The main tax difference between PT PMA and PT PMDN lies in incentive eligibility, especially after Indonesia aligned with the OECD Pillar Two global minimum tax, which restricts tax holidays for foreign-owned companies. While both entities share the same 22 percent corporate income tax rate, domestic companies (PT PMDN) now unlock broader access to premium incentives under regulations led by the Ministry of Finance and BKPM.
This clarity is critical for foreign investors weighing the most efficient structure for long-term operations.
Understanding the Core Tax Obligations
Both PT PMA and PT PMDN are subject to Indonesia’s standard 22 percent corporate income tax. SMEs with taxable income up to IDR 480 million may qualify for the 11 percent reduced rate, regardless of whether the entity is foreign- or domestically-owned.
The base compliance scope is similar: annual tax filings, monthly withholding tax reporting, VAT registration (when applicable), and adherence to the updated depreciation rules under MoF Regulation 72/2023.
Also read: Indonesia Corporate Tax Rate: Navigating the Business Landscape
Impact of the Global Minimum Tax: A Turning Point for PT PMA
Indonesia’s adoption of the 15 percent GloBE minimum tax reshaped its incentive structure. Foreign-owned entities (PT PMA) generally no longer qualify for pioneer industry tax holidays, a major shift effective 2024–2025.
This exclusion matters because tax holidays previously offered 50 to 100 percent corporate tax reductions for up to 20 years. Under the new framework, granting these incentives to multinational groups risks falling below the global minimum threshold. As a result, the government restricts tax holiday access primarily to domestic players.
PT PMDN companies, however, retain full eligibility when meeting the minimum investment of IDR 100 billion and operating in one of the designated pioneer sectors.
If you need clarity on choosing the most tax-efficient structure under current GloBE rules, consult InvestinAsia’s Tax Compliance and Advisory Team for a scenario-based assessment.
Also read: How Global Minimum Tax (GMT) Affects FDI Incentives in Indonesia
Tax Allowance Access: A Major Advantage for PT PMDN
Under Government Regulation No. 78/2019, tax allowance facilities are available exclusively to PT PMDN. The benefits include:
- 30 percent investment-based deduction over 6 years
- Accelerated depreciation and amortization
- Dividend withholding tax reduction to 10 percent
- Extended loss carryforward up to 10 years
PT PMA entities have limited access and only qualify through specific programs (e.g., Special Economic Zones) or cases involving high local employment and significant domestic value-add.
Planning to set up PT PMA or PT PMDN? InvestinAsia’s registration services simplify incorporation, compliance, and BKPM filings.
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Depreciation and Amortization Rules: Harmonized for Both Entities
Both PT PMA and PT PMDN apply the same depreciation framework under MoF 72/2023, including the option to depreciate assets based on actual useful life when it exceeds 20 years. This alignment reduces disparity and simplifies long-term asset planning.
Super Deduction Incentives: Available to Both
Indonesia continues to promote activities that stimulate innovation and labor development. Both PT PMA and PT PMDN can access:
- Up to 300 percent super deduction for qualifying R&D
- Up to 200 percent super deduction for certified vocational training
These incentives are neutral regarding ownership and focus instead on contribution to Indonesia’s knowledge and skills ecosystem.
Also read: Understanding Super Tax Deduction in Indonesia
Minimum Capital: Indirect Tax Planning Impact
Although not a tax rule, capital requirements influence the tax posture of an entity.
- PT PMA: Minimum paid-up capital of IDR 10 billion
- PT PMDN: No fixed minimum; micro and small companies can start below IDR 1 billion
Foreign investors evaluating early-stage ventures may find PT PMDN structurally advantageous, especially when tax incentives are part of the long-term strategy.
Also read: PT PMA (Foreign Company) Taxation in Indonesia: Complete Guide
Double Tax Treaties: A PT PMA Strength
PT PMA entities benefit from Indonesia’s wide network of double tax treaties, reducing withholding tax rates on dividends, interest, and royalties when paid to foreign shareholders. PT PMDN only benefits from these reductions if foreign shareholders are involved.
Bottom-Line Comparison
- PT PMA remains the correct structure for foreign control, cross-border capital injection, global licensing, and treaty benefits.
- PT PMDN has emerged as the more tax-advantaged structure when optimizing for Indonesia’s modern incentive landscape, particularly for pioneer sectors or large-scale domestic projects.
Table of Tax Differences Between PT PMA and PT PMDN
| Tax Aspect | PT PMA (Foreign Investment Company) | PT PMDN (Domestic Investment Company) |
|---|---|---|
| Corporate Income Tax (CIT) | 22 percent standard rate; SMEs may qualify for 11 percent | 22 percent standard rate; SMEs may qualify for 11 percent |
| Tax Holiday (Pioneer Industries) | Not eligible as of 2024–2025 due to GloBE 15 percent rule | Eligible for 50–100 percent reduction for 5–20 years |
| Tax Allowance (30 percent net income deduction) | Limited availability; only through specific schemes (e.g., SEZs) | Fully eligible under Government Regulation 78/2019 |
| Accelerated Depreciation & Amortization | Available under MoF Reg. 72/2023 | Available under MoF Reg. 72/2023 |
| Super Deduction R&D (Up to 300 percent) | Eligible | Eligible |
| Super Deduction Vocational Training (Up to 200 percent) | Eligible | Eligible |
| Double Tax Treaties (P3B) | Can access reduced withholding tax rates on dividends, interest, royalties | Limited; generally applies only if foreign shareholders involved |
| Minimum Paid-Up Capital | Minimum IDR 10 billion required | No fixed minimum; micro–small businesses may start below IDR 1 billion |
| Impact of Global Minimum Tax (GloBE 15 percent) | Strong impact; limits access to tax holidays and incentives | Beneficial; more access to tax incentives than PT PMA |
| Dividend Withholding Tax | Eligible for DTA reductions based on treaty | Standard 10 percent domestic WHT applies; DTA applies if paid to foreign shareholders |
For accurate tax planning, incentive qualification assessment, and full compliance, consult InvestinAsia’s Tax Consultant and Compliance Service.
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 now for FREE consultation and special package!
FAQs
What is the main tax difference between PT PMA and PT PMDN?
The primary difference lies in incentive eligibility. PT PMDN has broader access to tax holidays and tax allowance facilities, while PT PMA’s access is limited due to the global minimum tax rules.
Do PT PMA and PT PMDN pay the same corporate income tax rate?
Yes. Both entities are subject to the standard 22 percent corporate income tax rate.
Can PT PMA still receive tax holidays?
Generally no. Most PT PMA entities no longer qualify for pioneer industry tax holidays due to GloBE minimum tax alignment.
Are depreciation rules different for PT PMA and PT PMDN?
No. Both follow the same depreciation and amortization rules under MoF Regulation 72/2023.
Is PT PMDN always better for tax efficiency?
Not always. PT PMDN is better for incentive access, but PT PMA may be essential for foreign control, treaty benefits, and international structuring.
