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Tax ServicesIndonesianPocket Tax Book2022
ContentsCorporate Income TaxTax rates; Tax residence; Tax payments; Business profits; Taxationon certain offshore income; Controlled foreign companies; Capitalallowances; Disallowed deductions; Debt to Equity Ratio; Losses;Profit distributions; Deemed profit margins; Special industries andactivities; Transfer Pricing; Income Tax on e-commerce and ElectronicTransaction Tax1Individual Income TaxNormal tax rates; Concessional tax rates; Main Personal Relief; Taxresidence; Registration and filing; Tax payments; Benefits-in-kind (BIKs);Social security system18Withholding TaxesGeneral; Articles 21, 22, 4(2), 23 and 26 income taxes27International Tax AgreementsDouble Taxation Agreements; Tax Information Exchange Agreements;Mutual Administrative Assistance in Tax Matters; Multilateral Instrument;US FATCA36Value Added TaxGeneral; VAT on e-commerce; VAT exemption facilities; VAT not-collectedfacilities48Luxury-goods Sales Tax60Carbon Tax62Customs and ExciseImport Duty; Export Duty; Excise63Tax ConcessionsIncome tax concessions; LST concession; Concessions on special projectsand special zones68Land and BuildingLand and Building Tax; Tax on land and building transfer;Duty on the acquisition of land and building rights81Stamp Duty85Tax Payments and Tax Return FilingMonthly tax obligations, Annual tax obligations, Early tax refunds86Accounting for Tax92Tax Audits and Tax Assessments94Tax Collection Using Distress Warrant100Tax Dispute and ResolutionObjections; Appeals; Other avenues for tax dispute resolution;Judicial Review Requests to the Supreme Court102Contacts106
Corporate Income TaxCorporate Income TaxTax ratesGenerally a flat rate of 22% applies. Public companies thatsatisfy a minimum listing requirement of 40% and otherconditions are entitled to a tax cut of 3% off the standardrate, giving them an effective tax rate of 19% (refer to page70). Small enterprises, i.e. corporate taxpayers with an annualturnover of not more than IDR 50 billion, are entitled to a50% discount of the standard tax rate which is imposedproportionally on taxable income of the part of gross turnoverup to IDR 4.8 billion. Certain enterprises with gross turnover ofnot more than IDR 4.8 billion are subject to Final Tax at 0.5%of turnover.Tax residenceA company is treated as a resident of Indonesia fortax purposes by virtue of having its incorporation or itsdomicile is in Indonesia. A foreign company carrying outbusiness activities through a Permanent Establishment (PE)in Indonesia will generally have to assume the same taxobligations as a resident taxpayer.PwC IndonesiaIndonesian Pocket Tax Book 20221
Corporate Income TaxTax paymentsResident taxpayers and Indonesian PEs of foreigncompanies have to settle their tax liabilities either by directpayments, third party withholdings, or a combination ofboth. Foreign companies without a PE in Indonesia have tosettle their tax liabilities for their Indonesian-sourced incomethrough withholding of the tax by the Indonesian partypaying the income.Monthly tax instalments (Article 25 income tax) constitute thefirst part of tax payments to be made by resident taxpayersand Indonesian PEs as a prepayment of their current yearCorporate Income Tax (CIT) liability. A monthly tax instalmentis generally calculated using the most recent CIT Return(CITR). Special instalment calculations apply for newtaxpayers, finance lease companies, banks, state-ownedcompanies, listed companies and other taxpayers withperiodical reporting requirements.The tax withheld by third parties on certain income (Article 23income tax) or tax to be paid in advance on certaintransactions (e.g., Article 22 income tax on imports) alsoconstitute prepayments for the current year CIT liability of theincome recipient or the party conducting the import (refer topages 33-34 for income items subject to Article 23 incometax and pages 27-31 for transactions subject to Article 22income tax).2Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income TaxIf the total amount of tax paid in advance through the year(Articles 22, 23, and 25 income taxes) and the tax paidabroad (Article 24 income tax) is less than the total CIT due,the taxpayer has to settle the shortfall before filing its CITR.Such a