Personal Income Tax

Hereby we provide you with a brief overview of the personal income tax regulation in Indonesia.

Tax Number

The individual taxpayer, whether foreign or Indonesian, is legally responsible for ensuring their registration at the tax office and for timely payment of the taxes due.

The Indonesian Directorate General of Taxation requires all individuals residing in Indonesia including expatriates, to have their own personal tax number, called Nomor Pendaftaran Wajib Pajak (NPWP).

Individuals required to obtain a NPWP tax number and file income tax returns are:
  •     Employees who earn an income in excess of the non-taxable income level a/o income in addition to their monthly salary.
  •     Individuals who receive income from their business or as a self-employed professional.
  •     Individuals who receive income from capital investments.

Notes:

Foreigners, who are present in Indonesia for more than 183 days within a continuous period of 12 months and show the intention to stay, may be obliged to get a NPWP.

Dependent spouses are included in the NPWP of the husband/wife and do not need a separate tax number.

Once you have your personal tax number, you are legally responsible for paying your monthly income tax and for filing your annual tax returns. You are also liable for paying tax on income earned outside of Indonesia, minus the tax paid in those other jurisdictions on that oversees income.

Tax Registration

Taxpayers must register at the Tax Office (Kantor Pelayanan Pajak) in your place of residence. Foreigners living in Jakarta are required to register with the Tax Office for Foreign Entities and Expatriates (KPP BadOrA).

Registration requirements include the following:
  •     Completed registration form
  •     Photocopy of your passport
  •     Photocopy of your work permit
  •     Photocopy of your domicile certificate
  •     Photocopy of your employer's NPWP

Notes:

If you are employed by a local company, the tax office may ask additional employer info.

If you do not file your own tax return, you should also bring an authorization letter, stating the representative who handles your tax matters, usually a tax consultant.

Once you have registered, you will get your personal taxpayer registration number (NPWP). You should notify the tax office if you relocate within Indonesia, if you are retiring in Indonesia or if you are leaving Indonesia altogether.

 

Tax Payment

he income tax is due no later than the 15th of the following month.
The tax report must be submitted to the tax authorities no later than the 20th of the same month.
Note that some companies may have made an agreement with their local tax office to pay and report on an annual basis.

If you are employed by a company, your employer is responsible for the calculation and payment of taxes that need to be withheld from your monthly salary.
The employee is responsible for filing the annual income tax return before the 1st of April of the following year.

It may have been agreed in the employment contract with your employer that they pay your income tax.
However, you are still personally liable for those tax payments on your income.
Therefore you should get a monthly pay slip which states the gross and the net amounts and an overview of the yearly tax calculation from the company you work for.

Registered individuals and legal entities can file for tax electronically.
To be able to do so, they first need to obtain an Electronic Filing Identification Number (EFIN).
The tax amounts are paid via the banking system to the tax office.

Personal income tax rates:

Personal income tax overview:*

Annual Income Income Tax Rate
Up to: Rp 50 million 5%
Between: Rp 50-250 million 15%
Between: Rp 250 million-500 million 25%
Above: Rp 500 million 30%

* The amounts and percentages may be subject to change, due to fiscal amendments.

Worldwide Income

The personal taxation system is based on worldwide income.

Contact the applicable tax agencies to make sure that you are not double taxed in different tax jurisdictions over the same income. The Indonesian tax office has the authority to contact tax offices in countries that have a double-tax Treaty with Indonesia and vice-versa.

Excluded from personal taxation in Indonesia are:
  •     Inheritances.
  •     Gifts & donations.
  •     Fringe benefits & benefits-in-kind.

Note that these gifts and benefits should be correctly processed as such to avoid taxation disputes.

Summary

The Indonesian tax system is quite complex and far-reaching. The tax guides from PwC provide a comprehensive overview of Indonesian taxes.

It is advisable to make use of a certified accountant or tax specialist to file the tax returns on your behalf. If your taxpayer position is multi-faceted, you may contact an international accounting firm who has staff that can assist you in preparing your onshore and offshore taxes.

Do not pay more tax than necessary, but do not leave vital taxes unpaid.