Indonesia Individual

Tax Guide
For Foreigners Working
in Indonesia (Inbound)
JANUARY 2022
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© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 2

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Contents

PERSONAL 01 02
SOCIAL
INCOME TAX SECURITY

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 5

Personal Income Tax
Personal Income Tax

Residency Tax Obligation - Resident Taxpayer

• For tax purposes, resident taxpayers are defined as • Register and obtain Tax ID Number (‘NPWP’)
individuals who: • File individual income tax return annually, declaring taxable income,
✓ are domiciled in Indonesia; or assets and liabilities on self assessment basis.
✓ stay in Indonesia for more than 183 days in any • May need to pay monthly tax instalment/tax prepayment (“Article 25
12-month period; or Income Tax”) on regular income which is not subject to withholding tax
✓ are present in Indonesia during a tax year and and final tax. The amount of which is to be calculated with reference to
intending to reside in Indonesia. the income reported in the prior year annual income tax return.
• A foreigner who qualifies to be a resident taxpayer • Must maintain documents to support the income, taxes paid, and
becomes a tax resident from the date of arrival in assets and liabilities declared in the individual tax return, e.g., bank
Indonesia until the date of final departure from statements, tax withholding slips, foreign tax returns, asset ownership
Indonesia. certificate, etc. Documents shall be maintained for a minimum period
of 10 (ten) years.
• Deregister tax ID number/NPWP upon leaving Indonesia permanently.

Tax year Tax Obligation - Non-resident taxpayer

The tax year corresponds to the calendar year • Do not have an obligation to register for tax ID
number and file individual tax return.
• Subject to tax only on Indonesia sourced
income, which shall be settled via the
withholding tax mechanism by the Indonesian
payer.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 7

Personal Income Tax

Basis of taxation General filing due dates

• The Indonesian tax regime adopts the worldwide income concept
• The annual tax return shall be lodged to the Tax Office
for resident taxpayers. This means that any income earned as a
not later than 31 March of the following year.
tax resident will be subject to Indonesian taxes regardless of the
• Taxpayers who end their tax residency before the end of
source.
the year must file their annual tax return no later than
three (3) months after the end of their tax residency
Territorial Taxation
during that year.
• Effective from November 2020, the Government has introduced a
• Any taxes due must be paid prior to submission of the tax
limited territorial taxation basis for certain foreign citizens who
return.
satisfy the prevailing conditions.
• Under this scheme, foreigners who are tax residents of Indonesia
can be taxed only on Indonesian-sourced income for up to four (4)
years after becoming a tax resident of Indonesia, provided that
they meet certain skill requirements. For this purpose, Indonesian-
sourced income includes any income that is earned in Indonesia
but paid overseas.
• Territorial basis taxation will not apply when the foreigner utilizes
tax treaty benefits between Indonesia and the source country.
• The Indonesia government has issued a list of the specific skills /
occupations which will qualify for the territorial tax basis.
• Eligible foreigners who wish to enjoy the territorial basis taxation
need to submit an application to the Tax Office and obtain a
written confirmation of the Tax Office’s approval.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 8

Personal Income Tax
Important dates

1 January 15th of the month 31 March – annual filing deadline 31 May – extended filing deadline 31 December

End of the
Beginning of the Settlement of the provisional Tax payment and normal filing deadline of ➢ Maximum extension for filing
Indonesian
Indonesian fiscal monthly tax payable (if due); annual individual income tax return; for deadline of annual individual income
Fiscal Year.
year. e.g., September 2021 tax example, Individual Income Tax Return for tax return.
instalment must be paid by 15 Fiscal Year 2021 should be filed by 31 March
October 2021. 2022. Any underpayment of tax must be ➢ There is no extension available for
settled latest by March 31st, and before the tax payment deadline.
submission of the annual tax return.

Taxpayer with certain criteria can submit a

notification on extension of time to file tax
return to the tax office, for up to a
maximum of two months.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 9

Personal Income Tax
Certificate of Residence

A certificate of residence or certificate of domicile

A certificate of residence or certificate of domicile is a document issued by

the Tax Authority for its resident taxpayers requiring proof of residential
status for the purposes of claiming tax benefits under Double Taxation
Agreements (DTA).

An Indonesian resident taxpayer who has a tax ID number may apply for the
certificate for the current tax year (full/part year) and/or prior tax years for a
maximum of 5 prior years. The application needs to be submitted to the Tax
Office where the taxpayer is registered, for the specific tax year for which
the certificate is requested and completed with the required supporting
documents. If the application is approved, the Tax Office will issue the
certificate within 10 working days.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 10

Personal Income Tax
Individual Tax Rates

Resident Taxpayer
The standard tax rates on taxable income received by resident
taxpayers are as follows:

Taxable Income 2021 Rate Taxable Income 2022 Rate*)

Up to Rp 50,000,000 5% Up to Rp 60,000,000 5%

Over Rp 50,000,000 but not exceeding Rp 250,000,000 15% Over Rp 60,000,000 but not exceeding Rp 250,000,000 15%