payment is referred to as Article 29 income tax.Certain types of income earned by resident taxpayersor Indonesian PEs are subject to final income tax. In thisrespect, the tax withheld by third parties (referred to asArticle 4(2) income tax) constitutes the final settlement of theincome tax for that particular income (refer to pages 32-33for income items subject to final income tax under Article4(2) income tax).For foreign companies without a PE in Indonesia, thetax withheld from their Indonesia-sourced income by theIndonesian party paying the income (Article 26 incometax) constitutes a final settlement of their income tax due(refer to pages 34-35 for income items subject to Article 26income tax).Business profitsTaxable business profits are calculated on the basis ofnormal accounting principles as modified by certaintax adjustments. Generally, a deduction is allowed forall expenditure incurred to obtain, collect and maintaintaxable business profits. A timing difference may arise if anexpenditure recorded as an expense for accounting cannotbe immediately claimed as a deduction for tax.PwC IndonesiaIndonesian Pocket Tax Book 20223
Corporate Income TaxTaxation on certain offshore incomeIndonesian tax residents are generally taxed on a worldwideincome basis. However, the following offshore income maybe exempted from income tax if it is reinvested or used forbusiness activities in Indonesia within a certain period: Income received by an Indonesian taxpayer from a PEabroad; Dividends paid by companies abroad; and Active business income received by an Indonesiantaxpayer from abroad (not from a PE or foreignsubsidiary).For after-tax income from the PE and dividends paid fromthe non-listed subsidiary, the minimum reinvestment amountis 30% of the profit after tax. Otherwise, the differencebetween the 30% threshold and the reinvested portion willbe subject to income tax.Controlled foreign companiesCertain income of a Controlled Foreign Companies (CFCs)are subject to deemed dividend rules in Indonesia. Thisincome includes dividends, interest, rentals, royalties,and gains from sales or transfer of assets, with certainlimitations. A CFC is a foreign entity that is at least50% owned by an Indonesian taxpayer or at least 50%collectively owned by Indonesian taxpayers. The scopeof CFC income also covers income from indirectly ownedCFC with a minimum of 50% ownership by another CFC, orcollective ownership by an Indonesian taxpayer’s CFCs, or4Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income Taxcollective ownership by a number of CFCs (including underthe same or different Indonesian taxpayers).The ownership threshold that is used to determine theCFC status is the ownership percentage at the end of theIndonesian taxpayer’s fiscal year, which is based on eitherthe percentage of paid-up capital or the percentage paid-upcapital with voting rights. The only situation in which therules do not apply is when the CFC’s shares are listed on astock exchange.Capital allowancesDepreciationExpenditure incurred in relation to assets with a beneficiallife of more than one year are categorised and depreciatedfrom the month of acquisition by the consistent use of eitherthe straight-line or the declining-balance method.TangibleAssetsCategoriesDepreciation rateUseful LifeStraight linemethodDecliningbalancemethod50%I. Non-buildingCategory 14 years25%Category 28 years12.5%25%Category 316 years6.25%12.5%Category 420 years5%10%PwC IndonesiaIndonesian Pocket Tax Book 20225
Corporate Income TaxTangibleAssetsCategoriesDepreciation rateUseful LifeStraight linemethodPermanent20 years*5%*Non-permanent10 years10%DecliningbalancemethodII. BuildingNotes:* Taxpayers are allowed to use the actual useful life based on taxpayer’sbookkeeping if the useful life is more than 20 years.The comprehensive lists of the assets included in each categoryare set out in certain Minister of Finance (MoF) regulations.Special rules apply to assets used for certain industries (i.e. oiland gas, forestry, plantation and cattle breeding).AmortisationIntangible property or costs, including the cost of extendingbuilding use rights, rights for business use, rights for useand goodwill with a useful life of more than one year, shouldbe amortised on the following bases, as appropriate:a.6Using the straight line