Resident companies in Indonesia are generally taxed on their worldwide income. Non-resident companies are generally taxed on Indonesian-source income, including income attributable to a permanent establishment (“PE”) in Indonesia. A foreign company carrying on business through an Indonesian PE generally has tax obligations similar to those of an Indonesian resident corporate taxpayer. 

A company is generally regarded as an Indonesian tax resident if it is established or domiciled in Indonesia. Indonesian tax residents and Indonesian PEs are subject to the Indonesian self-assessment regime.

Taxable income is generally calculated based on accounting income, subject to the tax adjustments required under Indonesian tax legislation. In general, expenses incurred to obtain, collect and maintain taxable income are deductible, subject to specific deductibility restrictions. Differences between accounting and tax treatment can therefore result in temporary or permanent tax adjustments.

Indonesia does not have a consolidated corporate income tax filing regime; each taxpayer generally calculates and reports its own taxable income.

Foreign companies without an Indonesian PE generally discharge Indonesian income tax liabilities on Indonesian-source income through withholding tax imposed on payments made by Indonesian parties.

The standard corporate income tax (“CIT”) rate is 22% of taxable income. This rate continues to apply for 2026. 

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%.

Small enterprises, or corporate taxpayers with an annual turnover of not more than IDR 50 billion, are entitled to a 50% discount of the standard tax rate which is imposed proportionally on taxable income of the part of gross turnover up to IDR 4.8 billion.

Certain taxpayers with annual gross turnover of not more than IDR 4.8 billion may instead be subject to final income tax at 0.5% of gross turnover, subject to the eligibility conditions and time limitations under the applicable regulations. 

Generally, the year of tax assessment is January to December. However, a corporate taxpayer can elect to file a corporate tax return based on the company’s book year other than the calendar year of January to December. The approval from Minister of Finance is required if tax payer intends to change the fiscal periods.

Certain industries are subject to specific Article 15 income tax regimes based on deemed profit rather than actual net profit.

*Calculated using the old tax rate of 30% because the decree that regulates the deemed profit margins has not been revised.

**Calculated using the current tax rate of 22%.

Tax is withheld from dividends as follows:

1. Resident recipients

Dividends distributed by an Indonesian company to an Indonesian resident corporate taxpayer are generally exempt from income tax.

Dividends received by an Indonesian resident individual can also qualify for non-taxable treatment where the applicable reinvestment requirements in Indonesia are satisfied. Otherwise, domestic dividends received by resident individuals are generally subject to final income tax, currently at up to 10%. 

Dividends received from foreign companies by Indonesian resident taxpayers may qualify for exemption where the applicable reinvestment/business-use requirements are satisfied. The detailed requirements differ depending on the nature of the foreign investment and should be assessed under the current implementing rules. 

1. Non-resident recipients

Dividends paid by an Indonesian resident company to a non-resident are generally subject to 20% final withholding tax, unless a lower rate is available under an applicable double taxation agreement (“DTA”). 

Application of treaty rates is subject to the relevant treaty requirements, including beneficial ownership and the required certificate of residence/domicile documentation. 

1. The Controlled Foreign Corporation (CFC) rules

Indonesia applies CFC rules under which certain passive income of a controlled foreign company may be treated as a deemed dividend received by an Indonesian taxpayer.

A foreign entity can generally fall within the CFC regime where it is at least 50% owned, directly or indirectly, by an Indonesian taxpayer or collectively by Indonesian taxpayers. The rules cover specified passive income, including dividends, interest, rentals, royalties and certain gains from the disposal or transfer of assets. Listed foreign companies meeting the relevant recognised-stock-exchange condition are generally outside the CFC regime.

Capital gains are generally included in taxable income and subject to the normal CIT rate.

An important exception applies to the transfer of land and/or buildings, which is generally subject to final income tax at 2.5% of the transaction value or government-determined value, as applicable.

Interest received by an Indonesian resident company from time deposits and savings is generally subject to 20% final income tax, subject to the applicable exemptions and special rules.

Interest on bonds is generally subject to 10% final income tax under the current regime.

Other interest income received by an Indonesian resident taxpayer is generally taxable at the normal CIT rate, with 15% Article 23 withholding tax generally applying to interest payments to Indonesian resident recipients. The withholding tax generally constitutes a tax credit against the recipient's CIT liability.

