The Indonesian taxation system works on a ‘self-assessment’ basis, taxpayers must lodge their income tax return and calculate the amount of tax payable. This is combined with a wide range of ‘withholding taxes’ imposed on many day-to-day transactions. The various taxes include:
- Taxation of employees and payments made to individual entities. There are established Indonesian tax scales.
- The current rate for resident corporations with taxable income is progressive. Net profit up to IDR 50 million is 10 per cent, net profit between IDR 50 million and IDR 100 million is 15 per cent. Net profit exceeding IDR 100 million, 30 per cent tax is applicable.
- Taxes related to payments made to offshore entities (dividends, royalties, etc.). Double tax arrangements (DTA) can provide some relief in this area. However, it is essential that the taxpayer applies to the local tax authorities for such DTA provisions to apply.
- Value Added Tax rate is generally 10 per cent.
For more information on Indonesian customs visit Import Regulations by Indonesia customs or Snapshot of Indonesia's Tax System.