or the declining balance methodat the rates specified in categories 1, 2, 3, and 4 underDepreciation (above) based on the useful life of theproperty that is applicable for: general intangible assets;Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income Tax the costs of incorporation and expansion of thecapital of an enterprise; and the capitalised costs incurred before thecommencement of commercial operations,with a useful life of longer than one year. Classificationinto the appropriate category is determined on thebasis of the nearest useful life. If an intangible assethas a useful life of more than 20 years, the amortisationcan be carried out using the straight-line method usinga 20-year period or the actual useful life based ontaxpayer’s bookkeeping.b.Using the production unit method on costs incurredin the acquisition of the right to oil and natural gasconcessions, mining rights, forest concessions, andother rights to exploit natural resources and naturalproducts with a beneficial life of longer than one year.Other than for oil and natural gas concessions, theamortisation may not exceed 20% per annum.Assets arising from Tax Amnesty and Voluntary DisclosureprogrammesNewly declared assets under 2016-2017 Tax Amnestyand 2022 Voluntary Disclosure programmes cannot bedepreciated or amortised for tax purposes. The acquisitioncosts of these assets are based on the value declared in theAsset Declaration Letter.PwC IndonesiaIndonesian Pocket Tax Book 20227
Corporate Income TaxAsset transfersSales of a company’s assets (other than land and building)may result in capital gains or losses, calculated as thedifference between the sales proceeds and the taxwrittendown value of the assets concerned. Capital gainsare assessable whilst a capital loss is tax-deductible only ifthe asset concerned is used in the running of the business,i.e., for obtaining, collecting, and securing assessableincome.Revaluation of fixed assetsSubject to the Director General of Taxes (DGT) approval,corporate taxpayers and PEs who maintain Rupiah (IDR)accounting may undertake a revaluation of their noncurrenttangible assets for tax purposes. This may be carried outonce every five years. Each revaluation must include allbusiness-related assets which are owned by the companyand located in Indonesia, except for land (this may beomitted). Before requesting the DGT’s approval, thecompany concerned must determine that it has settled all ofits outstanding tax liabilities.The revaluation must be conducted on a market or fairvalue basis. The market values must be determined bya Government-approved appraiser. These are subject toDGT adjustments if the values, in the DGT’s view, do notrepresent the fair or market values of the assets.8Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income TaxOnce approved, the depreciation applied to depreciableassets must be based on the new tax book values(approved values) on the basis of a full useful life (in otherwords, as if the assets were new).The excess of the fair market value over the old tax bookvalue of the revalued assets is subject to final income taxat a rate of 10%. Subject to the DGT approval, taxpayersfacing financial difficulties may pay this tax in instalmentsover 12 months.Fixed assets falling under categories 1 and 2 must beretained at least to the end of their useful life. Land,buildings, and assets falling under categories 3 and 4 mustbe retained for at least 10 years after the revaluation date.Additional final income tax at a rate of 10% is imposed onthe original revaluation gains if the revalued assets are soldor transferred before the end of this minimum retentionperiod. This does not apply to:a. Transfer of assets because of force majeure or basedon a Government decision/policy or a court decision;b. Transferred in the course of a tax-neutral businessmerger, consolidation, or business split;c. Withdrawal of fixed assets of a company because ofirreparable damage.PwC IndonesiaIndonesian Pocket Tax Book 20229
