Indonesia adopts a self-assessment system; thus, resident taxpayers have to calculate and settle (i.e., if the Annual Individual Income Tax Return (“AIITR”) is showing underpayment amount) and submit for the AIITR accordingly.
Indonesian tax resident and non-resident taxpayers who have Tax Identification Numbers (Tax-ID) are generally taxed on a worldwide income basis in Indonesia. However, based on the Indonesia Income Tax Law which has been amended by Indonesian Tax Law Number 7 Year 2021 regarding Harmonization of Tax Regulations ("Undang - Undang Harmonisasi Peraturan Perpajakan" or UU HPP) there is a facility for the expatriate resident taxpayers who meet with the particular job type and specific skills can apply the territorial basis to the Indonesian Tax Office (“ITO”), which can be valid for a maximum of 4 (four) fiscal years since the expatriate become Indonesian Tax Subject.
Please note that for the expatriates who often work across borders, the ITO may also perform an exchange of data and the bilateral and multilateral agreement(s) with the other tax treaty partner countries and/or jurisdictions to track the tax obligations of expatriates that he or she may have in which these expatriates are working in two or multiple countries including Indonesia.
Non-residents do not have to register for taxpayer-identification numbers (Tax ID) if the expatriate's presence in Indonesia does not exceed 183 days within 12 months. However, if the expatriate's presence in Indonesia exceeds 183 days within 12 months, according to Indonesia Income Tax Law, the expatriate shall be considered a resident taxpayer and shall be obligated to apply for a Tax ID. Therefore, the resident taxpayer has to calculate and settle the tax underpayment (if any) then submit the AIITR.
Please note that based the Article 2 Paragraph (3) letter a of Indonesia Income Tax Law (ITL), tax resident can be defined as individual both Indonesian or foreign nationality which meets the following conditions:
1. resides in Indonesia;
2. present in Indonesia for more than 183 days in 12 months period; or
3. in a fiscal year, the person presents in Indonesia and has intention to reside in Indonesia.
It is further elaborated on Article 2 Paragraph (4) of Minister of Finance Regulation Number 18/PMK.03/2021 (MoF-18/2021) that individual tax resident is considered to have intention to reside in Indonesia which can be proven with documents in form of:
a. Permanent Stay Permit Card (KITAP);
b. Limited Stay Visa (VITAS) with a validity period of more than 183 days;
c. Limited Stay Permit (ITAS) with a validity period of more than 183 days;
d. Contracts or agreement to carry out work, business, or activities carried out in Indonesia for more than 183 days; or
e. Other documents that can show the intention to reside in Indonesia, such as a rental contract residence for more than 183 days or documents showing transfer of family members.
Generally, every expatriate who plans to work in Indonesia must have:
For further information on visas for expatriates to work in Indonesia can be found on the Directorate General of Immigration’s official website, under the Immigration Information tab: https://www.imigrasi.go.id/en/
The Indonesia fiscal year runs from 1 January to 31 December.
Based on the newly issued Minister of Finance Regulation No. 122/PMK.03/2022 (MoF-122/2022), the Tax Authority has updated the tax-ID for Taxpayers in Indonesia since 14 July 2022 to reach the single identification program. Please note that previously, the number of Tax-ID in Indonesia comprises of 15 digits which shall be 16 digits with the following conditions as follows:
• Resident Taxpayer Individual
Resident Taxpayer Individual shall use the Citizen Identification Number (Nomor Induk Kependudukan or NIK) as his/her Tax-ID, who has Tax-ID previously, the Resident Taxpayer Individual need to activate his/her Tax-ID number using NIK. For the Resident Taxpayer Individuals who apply for the Tax-ID after the issuance of MoF-122/2022, the Tax Authority will activate the NIK as Tax-ID and give the Tax-ID number using 15 digits.
• Non-Resident Taxpayer
Non-resident Taxpayer who has Tax-ID before the MoF-122/2022 was issued and previously has Tax-ID with 15 digits, their Tax-ID shall be 16 digits with added zero on the beginning of Tax-ID Number. For the Non-Resident Taxpayer who apply the Tax-ID after the issuance of MoF-122/2022, then Tax Authority will provide the Tax-ID using 16 digits.
