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A Guide to Understanding Personal Taxes and Your Obligations

Filing your personal income tax is just as important as your business tax. At 3E Accounting, we provide Individual Personal Income Tax Services in Indonesia that help you meet those needs.

What is Personal Income Tax?

Income taxes are a huge revenue source for the local government. Taxes are imposed based on several factors for individual taxpayers. Everyone living and working in the country should be aware of their tax obligations. Personal income taxes are collected based on:

Salary
Pension
Dividends and interest

As a taxpayer, you are responsible for fulfilling your obligations. Your employer is responsible for calculating how much taxes must be withheld from your salary. Taxes must be paid to the local authorities promptly and on time. A global income tax system is used in Indonesia for personal taxes.

Who Must Pay Personal Income Tax in Indonesia

Anyone who is considered a tax resident must pay their taxes. This includes revenue earned locally and abroad too. If you work in Indonesia but you’re not a resident, you pay personal taxes on the income you earn in the country. Some people might not have to pay taxes at all. This would depend on the treaty agreements between Indonesia and the country in question.

You are considered a tax resident in Indonesia if you have been there for at least 183 days out of a 12-month period. If you plan to stay in Indonesia, you will also be considered a tax resident. All tax residents are identified with a taxpayer number known as Nomor Pendaftaran Wajib Pajak or NPWP.

Those exempted from paying personal income taxes are:

Overseas consular or diplomatic staff
Representatives of international organisations
Foreign armed services staff (civilians)
Military personnel

With 3E Accounting’s Individual Personal Income Tax Services in Indonesia, we can help you get your personal income taxes in order in an easy, hassle-free manner.

What Are the Tax Rates?

Normal tax rates on an individual’s annual revenue are as follows (tax residents):

5% (50 million rupiahs or less)
15% (50-250 million rupiahs)
25% (250-500 million rupiahs)
30% (more than 500 million rupiahs)

A large portion of personal taxes is withheld by the employer. If the taxpayer is not a resident, the withholding tax is 20% of the gross amount. This may vary depending on the tax agreements in place.

Taxes on severance payments are as follows:

0% (50 million rupiahs or less)
5% (50 – 100 million rupiahs)
15% (100- 500 million rupiahs)
25% (Exceeding 500 million rupiahs)

Taxes imposed on lump-sum pension payments are as follows:

0% (less than 50 million rupiahs)
5% more than (50 million rupiahs)

Need Help With Your Taxes? Contact 3E Accounting

When it comes to professionalism, our team is the best in the business. We are well-versed in all taxed related matters. Get the latest information on regulations, compliance, and policy updates directly from our team. You will always be kept in the loop about changes to tax conditions.

Always stay one step ahead of your tax obligations with a team you know you can trust. For more information about our Individual Personal Income Tax Services in Indonesia, contact the 3E team today.