Corporate Income TaxDisallowed deductionsThese include:a. Private expenses;b. Non-business gifts and aid, except certain religiouscontributions/alms and certain donations;c. Provisions, except for: provision for doubtful accountsfor banking and certain financial institutions, provisionfor insurance companies, deposit security provision forthe Deposit Insurance Corporation (Lembaga PenjaminSimpanan/LPS), reclamation provision for miningcompanies, forestation provision for forestrycompanies, and area closure and maintenanceprovision for industrial waste processing businesses;d. Income tax payments;e. Tax penalties;f. Profit distributions;g. Employer contributions for life, health and accidentinsurance and contributions to unapproved pensionfunds, unless the contributions are treated as part ofthe taxable income of employees;h. Expenses relating to income which is taxed at a finalrate, e.g., interest on loans relating to time deposits;i. Expenses relating to income which is exempted fromtax, e.g., interest on loans used to buy shares wheredividends to be received are not subject to income tax;j. Salaries or compensation received by partnership orfirmas members where their participation is not dividedinto shares.10Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income TaxLimitation on interest deductionThe acceptable methods to limit the interest deduction arethose commonly used internationally, such as Percentage ofEBITDA (Earning Before Interest, Taxes, Depreciation, andAmortisation), Debt-to-Equity Ratio, or other methods.LossesLosses may be carried forward for a maximum of five years.However, for a limited category of businesses in certainregions or businesses subject to certain concessions, theperiod can be extended for up to 10 years. The carryingback of losses is not allowed. Tax consolidation and grouprelief is not available.Profit distributionsTax is liable to be withheld from dividends as follows:a. Resident recipientsDividend received from an Indonesian company is nontax object if it is received or earned by: Resident individual taxpayers who reinvest it inIndonesia within certain period; and/or Resident corporate taxpayers.Dividends received by resident individual taxpayers whodid not meet the reinvestment requirement, are subjectto final income tax at a maximum rate of 10%.PwC IndonesiaIndonesian Pocket Tax Book 202211
Corporate Income Taxb.Non-resident recipients:20% (lower for treaty countries) final withholding tax isdue on dividends paid to a non-resident recipient.Deemed profit marginsThe following businesses have deemed profit margins fortax purposes:DeemedProfit inGrossRevenueEffectiveIncome TaxRateDomestic shipping operations4%1.20% 1Domestic airline operations6%1.80% 1Foreign shipping and airlineoperations6%2.64% 1Foreign oil and gas drilling operations15%3.3% 21% of exportvalue0.22% 2Certain Ministry of Traderepresentative officesNotes:1The effective income tax rate (eitr) is calculated using the old tax rateof 30% because the MoF has not revised the decrees which regulate thedeemed profit margins.212The eitr is calculated using the current tax rate of 22%, excluding BranchProfit Tax (BPT) portion. BPT rate varies according to availability of areduced rate based on tax treaties.Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income TaxSpecial industries and activitiesCertain contractually based concessions are available inIndonesia. These include Production Sharing Contracts(PSCs), Contract of Works (CoWs) and Mining BusinessLicences (Izin Usaha Pertambangan/IUP).Companies engaged in upstream oil and gas typically haveto calculate CIT in accordance with their PSCs. The PSCscan be “conventional” with CIT effectively based on costrecovery principles or “gross split” which more closelyfollow the general CIT rules.Certain companies engaged in metal, mineral and coalmining are governed by CoWs for the CIT calculation.Different provisions may apply including in respect of CITrates, deductible expenses and how taxable income iscalculated. CoW arrangements are however no longeravailable under the 2009 Mining Law and recent miningwill generally follow an IUP concession. The Mining Lawstipulates that general prevailing tax laws/regulations applyto these mining projects. Specific tax regulations howeveralso exist for non-coal mining IUPs.Transfer PricingThe Income Tax Law defines related parties as:a. Taxpayer has capital participation directly or indirectlyat least 25% upon another taxpayers; the relationshipbetween Taxpayers through ownership at least 25%PwC IndonesiaIndonesian Pocket Tax Book 202213