Please note that not all taxation administration service provided by the Tax Authority has accommodated the Tax-ID using 16 digits until 31 December 2023. Therefore, currently until 31 December 2023, the resident taxpayer can still use the Tax-ID using 15 digits. However, starting from 1 January 2024, the Taxpayer has to use Tax-ID with 16 digits since all taxation administration service has accommodated the Tax-ID which comprises 16 digits.
According to the prevailing tax regulations, income tax payments are based on a self-assessment system, which means resident taxpayers are responsible for calculating tax payable and report through the AIITR to the Tax Office.
The filing date and the settlement date for the tax underpayment (if any) for the AIITR shall be 31 March after the year-end. However, the filing deadline can be extended to two months if the resident taxpayer applies for a filing extension.
Please note that if the individual resident taxpayer is late in submitting their AIITR, there shall be a tax sanction of late submission amounting to IDR 100,000. In addition, if the AIITR is showing tax underpayment and if the individual resident taxpayer is late to settle the tax underpayment, thus the administrative sanctions shall apply on this late payment of tax.
The administrative sanction above shall be in the form of monthly interest rates stipulated by the Minister of Finance per month, starting from the tax payable up to the settlement date for a maximum of 24 months, and part of the month is counted as one month.
Based on the Income Tax Law, resident taxpayer individuals are taxed at progressive rates according to total taxable income with the updated progressive tax rate has been in force starting from FY 2022 as follows:
| Total income (IDR) per Annum | Tax rate |
| Up to IDR 60,000,000 | 5% |
| More than IDR 60,000,000 until IDR 250,000,000 |
15% |
| More than IDR 250,000,000 until IDR 500,000,000 | 25% |
| More than IDR 500,000,000 until IDR 5,000,000,000 | 30% |
| More than IDR 5,000,000,000 | 35% |
While non-resident taxpayer individual shall be subject to income tax article 26 at 20% of the gross amount or non-taxable based on tax treaty Indonesia and other tax treaty partner using valid and complete DGT Form and/or Certificate of Residence (CoR).
Additionally, non-residents are only liable to pay personal income tax (PIT) for Indonesian-owned income, unlike their tax resident counterparts who are taxed on the income they earn in Indonesia and abroad; unless there is a Double Taxation Avoidance Agreement between the individual’s country of residence and the Indonesian government.
Based on the Indonesian tax regulation, an individual who is a tax resident subject shall be any individual, whether he/she is an Indonesian citizen or non-Indonesian citizen who:
Included in the term 'individual residing in Indonesia' shall be anyone who intends to reside in Indonesia. Whether a person has an intention to reside in Indonesia can be deemed according to certain conditions (eg, has a Permanent Stay Permit Card (KITAP), has a Temporary Stay Permit (ITAS) with a validity period of more than 183 days, has employment contract for more than 183 days, rent of house or apartment for more than 183 days).
An expatriate working in Indonesia has the option to apply for a territorial income basis with several requirements. For example, the expatriate must have particular expertise. In addition, it is only valid within 4 (Four) fiscal years from obtaining a Tax ID, does not apply to expatriates who utilize Tax Treaty, and the expatriate has to apply and provide the supporting documents to the Tax Office to receive this benefit.
The expatriate shall apply to the Tax Office where the expatriate is registered by filling the territorial basis application form and attach the supporting documents as follows:
The application mentioned above, including its supporting documents, will be assessed, and the Tax Office will decide to either grant or decline the application.
Based on Indonesia Tax Law which has been amended by UU HPP that came into effect in 1 January 2022 in which the implementation tax regulation regarding fringe benefits has been issued by MoFR No. 66 of 2023, the tax treatment of the fringe benefit (i.e Benefit In Kind/BIK and/or enjoyment) for Withholding Tax ("WHT") Article ("Art.") 21.
The Summary of the update of the tax treatment for the fringe benefit for WHT Art. 21 are as follows:
1. Certain types of fringe benefits shall be subject to WHT Art. 21 while previously the fringe benefit as mentioned above is not subject to WHT Article 21.
