Indonesia Advisory

Indonesia individual Income Tax
Individual income tax (Pajak penghasilan) rates in Indonesia are
progressive up to 30%, as follows:

Taxable income (Rp) Tax Rate
0 – 50,000,000 0 + 5% on excess
50,000,001 – 250,000,000 2,500,000 + 15% on excess
250,000,001 – 500,000,000 32,500,000 + 25% on excess
Above 500,000,000 95,000,000 + 30% on excess

An additional 20% tax is imposed on the individuals, other than
non-tax residents, who do not posses tax identification number (NPWP).

ALLOWABLE TAX DEDUCTIONS

In determining the annual taxable income of an individual, the
following may be deducted from gross income:

- Occupational support: 5% of gross income, up to maximum of 6,000,000
- Pension: 5% of gross income, up to maximum of 2,400,000
- Non-taxable income:
. For the taxpayer 15,840,000
. Additional for a married taxpayer 1,320,000
. Additional for each lineal family member related by blood
marriage who is a full dependent up to a maximum of three 1,320,000
each

A married female employee is only allowed non-taxable income for
herself unless she has a certificate from the local authorities
stating that her husband does not work.

Non-resident individuals are subject to a final tax of 20% where the
payments represent compensation for work performed in Indonesian
regardless of where paid.

Lump sump pension payments and severance pay on individual residents
are subject to final tax on the gross amount at the following rates:

Taxable income Tax Rate
0 – 25,000,000 exempt/non taxable income
25,000,001 – 50,000,000 5% on excess
50,000,001 – 100,000,000 1,250,000 + 10% on excess
100,000,001 – 200,000,000 6,250,000 + 15% on excess
200,000,000 and above 21,250,000 + 25% on excess

However, pension payments made to non-resident individuals are taxed
under Article 26 of Income Tax Law at a rate of 20% on the gross
amount.

Where home leave or education costs are reimbursed, the amount of the
reimbursement is taxable in full on the employee.

Note that food and drink provided at the working area by the employer
to the employees are not subject to tax but deductible for the
employer.

Indonesians are taxed on their worldwide income. Non-residents are
only taxed on income derived from Indonesia. An individual will be a
resident of Indonesia if they are present in Indonesia for more than
183 days or reside in Indonesia during a fiscal year and intend to
stay in Indonesia. Certain tax treaties modify the above rules.

Filing status – The family is considered a single economic unit;
hence, joint filing is required. Separate filing is allowed only if
there is a pre-nuptial agreement between the husband and wife.

Taxable income – Taxable income of individuals includes profits from a
business, employment income and capital gains.

Capital gains – Capital gains derived by an individual are taxed as
income at the normal rates; gains on shares listed in Indonesia are
taxed at 0.1% (final tax) of the transaction value. (An additional tax
of 0.5% applies to the share value of founder shares at the time of an
initial public offering.) Gains on the disposal of land and/or
buildings are taxed at 5% (final tax) of the transaction value.

Source :http://www.taxrates.cc