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Guide to Personal Income Tax in Indonesia That You Need to Know
Personal income tax is collected by Indonesian government collects from individuals based on their incomes such as salaries, interests, dividends, pensions and other sources.
Individual employees have their personal income tax calculated by their employers. Employers must then pay the tax to tax authorities on a monthly basis on behalf of their employees.
Indonesia’s Meaning for Resident Taxpayers
Resident taxpayers are defined as individuals who:
- are based in Indonesia,
- stay in Indonesia for more than 183 days in any 12-month period, or
- are present in Indonesia during a tax year and intending to reside in Indonesia.
Resident taxpayers are legally required to register with the Indonesian Tax Office and obtain their Tax ID Number. They are taxed on their worldwide income, regardless of source. Indonesia uses a self-assessment system which means that resident taxpayers need to personally file individual income tax returns (either online or in-person) and declare worldwide income and assets and liabilities annually.
The relevant tax forms are as follows:
- Form 1770: Used for resident taxpayers with business income.
- Form 1770-S: Used for resident taxpayers who receive income from employment and other income.
- Form 1770-SS: Used for resident taxpayers with annual gross income not exceeding IDR 60 millions.
Calculating Personal Income Tax in Indonesia
All tax residents shall be subject to personal income tax. For non-resident individuals in Indonesia, they are responsible for 20% withholding tax on incomes generated in Indonesia, except for profits from the selling of shares in a company incorporated in Indonesia and other properties subject to a final sales tax of 5 per cent.
Other taxpayers with NPWP (National Taxpayer Identification Number) will have their personal income tax rates decided based on the amount of their taxable annual income.
The standard tax rates on taxable income received by resident taxpayers are as follows:
|Amount in Indonesian Rupees (IDR)||Rate|
|Up to 50 million:||5%|
|Over 50 million but below 250 million:||15%|
|Over 250 million but below 500 million:||25%|
|Over 500 million:||30%|
Penalties of Non-compliance
The following are the penalties for non-compliance:
- Failure to settle tax payment on time will acquire a penalty of 2% monthly interest charge on the tax payable.
- Failure to file on time will acquire a sanction of IDR 100,000 per return for monthly returns and IDR 100,000 per return for annual returns.
- Failure to file a return due to tax criminal act such as negligence or fraud will acquire a fine and imprisonment of up to 6 years (maximum).
Exemptions From Personal Income Tax
The following people have a unique legal status and are exempted from personal income tax in Indonesia:
- Consular or diplomatic staff
- Representatives of international organisation
- Foreign armed services or military personnel