2. Please note that the fringe benefit means under the above law are in the form of (1) kind or natura such as benefit in form of something other than cash and/or (2) enjoyment or kenikmatan in Indonesian language is the reward in the form of the right to utilize a facility and/or service.
3. Further HPP Law and Government Regulation Number 55 Year 2022 (GR 55 Year 2022) have already introduced the categories of BIK and/or enjoyment for shall not be subject to WHT Art.21 for the employees, as follows:
a. food, food ingredients, beverage ingredients, and/or drinks for all employees;
b. natura and/or kenikmatan provided in certain areas;
i. residence, including housing;
ii. health services;
iii. education;worship;
iv. transportation; and/or
v. sports do not include golf, motorboat racing, horse racing, hang gliding, or motorsports, as long as the employer's business location obtains a specific regional determination from the Director General of Taxes;
Please note that certain area as mentioned above refers to areas that economically have potential that is worthy of development but the condition of economic infrastructure is generally inadequate and difficult to reach by public transportation, either by land, sea or air, so that to convert the available economic potential into real economic strength, investors bear the risk which is quite high and has a relatively long return period, including areas of sea waters that have a depth of more than 50 (fifty) meters where the seabed has mineral reserves, including remote areas.
c. natura and/or kenikmatan that must be provided by the employer due to work, includes in-kind and/or enjoyment in connection with requirements regarding security, health and/or safety of employees required by ministries or institutions based on statutory provisions such as:
i. uniform;
ii. equipment for work safety;
iii. employee pick-up and drop-off facilities;
iv. lodging for crew members and the like; and/or
v. in kind and/or enjoyment received in the context of handling an endemic, pandemic or national disaster;
d. natura and/or kenikmatan sourced or financed by the Budget State Revenue and Expenditure, Regional Revenue and Expenditure Budget, and/or Village Revenue and Expenditure Budget; or
e. natura and/or kenikmatan with certain types and/or limitations which the detailed limitation and/or threshold has been elaborated in MoFR No. 66 of 2023 are as follows:
i. Gifts from the employer including food materials, drink materials, food and/or drink for religious celebrations, i.e. Eid al-Fitr, Christmas, Nyepi, Vesak, or Chinese New Year in which is received or earned by all employees;
ii. Gifts from employers that are given other than for religious celebrations as mentioned in above in point i which is received or earned by employees and maximum IDR 3 million per employee within the period of 1 fiscal year;
iii. Work equipment and facilities from employers, including computers, laptops, or cellular phones including support facilities such as phone credit or internet connection which is received or earned by employees and support employee’s work;
iv. Health and medical treatment facilities from employer which is received or earned by employees and provided for handling work accident, work-related illness, life-saving emergencies or follow-up care and treatment due to work accidents or work-related illness
v. Sports facilities from employer, other than golf, horse racing, motorised boat racing, gliding, and/or automotive sports which is received or earned by employees and maximum IDR 1.5 million per employee within the period of 1 fiscal year;
vi. Communal residential facilities from employers, including dormitories, lodges, or barracks which is received or earned by employees;
vii. Residential facilities from employers whose utilisation rights are held by individuals, including apartments or landed houses which is received or earned by employees and maximum IDR 2 million per employee within the period of 1 month;
viii. Vehicle facilities from employer which is received or earned by employees who do not have capital participation in the employer and have an average gross income within the last 12 months of maximum IDR 100 million per month from the employer;
ix. Facility of contribution to pension funds which the establishment has been authorized by the Financial Services Authority (Otoritas Jasa Keuangan) that is borne by the employer which is received or earned by employees;
x. Religious facilities, including musala, mosques, chapels or temples which is intended solely for religious activities; and
xi. All BiK and/or enjoyment received in 2022 which is received or earned by employees or service providers.
4. Please note that If natura and/or kenikmatan that were received and/or obtained is not mentiond on point 3 above, therefore the natura and/or kenikmatan received and/or obtained shall be subject to WHT Art. 21 that has to be withheld by the employer.
5. If natura and/or kenikmatan that were received and/or obtained during the period of January 1, 2023 up to June 30, 2023 that has not been withheld by the employer, then the tax must be calculated, paid, and reported by employees in their 2023 Annual Individual Income Tax Return.