Over Rp 250,000,000 but not exceeding Rp 500,000,000 25% Over Rp 250,000,000 but not exceeding Rp 500,000,000 25%

Over Rp 500,000,000 30% Over Rp 500,000,000 but not exceeding Rp 5,000,000,000 30%

Over Rp 5,000,000,000 35%

*) Applicable from 1 January 2022 onwards

Non-resident Taxpayer
A single rate of 20% is imposed on gross income; however, this rate may vary depending on the circumstances and the
applicable tax treaty provisions.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 11

Personal Income Tax
Personal Deductions

Basis of Deduction Deductible Amount (Per Year)

Taxpayer Rp 54,000,000

Rp 4,500,000 (additional Rp 54,000,000 for a wife whose income

Spouse
is combined with her husband’s)
These personal deductions are
Rp 4,500,000 each available for resident individual
Dependents taxpayers in calculating their
(up to a maximum of 3 individuals related by blood or marriage)
taxable income, depending on
the taxpayer’s personal
Occupational Support 5% of gross income up to a maximum of Rp 6,000,000
circumstances.

Pension contribution 5% of gross income up to a maximum of Rp 2,400,000

Contribution to approved pension

Actual Amount of self-contribution
fund, e.g. BPJS Ketenagakerjaan

Actual amount, provided that valid supporting evidence is

“Zakat” or religious contributions
available and certain requirements are met

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 12

Personal Income Tax
Categories of taxable income

Employment Income • Employment income provided in Indonesia is subject to

tax, regardless of where the income is paid.
• Indonesian tax resident companies and permanent
• In addition to salary, taxable employment income
establishments are required to withhold income tax (“Article
includes (but may not be limited to) bonuses,
21 / Article 26 Income Tax”) from the salaries payable to
commissions, overseas allowances, and fixed allowances
their employees on a monthly basis and pay the tax to the
for education, housing, and medical care.
State Treasury on their behalf and report it to the Tax Office.
• Prior to 1 January 2022, in-kind benefits paid by the
• Employment income paid offshore that has not been taxed employer in Indonesia such as medical expenses,
through withholding is subject to tax in the individual’s tax company-provided cars and housing, home leave, etc.,
return. are not, in most cases, taxable as income to the
employee, and non deductible by the employer.
• Effective from 1 January 2022, only certain In-kind
benefits are not subject to income tax, such as:
Resident individual taxpayers without a tax ID number/NPWP - food and beverage for all employees;
are subject to a surcharge of 20% in addition to the standard - benefit in certain remote area;
Article 21 Income Tax rates. - benefit that is required to carry the work
assignment;
- benefit financed by government; or
- other in-kind benefit with certain limitation.
Benefits other than the above shall be taxed at the
employees’ hands, and tax deductible for the
employer.
© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 13
Personal Income Tax
Categories of taxable income

Capital Gain Interest Income

Onshore capital gains Onshore interest income

Certain capital gains earned by tax residents in Indonesia are subject to Time deposits and savings with The tax is 20% final tax.
final tax, such as Indonesian banks or
Indonesian branches of foreign
Sale of land and/or The tax is 2.5% final tax on the taxable sale value banks (in any currency),
buildings located in or the actual proceeds, whichever is higher.
Indonesia. Interest on Indonesian bonds The tax is 15% final tax.

Sale of shares traded The tax is 0.1% final tax on the sales proceeds. Other interest income other Combine with other income of the
in the Indonesia than from Indonesian individual and assessable at standard
banks/bonds income tax rates

Offshore capital gains Offshore interest income

Capital gains earned by a tax resident are generally assessable at standard Interest income earned by a tax resident from offshore is taxed at standard
income tax rates, together with other income of the individual. income tax rates

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 14

Personal Income Tax
Categories of taxable income

Dividend Income Rental Income

Onshore / domestic dividend income Onshore rental income

Effective from November 2020, dividend income from Indonesia received Rental income from a building or land that is located in Indonesia is subject to
by an individual tax resident is no longer subject to withholding tax. 10% final tax, which is calculated on the gross rental income.

The individual recipient needs to self assess and remit the tax due directly Offshore rental income
to the State Treasury by 15th of the following month unless if they are
qualified for the tax exemption. Rental income from offshore earned by an individual tax resident is taxed at
standard income tax rates.
To qualify for the tax exemption, the dividend income must be reinvested
in Indonesia within 3 years and meets the reinvestment conditions Any expenses related to offshore rental income can be deductible such as
determined by the tax law. management fee, loan interest, repair expense, etc.

Offshore dividend income

Dividend income from overseas may also qualify for the tax exemption
provided that it meets the reinvestment requirement and other prevailing
conditions as per the tax regulations.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 15

Personal Income Tax
Tax Credits

Domestic Tax Credits Foreign Tax Credits

z z
An individual tax resident can claim the following tax An individual tax resident can claim the tax paid in the source country as
credits against the tax due at fiscal year-end tax credits against the tax due at fiscal year-end
• Income tax on employment income withheld by • Indonesian tax due can be reduced by foreign tax paid at the source
the employer (Article 21 Income Tax) country on income received or accrued abroad based on the
prevailing regulation and limitation on a country-by-country basis.
• Tax collected on business income
• The foreign tax credit that may be claimed is limited to the effective
• Withholding tax on other income which is not
Indonesian income tax or the tax treaty rate, whichever is lower.
final tax in nature
• Taxpayer must be able to provide an evidence of the foreign tax paid
• Provisional monthly income tax instalments
upon request from the tax authorities.
(Article 25 income tax) made by the taxpayer
during the fiscal year • The excess foreign tax credit cannot be carried forward and utilized
in the following year.

