Personal income tax (PIT) in Indonesia.

Personal income tax (PIT) in Indonesia

This guide will outline what you need to know about personal income tax in Indonesia.

Individuals in Indonesia, both residents and non-residents, are required to pay personal income tax according to their taxable income.

Let’s jump in and find out more about personal income tax.

Taxable income in Indonesia

Resident taxpayers must file personal income tax returns through a self-assessment system and are subject to tax rates of 5% to 30%.

The personal income taxpayer can be a resident or a non-resident of Indonesia.

Worldwide income vs income in Indonesia

Indonesia has endorsed a worldwide income tax system which Indonesian tax residents pay tax from the income they earned inside Indonesia and abroad. If you are a non-resident taxpayer, you will only pay tax for the income you earned in Indonesia.

Who is a tax resident in Indonesia?

You are considered as a personal resident taxpayer if you have been in Indonesia for at least 183 days within 12 months or have been in Indonesia during a fiscal year and plans to live in Indonesia for longer.

Non-resident taxpayers are subject to pay a single tax rate of 20% on income earned.

Personal income tax rates

Resident-taxpayer’s tax rates

Taxable incomeRate Tax (IDR)
Up to IDR 50 million5%2.5 million
Over IDR 50,000,001 but not exceeding IDR 250 million15%30 million
Over IDR 250,000,001 but not exceeding IDR 500 million25%62.5 million
Over IDR 500,000,00130%30% of the relevant amount

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Types of income subjected to personal income tax

Income that is subjected to pay personal income tax include:

  • Employment income
  • Onshore and offshore dividends, interest income and royalties
  • Onshore and offshore rental income
  • Onshore and offshore capital gains

Resident taxpayers who conducts certain business activities with a gross revenue of not more than IDR 4.8 million can choose to use the 0.5% final income tax rate, which will be calculated from the gross revenue.

Tax rates of severance payments

The tax rates imposed on severance payments are:

Taxable incomeRate Tax (IDR)
Up to IDR 50 million00
Over IDR 50,000,001 but not exceeding IDR 250 million5%2.5 million
Over IDR 250,000,001 but not exceeding IDR 500 million15%60 million
Over IDR 500,000,00125%25% of the relevant amount

Available deductions for personal taxable income

There are several deductions for an individual when determining the personal taxable income.

Personal deductions

Basis of deductionDeductible amount per year
Individual taxpayerIDR 54,000,000
SpouseIDR 4,500,000 (additional 54,000,000 for a wife whose income is combined with her husbands)
Dependents (maximum three)IDR 4,500,000 each
Occupational support5% of gross income up to a maximum of IDR 6,000,000
Pension costs5% of gross income up to a maximum of IDR 2,400,000
Contribution to approved pension fundAmount of self-contribution
Compulsory tithe or religious contributionsActual amount, provided that valid supporting evidence is available, and all requirements are met.

Personal tax exemption

Certain foreigners are exempted from paying personal income tax and are not considered as a tax resident even if they have stayed in Indonesia for longer than 183 days because of their legal status.

The exemption applies to:

  • Foreign diplomatic and consular personnel
  • Military personnel and employees of foreign armed services
  • Representatives of international organisations specified by the Ministry of Finance

Claiming tax credits in Indonesia

Personal tax residents can claim tax credits at the financial-year end.

The domestic tax credits include:

  • Income tax on employment income withheld by the employer
  • Tax collected on business income
  • Withholding tax on other income which is not a final tax in nature
  • Provisional monthly tax instalments made by the taxpayer during the fiscal year

Foreign tax credits include:

  • Tax deducted by foreign countries can be treated as tax credit. However, foreign tax credit claim is limited to the total Indonesian income tax due on the foreign income.
  • Indonesian tax due can be reduced by tax paid abroad on income received or earned abroad on a country-by-country basis.

Submitting income tax returns

Any tax that is needed to be paid must be done before the tax return is lodged.

The annual tax return is from 1 January to 31 December, and personal tax return must be lodged to the Tax Office at the latest by 31 March of the following year. Individuals who have monthly personal tax obligations must settle the tax payable at the latest by the 15th of the following month.

The monthly submission obligation is considered to be completed once the payment is made. Late payment may result in a 2% interest penalty per month, while late filing of the tax return results in an IDR 100,000 fine.

Extension of annual income tax return filing

If you are unable to submit the annual personal tax return by 31 March, you may request an extension to file the return by 31 May by submitting Form 1770-Y.

Even though you extend the time to file the returns, this does not extend the period of paying the tax return.

Tax return documents

Documents that need to be attached to the annual personal income tax return (Form 1770 and 1770S) include:

  • Tax payment slips to show that the balance of income tax payable according to the tax calculation has been paid
  • List of liabilities and assets
  • A copy of the Employer’s Certificate of Income Tax on Earnings (Form 1721 – A1)
  • List of the taxpayer’s dependents
  • Letter of authority for tax representative to submit the tax return
  • The supporting documents for foreign tax paid

Tax return registration

To file a tax return, you must first register in order to have a tax identification number (NPWP). The documents needed to register as a taxpayer include:

  • Copy of passport
  • Copy of work permit (ITMA)
  • Copy of limited stay permit (ITAS)
  • Completed registration form
  • Letter of authority for tax professional/representative to conduct the registration process
  • Copy of the sponsoring company’s NPWP

Further, most tax offices encourage taxpayers to submit the tax return electronically. Therefore, you may be required to register for the electronic Filing Identification Number (eFIN).

Termination of residence in Indonesia

If a foreigner is going to leave Indonesia permanently, the foreigner must cancel their tax registration by submitting an application.

Before the tax office approves of the deregister, the tax office must perform a tax audit on the taxpayer’s returns and necessary documents.

All tax-related documents such as bank statements, salary slip, employment contract and foreign tax paid documents must be available for the tax audit.

The documents needed for the termination include:

  • Deregistration form
  • Letter from the individual requesting the deregistration of the tax registration number due to leaving Indonesia and is no longer working at the company
  • Statement letter from the company that the individual is no longer working at the company
  • Original tax registration (NPWP) card
  • Copy of Exit Permit Only (EPO)
  • Letter of authority to enable the tax professional/representative to handle the tax deregistration

Conclusion

You must file your personal income tax on time and correctly as you can be fined 2% per month for any late monthly filings and IDR 100,000 for late reporting on annual personal income tax.

To make sure you make filings on schedule, we recommend engaging with Acclime’s tax services.

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