Personal Income Tax in Indonesia: An Overview

Personal income tax in Indonesia is a crucial source of revenue collected by the government from individuals based on their various income sources, including salaries, interests, dividends, pensions, and more.

 

Resident Taxpayers in Indonesia

Resident taxpayers in Indonesia are individuals who meet specific criteria. These criteria include being based in Indonesia, staying in the country for more than 183 days in any 12 months, or intending to reside in Indonesia. These taxpayers are legally obliged to register with the Indonesian Tax Office and obtain a Tax ID Number. Importantly, regardless of the source, they are subject to taxation on their worldwide income. Resident taxpayers must file annual income tax returns using various tax forms such as Form 1770, Form 1770-S, and Form 1770-SS, depending on their income sources and levels.
 

Calculating Personal Income Tax

For non-resident individuals in Indonesia, a 20% withholding tax applies to incomes generated within the country. However, specific exceptions exist, such as profits from the sale of shares in an Indonesian-incorporated company, which is subject to a 5% final sales tax. For taxpayers with a National Taxpayer Identification Number (NPWP), personal income tax rates are determined based on their annual taxable income. The standard tax rates for resident taxpayers range from 5% for incomes up to 50 million Indonesian Rupees (IDR) to 30% for incomes exceeding 500 million IDR.
 

Penalties for Non-Compliance

Non-compliance with personal income tax regulations in Indonesia carries penalties. Failure to settle tax payments on time results in a 2% monthly interest charge on the outstanding tax amount. Late filing incurs a sanction of IDR 100,000 per return for both monthly and annual returns. More severe penalties, including fines and imprisonment for up to six years, apply to cases involving tax criminal acts like negligence or fraud.