• Particularly for dividend income, the foreign tax paid cannot be

claimed if the taxpayer utilize tax exemption.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 16

Personal Income Tax
Assets and Liabilities Reporting

Assets and Liabilities

z
Resident taxpayers are required to declare their assets and liabilities as of the end of
fiscal year. So far, the Tax Office has not set any specific monetary value threshold for The Organization for Economic Co-operation and
the assets and liabilities that should be reported under the individual’s tax return. Development (OECD) has developed a Common
However, asset is defined as accumulated addition to economic capability, whether Reporting Standard (CRS) for the automatic exchange
tangible and/or intangible, fixed or non-fixed, whether used for business or not, which of tax and financial information on a global level, which
is located inside and/or outside Indonesian territory. intention is to reduce the possibility of tax evasion. It
provides for the exchange of non-resident financial
Some examples of assets and liabilities are provided in the instruction for completion of
account information with the tax authorities in the
the annual tax return, such as:
account holders’ country of residence.
• Cash and cash equivalents: cash on hand, savings, time deposits.
• Receivables from affiliates or other receivables.
• Real property: house, apartment, factory, warehouse. Participating jurisdictions that
implement AEOI send and receive pre-
• Investments: shares, bonds, mutual funds, warrants.
agreed information each year, without
• Other investments: pension fund, insurance. having to send a specific request.
• Means of transportation: bicycle, motorcycle, car. Indonesia, as one of the participating
• Other movable property: precious metals and stones, art works, antiques, yacht, countries, has conducted the first
airplane, helicopter, special sports equipment. information exchange since 2018.
• Liabilities: loans from banks, credit cards.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 17

Personal Income Tax
Sanctions

Failure to settle tax payment on time:

❑ Monthly interest charge on the tax payable based on the reference interest rate as determined by Ministry of Finance plus an
uplift which differs depending on the case.

Failure to file on time & administrative sanction for late filing:

❑ Monthly Return: IDR 100,000 per return

❑ Annual Return: IDR 100,000 per return

Failure to file a return due to tax criminal act such as negligence or fraud:

❑ Fine and a possibility of imprisonment (subject to certain conditions).

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 18

Tax Audits

The Tax Office will conduct an audit of an individual tax return in During the tax audit, the Tax Office will examine the
the following circumstances: taxpayer’s records to ensure that the income tax is
calculated properly. In general, records requested by the Tax
Office are bank statements, employment agreement, pay
Tax return shows Audit to test compliance
slips, original withholding tax slips or tax payment slips, cost
overpayment
of living estimation, and other records which are needed by
the tax auditor in verifying the income reported in the tax
return.

Tax ID deregistration process

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 19

Social Security
Social Security

The national social security schemes are the Manpower Scheme

(BPJS Ketenagakerjaan) and Healthcare Scheme (BPJS Kesehatan)

The national social security schemes are mandatory for Indonesian

nationals as well as foreigners who work in Indonesia for at least 6
months

Expatriates need to be able to prove their participation in the social

security schemes when renewing their work permits.

Particularly for old-age saving, it can be withdrawn upon completion

of employment or assignment.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 21

Social Security
The premium contribution

Rate
Social Security
Areas covered
Scheme Borne by Borne by
employer employee Notes:

Working accident protection 0.24% - 1.74% - 1. The regular salary/wages cap for calculating
the pension insurance contribution is Rp
BPJS Ketenagakerjaan Death insurance 0.30% - 8,754,600 per month.
(Manpower Scheme) 2. Contribution to the pension plan is not
Old age saving 3.70% 2%
mandatory for Expatriates
Pension insurance (1)(2) 2% 1% 3. The regular salary /wages cap for calculating
the healthcare insurance contribution is Rp.
1% 12,000,000 per month.
4. The mandatory premium will cover husband,
BPJS Kesehatan (Healthcare Scheme) (3) 4% 1% for (4) wife, and 3 dependents. Additional family
additional members can be covered with additional
family member premium.
The salary cap or percentage may change from time
to time.

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 22

Contacts
Our GES practice

If you have any queries, please correspond with your usual contact within Deloitte Touche Solutions or with any one of the following tax professionals
specializing in Global Employer Services.

Irene Atmawijaya
National GES Leader
[email protected]

Utty Hariani Hidayati Gumilar M Ika Julyana

Partner Senior Manager Manager
[email protected] [email protected] [email protected]

Yosseane W Kristi Bayu Putra Pamungkas Talitha Medinova B

Manager Manager Manager
[email protected] [email protected] [email protected]

© 2022 Deloitte Touche Solutions Indonesia Individual Tax Guide 23

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