I. Family and personal considerations
Family members. A foreign national possessing an ITAS and a work permit may apply for his or her spouse and children (maximum age of 18 years old) to reside in Indonesia if they fulfill the necessary requirements. A copy of the marriage certificate and a complete copy of the passport are required for the spouse, and birth certificates and complete copies of the passports are required for the children.
The spouse of a foreign national who wishes to work in Indonesia must obtain a separate work permit sponsored by the employer.
Driver’s permits. Foreign nationals may not drive legally in Indonesia using their home country driver’s licenses. International driver’s licenses are acceptable. Indonesia provides no driver’s license reciprocity with other countries.
To obtain an Indonesian driver’s license, foreign nationals must take a written and a physical exam. Photocopies of the passport, the ITAS and the SKTT must be attached to the driver’s license application.
In view of the driving conditions and commuting time, it is recommended that foreign nationals hire Indonesian drivers. The base salary for drivers is about USD320 per month.
J. Recent immigration law changes
The Indonesian Ministry of Law and Human Rights issued Regulation No. 22 of 2023 on Visas and Residence Permits, which went into effect on 24 August 2023. The Regulation establishes into law the new Golden Visa route, which is discussed below.
Golden Visa. The government introduced the Golden Visa, which is a facility granted for individuals who meet certain requirements to stay longer in Indonesia for up to 10 years. This visa category is intended to facilitate the growth of foreign direct investment into the country by providing special benefits for foreigners who contribute to the Indonesian economy.
The Golden Visa is only granted to foreigners who conduct the following activities in Indonesia:
• Investment, which includes the following:
A foreign individual investor with the intention of establishing a company in Indonesia.
A foreign individual investor without the intention of establishing a company in Indonesia.
A foreigner who will be appointed as a member of the board of directors (BoD) or board of commissioners (BoC) in a branch office or a subsidiary of a foreign company to be established in Indonesia. The number of members of the BoD and BoC is limited to a maximum of 10 persons for each branch office or a subsidiary to be established.
• Family Union, which includes the following:
A foreigner who will join the spouse who has held an ITAS or ITAP under the Golden Visa category
A child below the age of 18 and unmarried who will join his or her father and/or mother who are holder(s) of an ITAS or ITAP under the Golden Visa category
A foreigner who will join the child who is a holder of an ITAS or ITAP under the Golden Visa category
• Repatriation, which includes the following:
Ex-Indonesian citizens who will reside in Indonesia without a guarantor
Descendant of an ex-Indonesian citizen (maximum to the second degree) who will reside in Indonesia without a guarantor
• Second Home, which includes the following:
Second home
Special skills
World public figure
Elderly foreign individuals aged 55 years old or above
All Golden Visa holders are entitled to certain additional benefits, including but not limited to, in the form of the following:
• Priority lane at the immigration checkpoints determined by the Ministry of Law and Human Rights
• Priority service in immigration offices
• Priority services from related institutions, ministries and agencies based on a cooperation agreement
A foreigner who applies for a Golden Visa under a certain category is exempted from the requirement to have a guarantor but would need to have an immigration guarantee. This applies to foreigners in the Investment, Repatriation and Second Home categories.
Remote Worker Visa. Foreigners can now perform remote work by applying for a VITAS, which can be granted for 12 months. The applicant should provide an immigration guarantee, which is a salary slip with minimum of USD60,000 per year, and a copy of the work contract with the foreign company.
New visa classification. In January 2024, the Indonesian government introduced a new online visa application portal and revised classification codes for several types of visas (including the Visit Visa and Limited Stay Visa) as per the previous regulation, which was effective in October 2023.
Employers that already have an account on the current online application portal must register on the new portal and upload a photo of the authorized company representative. Their accounts will be activated in approximately three business days after completing the registration process. Employers can then begin filing visa applications visa on the new portal on behalf of employees and business visitors.
The new portal uses revised classification codes for several types of visas (for example, previously, individuals visiting Indonesia to attend business meetings used the code B211A; effective from 9 January 2024, these individuals must use the code C2). Companies must identify the appropriate code based on the activities that the applicant will conduct in Indonesia and use this code when filing visa applications on the new portal.
Health Pass. As a result of the emerging outbreak of Mpox, the Indonesian authorities reactivated the mandatory Health Pass for travelers at Indonesia’s entry points. Effective from 29 August 2024, travelers visiting Indonesia must report to health authorities at Indonesia’s entry point upon arrival to show their Satusehat Health Pass (SSHP) QR Code. The SSHP is an electronic health declaration form that needs to be completed by all passengers and aircraft personnel when traveling to Indonesia. The QR Code must be stored on a device and can be obtained by filling out an online self-declaration form. Travelers are advised to fill out the form prior to departure while in their home jurisdiction.