Corporate Income Taxb.c.upon two or more taxpayers; or relationship betweentwo or more taxpayers mentioned later;Taxpayer controls the other taxpayer or two or moretaxpayers are under the same control, either directly orindirectly; orThere are family relationship either blood relationship orby marriage in vertical and/or horizontal lineage of onedegree.Transactions between related parties must be consistentwith the arm’s length principle. If the arm’s length principleis not followed, the DGT is authorised to recalculate thetaxable income or deductible costs arising from suchtransactions applying the arm’s length principle.Under the General Tax Provisions and Procedures(Ketentuan Umum dan Tata Cara Perpajakan/KUP)Law, the Government requires specific transfer pricingdocumentation to prove the arm’s length nature of relatedparty transactions.Taxpayers under certain criteria are required to preparetransfer pricing documentation, namely: Master file, Localfile, and Country by-Country Report (CbCR). The Master fileand Local file must be available if requested by the DGT,whilst the summary must be attached to the CITR of the taxyear concerned. The Notification of the CbCR obligation and14Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income Taxthe CbCR itself (if required) must be submitted to the taxoffice within 12 months after the end of a tax year.Detailed transfer pricing disclosures are required in theCITR. These include: The nature and value of transactions with related parties; The transfer pricing methods applied to thosetransactions and the rationale for selecting themethods; and Whether the company has prepared transfer pricingdocumentation.Indonesian Tax Office (ITO) provides specific technicalguidelines to carry out transfer pricing audits.Transfer pricing disputes may be resolved through thedomestic Objection and Appeal process or, where thedispute involves a transaction with a related party in acountry that is one of Indonesia’s tax treaty partners, theparties may request double tax relief under the MutualAgreement Procedures (MAP) article of the relevant taxtreaty. MAP may be applied concurrently with a domesticdispute resolution process. If the MAP process has notreached agreement until the announcement of Tax Courtor Judicial Review Decision on a MAP-related content, theDGT may use the Decision result as a position in the MAPnegotiation or propose a cessation of negotiation.PwC IndonesiaIndonesian Pocket Tax Book 202215
Corporate Income TaxThe tax law authorises the DGT to enter into AdvancePricing Agreements (APAs) with taxpayers and/or anothercountry’s tax authority on the future application of the arm’slength principle to transactions between related parties.APA’s conclusions may potentially be rolled back to openyears, albeit on a limited basis. In all cases, the APA periodcan be up to maximum of five years.Income Tax on e-commerce and ElectronicTransaction TaxForeign e-commerce players with a significant economicpresence in Indonesia can be deemed as having a PEin Indonesia. If a PE cannot be deemed to exist underthe existing rules of an applicable Tax Treaty, affectede-commerce players will be subject to an ElectronicTransaction Tax (ETT). ETT will be imposed on direct salesor sales through the marketplace.The PE with significant economic presence will bedetermined based on the following factors: consolidated gross turnover of group businesses; revenue from Indonesian market; or number of active userswithin certain thresholds that will be governed by the MoF.Details on the tax rate, tax base, and calculation methodwill be governed in a Government Regulation (GR), whilstthe payment and reporting mechanism will be governed byfurther implementing regulations.16Indonesian Pocket Tax Book 2022PwC Indonesia
Corporate Income TaxSovereign Wealth FundSovereign Wealth Fund (Lembaga Pengelola Investasi/LPI)is an institution that is authorised to manage the sovereignwealth fund investments of the central Government.For Indonesian tax purposes, LPI is considered as adomestic corporate taxpayer that is subject to generalIncome Tax treatment, but with several special taxtreatments in relation to the deductibility of provisionexpense and Duty on the acquisition of land and/or buildingrights (Bea Perolehan Hak atas Tanah dan Bangunan/BPHTB), as well as withholding tax exemption on certainloan interest income.Third parties cooperating with LPI may also receive specialtax treatment in relation to their dividend income, which willdepend on the fulfilment of certain requirements and thetype of the dividend recipient.PwC IndonesiaIndonesian Pocket Tax Book 202217
