Over the years, foreign direct investments have witnessed growth, and initiating a PT PMA (foreign-owned company) in Indonesia is the initial stride towards success in the Indonesian real estate market. Operating a profitable business in adherence to regulations necessitates a comprehensive understanding of taxes and tax laws.
This guide is crafted to aid you in navigating the Indonesian tax system for your PT PMA, encompassing all pertinent corporate taxes in Indonesia.
But before discussing its tax regulations, make sure your PMA company is properly registered. You can rely on InvestinAsia’s services for PMA company registration in Indonesia.
6 Corporate Taxes for PT PMA in Indonesia You Should Understand
In general, the law treats PT PMA similarly to a domestic company, subject to the same Indonesian company tax rates. Foreign individuals managing a PT PMA for property rental purposes should be aware of the following six crucial corporate taxes in Indonesia:
- Corporate Income Tax (CIT)
- Employee Withholding Tax (WHT)
- Personal Income Tax (PIT)
- Land and Buildings Tax (PBB)
- Value Added Tax (VAT)
- Documentary Stamp Tax
As a business owner, having a clear understanding of tax obligations associated with operating a PT PMA in Indonesia, including property taxes, is indispensable.
Also read: Indonesia Tax Rate in 2023: A Complete Guide
Corporate Income Tax (CIT)
Corporate Income Tax in Indonesia is levied on the business profits earned by a PT PMA and is one of the most critical corporate taxes in the country. Companies must submit annual tax returns, and the Corporate Income Tax is fixed at a rate of 22%, based on the net taxable income for the fiscal year.
Global corporate tax agreements may reduce foreign corporate tax rates, especially for those involved in international sales, subject to regulations outlined in the negative investment list. Companies investing between IDR 1 billion ($65,000) and IDR 500 billion ($32.5 million) in the first five years of establishment enjoy a CIT reduction of up to 50%.
Capital gains from real estate sales are considered part of taxable income and are subject to Corporate Income Tax (CIT). The CIT filing deadline is April 30th of the following year, with payment due by the 10th of the subsequent month.
- Type: Corporate Income
- Tax Rate: 22%
Also read: Indonesia Corporate Tax Rate: Navigating the Business Landscape
Employee Withholding Tax (WHT)
Employee Withholding Tax in Indonesia pertains to a portion of an employee’s salary deducted by the PT PMA and remitted directly to the government for income tax payment. WHT amounts vary based on the employee’s wages, with progressive rates. WHT should be filed by the 20th of the following month and paid by the 10th of the subsequent month.
These rates apply to individuals with a Tax Identification Number (NPWP). Individuals who are not residents are liable to a fixed rate of 20%. Foreigners with a temporary stay permit, such as KITAS, and those temporarily receiving income in Indonesia, such as musicians, are exempt from obtaining an NPWP.
| Income | Tax Rate |
|---|---|
| Up to IDR 60 million ($3,900) | 5% |
| IDR 60 million ($3,900) – IDR 250 million ($16,250) | 15% |
| IDR 250 million ($16,250) – IDR 500 million ($32,500) | 25% |
| IDR 500 million ($32,500) – IDR 5 billion ($325,000) | 30% |
| Over IDR 5 billion ($325,000) | 35% |
Also read: The Minimum Capital for Establishing PMA Company in Indonesia
Personal Income Tax (PIT)
Linked to Employee Withholding Tax is Personal Income Tax, known as Pajak Penghasilan Orang Pribadi. PIT should be filed by March 31st of the following year, with a payment deadline on the 10th of the subsequent month.
It’s essential to note that the income tax rate for a foreign company in Indonesia differs from the income tax liabilities of its employees and shareholders. Shareholders are liable for Indonesia’s dividend tax, constituting part of their income.
| Income | Tax Rate |
|---|---|
| Up to IDR 60 million ($3,900) | 5% |
| IDR 60 million ($3,900) – IDR 250 million ($16,250) | 15% |
| IDR 250 million ($16,250) – IDR 500 million ($32,500) | 25% |
| IDR 500 million ($32,500) – IDR 5 billion ($325,000) | 30% |
| Over IDR 5 billion ($325,000) | 35% |
Also read: PT vs PMA vs KPPA Indonesia, What’s the Differences?