Interest paid to a non-resident is generally subject to 20% Article 26 withholding tax, subject to a lower DTA rate where applicable.

Tax losses may generally be carried forward for five tax years following the year in which the loss was incurred.

There is generally no carry-back of tax losses.

Certain approved tax incentives can extend the loss carry-forward period beyond five years, subject to specific conditions. Under the tax allowance regime, for example, the carry-forward period can be extended to a maximum of 10 years.

a. Tax reduction for public companies

Public companies meeting the statutory requirements may apply the 3-percentage-point CIT reduction, producing an effective CIT rate of 19%.

The principal requirements include:

• at least 40% of paid-up shares being publicly owned;
• the shares being held by at least 300 individual shareholders, subject to the applicable requirements; and
• the relevant public ownership and shareholder conditions being maintained for the required period.

2. Income Tax incentive for medium enterprises

The Companies with an annual gross turnover of not more than Rp50 billion, are entitled a 50% discount of the standard corporate tax rate of 22% which is imposed proportionally on taxable income of the part of gross turnover up to Rp4.8 billion.

c. Final Tax regime for small enterprises

Eligible taxpayers with gross turnover not exceeding IDR 4.8 billion may be subject to final income tax at 0.5% of gross turnover, subject to the taxpayer's legal form, eligibility and applicable time limitation.

d. Tax holiday

For qualifying pioneer-industry investments, the principal benefits include:

• 100% reduction of CIT for qualifying investment plans of at least IDR 500 billion; and
• 50% reduction of CIT for qualifying investment plans of at least IDR 100 billion but less than IDR 500 billion.

For the 100% reduction, the period can range from 5 to 20 years, depending on the investment value, followed by a 50% CIT reduction for two subsequent years.

For the 50% reduction, the facility is generally available for five years, followed by a 25% CIT reduction for two subsequent years. 

This facility is provided to firms in pioneer industries which have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy. Currently this facility is available for the business sectors with specific Indonesian Standard Classification of Business Field (Klasifikasi Baku Lapangan Usaha/KBLI) as listed in the regulation. Business sectors outside this list may also apply by fulfilling the self-assessed quantitative scoring system to justify their nature as a pioneer industry.

Generally, an application must be submitted via the Online Single Submission (OSS) system, which will verify the eligibility of the application and pass it on to the MoF. Under the latest regulation, proposals can be submitted to the MoF until 31 December 2025.

Under the latest Tax Holiday regulation, a taxpayer who has obtained a Tax Holiday facility but also falls under a qualifying taxpayer being part of a multinational enterprise group that is subject to Global Minimum Tax under Pillar Two rules, is subject to an additional domestic top up tax under this rule. This domestic top up tax would also apply to those who have obtained the Tax Holiday facility prior to 9 October 2024.

e. Tax allowance

Eligible Indonesian companies investing in certain designated business areas or in certain designated regions may obtain a tax allowance.

The principal facilities include:

1. a reduction in taxable income equal to 30% of the qualifying investment in tangible fixed assets, including land, allocated at 5% per year over six years from commercial production;
2. accelerated depreciation of qualifying tangible fixed assets and accelerated amortisation of qualifying intangible assets;
3. a reduced dividend withholding tax rate of 10%, or the applicable lower DTA rate, for dividends paid to non-resident shareholders; and
4. an extension of tax-loss carry-forward periods to more than five years but not more than 10 years, subject to the relevant conditions.

Eligibility generally depends on criteria such as high investment value/export orientation, high labour absorption or high local content. Applications are generally made through the Online Single Submission (“OSS”) system and are subject to approval by the Ministry of Finance.

f. Super deduction facility

The super deduction facility will be given to certain industries as follows:

• facility for labour-intensive industries; in the form of a reduction in net income of 60% of the amount invested in the form of tangible fixed assets (including land utilised for main business), spread throughout a certain period;
• facility for human resources development in certain competencies; in the form of a reduction in gross income of up to 200% of the amount spent for this activity;
• facility for certain R&D activities in Indonesia; in the form of reduction in gross income of up to 300% of the amount spent for this activity.

1. g. Other investment and regional incentives

Indonesia also provides tax and customs incentives for investments in designated areas and sectors, including:

• Special Economic Zones (“KEKs”);
• Free Trade Zones;
• Certain industrial zones;
• The Nusantara/IKN area; and
• Certain qualifying investment projects.