Individual Income TaxIndividual Income TaxNormal tax ratesMost income earned by individual tax residents is subject toincome tax at the following normal tax rates:Taxable IncomeUp to IDR 60,000,000Rate5%Above IDR 60,000,000 up to IDR 250,000,00015%Above IDR 250,000,000 up to IDR 500,000,00025%Above IDR 500,000,000 up to IDR 5,000,000,00030%Above IDR 5,000,000,00035%Concessional tax ratesThe final tax rates for severance payments (if paid within twoyears) are as follows:Gross IncomeRateUp to IDR 50,000,000NilAbove IDR 50,000,000 up to IDR 100,000,0005%18Indonesian Pocket Tax Book 2022PwC Indonesia
Individual Income TaxGross IncomeRateAbove IDR 100,000,000 up to IDR 500,000,00015%Above IDR 500,000,00025%The final tax rates for lump-sum pension payments from aGovernment-approved pension fund, old-age securitysaving payments from Badan Penyelenggara JaminanSosial (BPJS) Ketenagakerjaan (workers’ social securityprogramme) if paid within two years are as follows:Gross IncomeRateUp to IDR 50,000,000NilAbove IDR 50,000,0005%Payments for year 3 onwards, the usual normal tax rates(please refer to page 18) will be applied.PwC IndonesiaIndonesian Pocket Tax Book 202219
Individual Income TaxMain Personal ReliefAnnual non-taxable income (Penghasilan Tidak Kena Pajak/PTKP) for resident individuals is as follows:IDRTaxpayer54,000,000Spouse4,500,000Each dependant (max. of 3)4,500,000Occupational expenses (5% of gross income, max.IDR 500,000/month)6,000,000Employee contribution to BPJS Ketenagakerjaan forold age security savings (2% of gross income)Pension maintenance expenses (5% of gross income,max. IDR 200,000/month)Full amount2,400,000Non-taxable turnover threshold of IDR 500 million per FiscalYear is also applicable for individual taxpayer on certainincome with annual gross turnover of not more than IDR 4.8billion that is subject to Final Tax (see no. 10 in table in page33).Tax residenceAn individual is regarded as a tax resident if he/she fulfilsany of the following conditions: He/she resides in Indonesia;20Indonesian Pocket Tax Book 2022PwC Indonesia
Individual Income Tax He/she is present in Indonesia for more than 183 daysin any 12-month period; He/she is present in Indonesia during a fiscal year andintends to reside in Indonesia.Note: The provisions of tax treaties may override these rules.Indonesian tax residents are generally taxed on aworldwide income basis. However, foreign citizens may betaxed only on their Indonesian-sourced income for the firstfour years if they fulfil certain requirements. In addition,there are certain overseas income that are not subjectto tax in Indonesia (see page 4 on Taxation on certainoffshore income).An Indonesian citizen who is present in Indonesia for lessthan 183 days in any 12-month period may be consideredas a non-resident if they fulfil additional requirements, forexample having a permanent home, centre of vital interest,habitual abode, the status of tax subject, or other criteriaoutside Indonesia.Non-resident individuals are subject to withholding tax ata rate of 20% (Article 26 income tax, subject to a relevanttax treaty provisions) on Indonesia-sourced income (asspecified on pages 34-35).PwC IndonesiaIndonesian Pocket Tax Book 202221
Individual Income TaxRegistration and filingResident individual taxpayers who receive or earn annualincome exceeding the PTKP threshold must register withthe ITO and file Annual Income Tax Return (AITR) (Form1770). The tax return should disclose all the individual’sincome, including compensation from employment,investment income, capital gains, overseas income andother income, as well as providing a summary of theindividual’s assets and liabilities. An Indonesian shareholderin a CFC is deemed to receive a dividend with respect to theCFC income. Please refer to pages 4-5 regarding CFCs.A family is generally regarded as a single tax reporting unitwith a single tax identity number (Nomor Pokok Wajib Pajak/NPWP) in the name of the head of the family (typically thehusband). His wife and his dependant children’s incomemust be reported on the same tax return in his name;they may or may not be taxed together with his incomedepending on whether their income is subject to Article 21income tax. To support the implementation of single identitynumber, the Indonesian resident number (Nomor IndukKependudukan) will be used as the NPWP for individualIndonesian residents.Tax paymentsA substantial part of individual income tax is collectedthrough withholding by third parties. Employers are requiredto withhold Article 21/26 income tax on a monthly basis22Indonesian Pocket Tax Book 2022PwC Indonesia