Land and Buildings Tax (PBB)
Indonesia levies a Land and Building Tax (PBB), known as Pajak Bumi dan Bangunan (PBB) in Indonesian. The tax is paid to the Directorate General of Taxes (Direktorat Jenderal Pajak, Kementerian Keuangan Republik Indonesia). The PBB tax is applicable to the owner of the land or building, which could include a PT PMA. In 2022, Indonesia increased the PBB rate to 0.5% from the previous range of 0.01%–0.3%.
To calculate the PBB tax, both NJOP and NJKP are needed. NJOP (Nilai Jual Objek Pajak) represents the average real estate transaction price, while NJKP (Nilai Jual Kena Pajak) is the NJOP-based appraisal value.
You can calculate the NJKP with the following formula:
- NJKP = 40% or 20% x (NJOP–NJOPTKP).
- 40% for properties above IDR 1 billion ($65,000)
- 20% for properties under IDR 1 billion ($65,000)
- NJOPTKP is IDR 12 million ($780)
The subsequent formula computes the PBB tax based on the NJKP.
- PBB = 0.5% x NJKP
Take a property with an NJOP value of IDR 5.8 billion ($377,000):
- NJKP = 40% x (5,800,000,000 – 12,000,000) = IDR 2.32 billion ($150,488)
- PBB = 0.5% x 2,315,200,000 = IDR 11.58 million ($752)
The property owner’s annual PBB tax is IDR 11.58 million ($752).
(study case source: ownpropertyabroad.com)
Taxpayers receive a tax-due notice letter (Surat Pemberitahuan Pajak Terutang/SPPT) from the Indonesian tax authorities, specifying the tax amount to be paid. Payment of the PBB tax is required within six months of the issuance of the SPPT.
Also read: Can a PMA Own Land and Properties in Indonesia?
Value Added Tax (VAT)
The Value Added Tax (VAT) is a consumption tax applicable to the sale of goods and services, tangible and intangible alike. It is an essential corporate tax in Indonesia, included in the cost of products and services. The regular VAT rate is 11%, and it should be filed and paid before the end of the following month.
Documentary Stamp Tax (DST)
Documentary Stamp Tax is another crucial corporate tax in Indonesia, applied to papers, documents, or deals indicating the legalization of a document. Most government offices require a DST for document approval. The tax rate is IDR 10,000 ($0.65), payable at the time of legalizing the document.
Also read: Business Registration Number vs Tax ID: The Key Differences
When to Pay PT PMA Corporate Taxes in Indonesia?
The table below outlines the filing and payment deadlines for corporate taxes in Indonesia:
| Type of Tax | Deadline for Filing | Deadline for Payment |
|---|---|---|
| Corporate Income Tax (CIT) | CIT should be filed by April 30th of the following year | WHT should be paid by the 10th day of the following month |
| Withholding Tax (WHT) | VAT should be paid before the end of the following month | PIT should be paid by the 10th day of the next month |
| Personal Income Tax (PIT) | WHT should be filed by the 20th of the following month | The PBB tax must be paid within six months after the SPPT issue |
| Land and Buildings Tax (PBB) | The Indonesian tax authorities send taxpayers a tax-due notice letter (SPPT) with the tax amount to be paid | – |
| Value Added Tax (VAT) | VAT should be filed before the end of the following month | VAT should be paid before the end of the following month |
| Documentary Stamp Tax (DST) | N/A | DST is paid at the moment of legalizing the document |
It is imperative to file and pay corporate taxes for PT PMA in Indonesia promptly to avoid fines and potential legal issues.
Ensure that the taxes for your PMA company are managed correctly. You can rely on InvestinAsia’s Indonesia tax consultant and compliance services. Our experienced team of professionals is ready to assist you in every tax matter, such as:
- Accounting and tax reporting services in Indonesia
- Indonesia Payroll Service
- Indonesia LKPM Reporting Service
- Indonesia VAT Taxpayers Registration
Contact us for a FREE tax consultation and get special offers!
