Corporate Tax in Indonesia

Overview

Indonesia applies a corporate income tax system under which resident companies are taxed on their worldwide income, while non-resident companies are taxed only on income sourced from Indonesia. Corporate taxation in Indonesia is governed by national tax laws and administered by the Directorate General of Taxes (DGT).

Dividends received by certain shareholders may be exempt from income tax, subject to reinvestment requirements and applicable regulations. Capital gains are generally taxable as ordinary income, unless specific exemptions or special tax treatments apply under Indonesian tax laws.

Indonesia also provides various tax incentives and relief programs to encourage investment, support new businesses, and promote economic growth.

Corporate Income Tax Rate

The standard corporate income tax (CIT) rate in Indonesia is 22%, applicable to both local and foreign-owned companies (including PT and PT PMA).

Certain publicly listed companies that meet specific requirements may be eligible for a reduced corporate tax rate, subject to prevailing regulations.

Tax Incentives for New and Growing Companies

Although Indonesia applies a flat corporate income tax rate, the government offers several tax incentive schemes to reduce the effective tax burden for eligible businesses, particularly new companies and small-to-medium enterprises.

1. Tax Holiday Scheme

Eligible companies operating in priority sectors and meeting minimum investment requirements may enjoy a corporate income tax exemption or reduction for a specified period.

2. Tax Allowance Scheme

Companies may receive tax deductions, accelerated depreciation, or reduced withholding taxes if they meet certain investment and business criteria.

3. MSME Final Income Tax Regime

Small businesses with annual gross turnover below a specified threshold may be subject to a final income tax at a reduced rate, simplifying tax compliance during early business stages.

Dividend Tax Treatment

Dividends received by individual or corporate taxpayers may be exempt from income tax if reinvested in Indonesia in accordance with applicable regulations. This policy is intended to encourage capital reinvestment and economic expansion.

Eligibility and Compliance Requirements

To benefit from applicable tax incentives and exemptions, companies must generally meet the following conditions:

• Properly incorporated and registered in Indonesia

• Compliant with Indonesian tax registration and reporting requirements

• Timely submission of annual corporate income tax returns

• Fulfillment of specific investment, business activity, or reinvestment criteria as required under relevant incentive schemes

Certain business sectors may be excluded from specific tax incentives, subject to government policy and regulatory updates.

How brainworks.id Can Help

At brainworks.id, we assist companies in understanding and navigating Indonesia’s corporate tax framework. Our services include tax structuring support, compliance coordination, and advisory on applicable tax incentives—helping businesses operate efficiently while remaining fully compliant with Indonesian tax regulations.