Individual Income Taxfrom the salaries and other compensation payable to theiremployees. If an employee is a resident taxpayer, theamount of tax withheld should be based on the normal taxrates (as set out above). If he/she is a non-resident taxpayer,the withholding tax is 20% of the gross amount (and may beset at a lower rate under a tax treaty).Various other payments to individuals also call forwithholding tax obligations from the payers. These include,among others: Pension payments made by Government-approvedpension funds; Severance payments; Old-age security saving payments from BPJSKetenagakerjaan; Fees for services; Prizes/awards.Typically the amount of tax withheld from these types ofincome (Article 21 income tax) is based on normal tax ratesas set out above.The tax withheld on fees for non-employee individualsand certain professionals, such as lawyers, notaries,accountants, architects, doctors, actuaries and appraisers,are required to be calculated based on 50% of the grossincome at the prevailing rates.PwC IndonesiaIndonesian Pocket Tax Book 202223
Individual Income TaxInterest earned on severance payments transferred to amanpower severance pay management board is subjectto a final tax of 20% if the board is a bank, or to a 15%withholding tax under Article 23 income tax in other cases.Benefits-in-kind (BIKs)BIKs are generally taxable in the hands of the employee. Anexception applies to BIKs that are required for the executionof a job, the cost of providing BIKs in certain areas, foodand drink provided to all employees, BIKs financed fromthe Government’s budget, and certain types of BIKs with acertain threshold.Social security systemEmployers are responsible for ensuring that their employeesare covered by a social security programme. Employees’contributions are collected by the employers throughpayroll deductions. These must be paid together with theemployer’s contributions.From 1 January 2014, a comprehensive social securityprogramme covers all Indonesian citizens is in place. Thesocial security system is administered by:1. Social Security Agency for health insurance (BPJSKesehatan) - covering health insurance2. Social Security Agency for worker’s social security(BJPS Ketenagakerjaan) - covering accidents,insurance, old age savings, death insurance andpensions24Indonesian Pocket Tax Book 2022PwC Indonesia
Individual Income TaxThe current premium contributions are as follows:Areas coveredAs a percentage of regularsalaries/wagesBorne byemployersBorne byemployees0.24-1.74%-Death insurance0.3%-Old age savings3.7%2%Health care*4%1%Pension**2%1%Working accident protection*) Maximum calculation base is IDR 12,000,000/month**) Maximum calculation base is updated annualy based on BPJS regulationThe compulsory requirement to join the new socialsecurity scheme applies to all employees, includingexpatriates who have been working in Indonesia for morethan six months.Saving Management of People’s HousingSaving management of people’s housing (TabunganPerumahan Rakyat/Tapera) is a mechanism to collectand provide a long-term, sustainable low-cost funds forhouse financing in order to meet the needs of decent andaffordable housing for the participants. The implementationof the Tapera Programme is intended for all segments ofworkers on the principle of mutual cooperation.PwC IndonesiaIndonesian Pocket Tax Book 2022
PwC Indonesia Indonesian Pocket Tax Book 2022 1 Corporate Income Tax Corporate Income Tax Tax rates Generally a flat rate of 22% applies. Public companies that satisfy a minimum listing requirement of 40% and other conditions are entitled to a tax cut of 3% off the standard rate, giving them an effective tax rate of 19% (refer to page 70).