Depending on the applicable regime, benefits may include CIT reductions, accelerated depreciation, VAT and import-tax facilities, customs exemptions and other incentives. 

Dividends – Based on the new Tax Regulations Harmonization Law, starting from the 2022 fiscal year, in general dividends are non-tax- objects. This was in the contrary of the previous regulations of which dividends were tax objects. To qualify for non-tax-objects, dividends paid by a domestic corporate taxpayer to a resident individual must be invested in Indonesia for a certain period. If not met, a 10% final withholding tax is imposed on dividends paid to a resident individual.

If dividends paid by a domestic corporate taxpayer to a non- resident, dividends are subject to a final 20% withholding tax (or a reduced treaty rate). If dividends were paid by a domestic corporate taxpayer to a domestic corporate taxpayer, it is exempted as tax objects without any investment requirements (non-taxable).

Dividends paid from foreign corporate taxpayer to a domestic individual and/or domestic corporate taxpayer must be invested in Indonesia for a certain period and at least 30% must be invested in Indonesia and before the DGT issues any tax assessment letters on the dividends.

Interests - Interest paid to a non-resident is subject to a 20% withholding tax (or a reduced treaty rate). Interest paid by a domestic taxpayer to a resident is subject to a 15% withholding tax, which represents an advance payment of tax liability.

Royalties - A 20% withholding tax is imposed on royalties remitted abroad (or a reduced treaty rate). For tax purposes, royalties refer to any charge for the use of property or know-how in Indonesia, as well as the transfer of a right to use property or know-how in Indonesia. Royalties paid by a domestic taxpayer to a resident are subject to a 15% withholding tax, with the payment representing an advance payment of tax liability.

Technical service fees and rental - A 2% withholding tax applies on gross payments made by a domestic taxpayer to a resident taxpayer for technical, management and consulting services and rentals (except for land and building rentals). For the land and building rental is subject to 10% Final Income Tax. Under the domestic tax law, a 20% withholding tax (or a reduced treaty rate) is imposed on technical service fees remitted abroad.

Branch Profit Tax - Permanent establishments are subject to a 20% branch profits tax (or a reduced treaty rate) on after-tax profits.

Transactions between related parties must comply with the arm's-length principle.

The principal current regulation is Minister of Finance Regulation No. 172/2023 (“PMK 172/2023”), which replaced and consolidated the earlier transfer-pricing documentation, Mutual Agreement Procedure and Advance Pricing Agreement regulations.

Where applicable, taxpayers must prepare and maintain three-tier transfer-pricing documentation consisting of:

• Master File;
• Local File; and
• Country-by-Country Report (“CbCR”).

The Master File and Local File requirements generally apply where specified thresholds are met, including, among other criteria:

• prior-year gross turnover exceeding IDR 50 billion;
• prior-year related-party transactions exceeding IDR 20 billion for tangible goods; or
• related-party transactions exceeding IDR 5 billion for each category of services, interest, intangible-property transactions or other specified transactions; or
• transactions with related parties in jurisdictions having a lower income tax rate than Indonesia, subject to the regulation.

The transfer-pricing documentation must be available in accordance with the current rules and, generally, no later than the deadline for the annual CIT return. DGT guidance states that documentation supporting an APA should be available at the same time as the tax return, i.e. no later than four months after the end of the fiscal year.

The DGT may recalculate taxable income or deductible expenses where transactions do not comply with the arm's-length principle. Current rules also provide mechanisms for corresponding adjustments, APAs and MAP procedures. 

Indonesia has issued MoF Regulation No.136/2024, effectively from 1 January 2025, and the implementing administrative procedures, PER-6/PJ/2026, which was issued on 4 May 2026, as an implementation of the OECD/G20 Global Anti-Base Erosion (“GloBE”) rules. This regulation introduced:

• the Income Inclusion Rule (IIR);
• the Undertaxed Profits Rule (UTPR); and
• a Qualified Domestic Minimum Top-Up Tax (QDMTT)

The rules generally apply to multinational enterprise groups with consolidated annual revenue of at least EUR 750 million, subject to the detailed scope and exclusions in the regulation.

This development is particularly important when assessing the economic value of tax holidays and other CIT incentives for large multinational groups, because a tax incentive reducing the Indonesian effective tax rate may result in a domestic top-up tax under Pillar Two.