The main taxes businesses in Indonesia are subject to are:
Income tax is imposed on income received or obtained in one fiscal year. The corporate income tax rate is generally 25%. A 5% reduction applies to publicly listed companies that meet certain requirements.
Value added tax (VAT)
VAT is imposed on the delivery of goods and services. The rate of VAT is 10%.
Luxury goods sales tax
In addition to VAT, a special tax is imposed on the import and/or delivery of luxury goods and services. Government Regulation No. 145/2000 dated 22 December 2000 specifies the types of goods that are considered as luxury goods and the rate of sales tax on those luxury goods. There are six types of goods subject to luxury sales tax at rates ranging from 10% to 75%.
Land and building tax
Land and building tax is imposed annually on property, buildings and land in Indonesia. The rate varies depending on the location of the land or building.
Duty on acquisition of rights in land and buildings (BPHTP)
BPHTB is imposed on individuals and entities that acquire rights in land and/or building. The rate of BPHTB varies depending on the location of the land or building.
Local government tax
Depending on an entity’s domicile, various taxes, charges and duties will be imposed by the local government, such as vehicle tax, restaurant tax, hotel tax, and so on.
For more information, please contact:
Ira A. Eddymurthy, Senior Partner
Revaldi N. Wirabuana, Associate
This first appeared in Establishing a Business in Indonesia, published by Thomson Reuters Practical Law. You can find the full chapter here.
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