6. As for the natura and/or kenikmatan that were received and/or obtained during the period of 1 July 2023 and so forth, should be whithheld by the employer.
Indonesian tax residents can utilize foreign tax credit for any tax that has been paid outside of Indonesia, which is available up to a certain calculation based on the prevailing tax regulation with the basis of threshold shall not be exceeding from the tax payable amount in Indonesia, for Annual Individual Income Tax Return (AIITR) calculation purposes.
General tax deductions are available for a resident taxpayer in Indonesia in the form of personal tax reliefs (Penghasilan Tidak Kena Pajak/PTKP), depending on the marriage status and the number of dependents that taxpayers have. In addition, determine the amount of personal tax relief is based on the status of a resident taxpayer in the initial fiscal year are as follows:
| Deductions | Amount (IDR) per annum |
| Taxpayer | IDR 54,000,000 |
| Spouse | IDR 4,500,000 (If married couples file jointly under the husband Tax ID, then additional IDR 54,000,0000 shall be applied) |
| Dependents | IDR 4,500,000 for each dependent with maximum three dependents |
In addition, for the employer to calculate Article 21 Income Tax, the employer shall deduct employee’s income with the personal tax relief above and occupation support with the following amount:
| Deductions | Amount (IDR) per annum |
| Occupational support |
5% of gross income up to a maximum of IDR 6,000,000 |
In Indonesia, if a resident taxpayer has a capital gain, which is derived from income subject to final tax (e.g., sale of shares listed on Indonesia Stock Exchange (IDX), sale of land/building, dividend), then it shall not be taxable on the AIITR but shall be declared on the AIITR attachment - III under the final tax income section.
Please note that the sales of non-founder’s shares listed on the IDX shall be subject to final income tax article 4(2) at 0.1% from the gross transaction amount. In comparison, the sales of founder’s shares shall be subject to final tax article 4(2) at 0.1% from the gross transaction amount and
additional income tax article 4(2) at 0.5% from the share price at the Initial Public Offering.
However, if there is a capital gain from the income which is not subject to final tax (eg, sale of stock that is not listed on IDX, sales of fixed assets except land and/or building), it shall be treated as taxable income to calculate the tax payable using the progressive tax rate on his/her AIITR.
Further, for the capital gain on the sales of non-listed shares, the capital gain comes from the discrepancy between sales of transactions and book value of non-listed shares, which shall be subject to progressive tax as stated in section 'Income tax rates' on the AIITR.
Any income received other than payroll and capital gain both sourced from outside and/or inside Indonesia shall be declared on the AIITR, which is taxable based on the prevailing tax regulation.
The employer is responsible for calculating any taxes that need to be withheld from employee salary, monthly payment of these taxes to the tax authorities, and annual numbers to the employee. The individual employee must then file a yearly income tax return at the latest end of March of the following year.
Currently, the individual taxpayer is legally responsible for ensuring that they have registered with the tax office and comply with the regulations and payment of the taxes due.
Employers have three choices for the personal income tax calculation:
Each employee will receive the tax slip form 1721-A1 from their employer, which summarizes the monthly taxes paid by the employer to authorities. Form 1721-A1 is needed to prepare the employee’s annual individual income tax return.
Indonesian tax resident companies and permanent establishments are required to withhold income tax (“Article 21 Income Tax”) from the salaries payable to their employees as individual resident taxpayers monthly basis and pay the tax to the State Treasury on their behalf and then report to the Tax Office.
Employment income in Indonesia is subject to tax, regardless of where the salary payment is paid. In addition to salary, taxable employment income includes bonuses, commissions, overseas allowances, fixed allowances for education, housing etc. In-kind benefits paid for by the employer, such as company-provided cars and housing, traveling accommodation from home country etc.
However, since the issuance of Indonesian Tax Law Number 7 Year 2021 regarding Harmonization of Tax Regulations (HPP Law) as well with the issuance of Government Regulation Number 55 Year 2022 (GR 55 Year 2022) and the implementation tax regulation of fringe benefit by Minister of Finance Regulation Number 66 Year 2023 (MoF 66 Year 2023), in-kind benefits paid for by the employer which is not stated in point number 3 section Fringe Benefits Tax (Benefits in-kind) is treated as taxable income to the employee. Therefore, payments of these benefits are tax-deductible by the employer as long as the payments are in connection with 3M activities (Obtaining, Collecting and Maintaining the income).
