Indonesia taxes residents on worldwide income and non-residents on Indonesia-source income only. Indonesia operates a self-assessment system, with the Directorate General of Tax conducting risk-based post-filing review and audit.
The Indonesian tax year is generally the calendar year (a company may apply to the Directorate General of Tax for approval to use a different fiscal year). The individual filing deadline is 31 March of the following year; the corporate filing deadline is 30 April.
Indonesia's headline corporate income tax (CIT) rate is 22%.
The headline personal income tax (PIT) rate is 35%.
The standard VAT/GST (or equivalent consumption tax) rate is 12%.
Under Article 2 of the Income Tax Law (as amended by Law No. 7 of 2021), an individual is an Indonesian tax resident if present in Indonesia for more than 183 days within any 12-month period (cumulative, not necessarily consecutive; arrival and departure days both count), or if they intend to reside in Indonesia. Residents are taxed on worldwide income and must report worldwide assets and liabilities; non-residents are taxed only on Indonesia-source income.
A non-Indonesian entity has an Indonesian permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Indonesia on the entity's behalf, following the OECD Model Treaty definition as applied under Indonesian domestic law and any applicable tax treaty.
Under Ministry of Finance Regulation No. 93/PMK.03/2019, a non-listed foreign corporation is a Controlled Foreign Company where Indonesian resident taxpayers hold, directly or indirectly, at least 50% of paid-up capital - either individually or collectively (including collective ownership through other CFCs). Certain categories of CFC income - dividends, interest, rents, royalties, and gains from asset sales - are subject to deemed-dividend treatment, attributed to Indonesian shareholders as taxable income within four months of the CFC's tax return filing deadline (or seven months after fiscal year-end where no filing obligation exists), regardless of actual distribution. The ownership threshold is tested as of the end of the Indonesian taxpayer's fiscal year.
Indonesia applies a general maximum debt-to-equity ratio of 4:1 for tax deductibility purposes (Minister of Finance regulation, effective 2016), subject to sector-specific exceptions (notably banking, insurance, and certain infrastructure financing). Interest on debt exceeding this ratio is non-deductible. Separately, interest charged between related parties at rates considered excessive relative to commercial rates may be disallowed under Indonesia's transfer pricing rules, and interest-free related-party loans can trigger deemed-interest withholding exposure.
Indonesia does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Indonesia does not have a comprehensive ATAD2-style anti-hybrid regime, relying instead on its CFC and transfer pricing rules to address related cross-border profit-shifting concerns.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Indonesia does not provide a broad, unconditional participation exemption for foreign dividends in the general European sense. However, foreign dividends (and certain other foreign income, including from an overseas permanent establishment) can be exempted from Indonesian income tax if reinvested or used for business activities in Indonesia within a specified period: dividends from foreign-listed shares are exempt to the extent invested in Indonesia, while dividends from foreign unlisted shares require at least 30% of after-tax profit to be reinvested domestically for the exemption to apply in full.
Indonesia has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Indonesia, capped at the Indonesian tax otherwise due on that income, computed on a per-country basis.
Indonesia maintains double tax treaties with 71 countries, generally following the UN Model Convention rather than the OECD Model. Treaty benefits require the taxpayer to substantiate residency (typically via a Certificate of Domicile) and satisfy anti-abuse provisions; shell entities used principally to access treaty benefits are denied relief under Indonesia's beneficial-ownership rules. The current authoritative rate schedule is maintained by the Direktorat Jenderal Pajak (Directorate General of Taxes).