As for the in-kinds that were paid for by the employer, which has not been withheld by the employer during the period of January 1, 2023 up to June 30, 2023, then the tax must be calculated, paid, and reported by employees in their 2023 Annual Individual Income Tax Return. However, as for the in-kinds that were paid for by the employer during the period of 1 July 2023 and onwards, must be withheld by the employer.
There are 2 (two) social security programs in Indonesia, there are BPJS Ketenagakerjaan (BPJS Employment) and BPJS Kesehatan (BPJS Healthcare). The expatriate who works for at least 6 (six) months in Indonesia must participate in the BPJS programs. Following are the BPJS programs which mandatory to expatriates:
BPJS employment
| No. | Programs | Description | Rate | Remark |
| 1 | Jaminan Kecelakaan Kerja / JKK (work related accident benefit) | This program protects against the risks of accidents that occur in the employment relationship, including accidents occurring on the way from home to work or vice versa and illness caused by the work environment | 0.24% - 1.74% | from wages / month (Basic Salary + Fixed Allowance). The contribution rate base on the risk level of the working environment. This premium is an employer contribution. |
| 2 | Jaminan Kematian / JKM (death benefit) | This program offers cash benefits given to heirs when a participant dies of a non-work-related occupational accident | 0.3% |
from wages / month. This premium is an employer contribution |
| 3 | Jaminan Hari Tua / JHT (old age benefit) | Provident fund benefit | 5.7% |
from wages /month. 2% is deducted from employees (employee contribution), and 3.7% is an employer contribution |
| 4 | Jaminan Pensiun / JP (Pension Benefit) | N/A for expatriate | N/A for Expatriate |
BPJS Healthcare
| No. | Programs | Description | Rate | Remark |
| 1 | Healthcare insurance* | Cover outpatient and Inpatient | 5% |
from wages /month. 1% is deducted from employees (employee contribution), and 4% is employer contribution. |
Notes:
* BPJS Healthcare Scheme:
The employee stock option is based on the Directorate General of Taxation Circular Letter No.SE-13/PJ.43/1999 regarding the tax treatment for stock options. The stock option shall be defined as a promise or offer granted by a foreign company that has sold its shares on a foreign stock exchange country to employees or private individuals from a company in Indonesia which related parties of the foreign company. The employee has the right to buy shares at a certain price and within a certain period, which the offer will revoke after passing the specified period.
Therefore, if the employee takes the option to buy the stock option, the income received by the employee who obtains the stock option shall be a dividend and/or capital gain. The dividend and/or capital gain, which is received from the obtained stock, shall be treated as income from overseas (i.e., non-final tax) and shall be calculated on the AIITR with progressive tax rates as stipulated on section “Income tax rates” and settle if there is any tax underpayment. In addition, the tax paid in relation to the dividend and/or capital gain from obtaining stock overseas can be claimed as a tax credit through a certain calculation as stated in section “Relief for foreign taxes”.
Please note that dividend received by the resident taxpayer from an entity (i.e., PT Company) in Indonesia; thus, the dividend shall be subject to final income tax article 4(2) at 10% on the gross amount with or without Tax ID.
In addition, the final income tax article 4(2) shall be declared on the AIITR attachment - III under the final income tax income section. However, if the dividend from outside and/or inside Indonesia is being re-invested in Indonesia, thus the said dividend shall be non-taxable.
Please be aware that the information above is general in nature and is correct at publication. It is not intended to be advice, and we cannot guarantee that it is current when you are reading it and applicable based on your facts and circumstances.
For further information on expatriate tax services, payroll services (Business Process Solutions or BPS), social security services (BPS) in Indonesia, please contact:
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Tax Services: |
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Juanita Pribadi |
Anugrah Fitrah Ramadhan |
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Business Process Solutions Services: |
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Johanes Herry Kurniawan |
Siangi Widjaja Soekamto |
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Andreas Hadiwijaya |
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