Indonesia Income Tax Rates 2023
by activpayroll
For tax residents in Indonesia, personal income is taxed progressively based on net salary. Read on for a full breakdown of Indonesia’s personal income tax rates for 2023, as well as wider guidance on income tax eligibility and advice for international employees earning income in the region
Indonesia Income Tax Rates 2023
For tax residents in Indonesia, personal income is taxed progressively based on net salary. Read on for a full breakdown of Indonesia’s personal income tax rates for 2023, as well as wider guidance on income tax eligibility and advice for international employees earning income in the region.
Let’s begin with an overview of Indonesia’s Personal Income Tax Rates for 2023:
| TAXABLE INCOME (IDR*) |
TAX RATE (%) |
|---|---|
| Up to IDR 60 million |
5% |
| Over IDR 60 million up to IDR 250 million |
15% |
| Over IDR 250 million up to IDR 500 million |
25% |
| Over IDR 500 million up to IDR 5 billion |
30% |
| Over IDR 5 billion |
35% |
Who is eligible to pay personal income tax in Indonesia?
Like many countries in the Asia-Pacific, Indonesia has adopted a worldwide income taxation system. This requires all Indonesian tax residents to pay tax on income earned in Indonesia, as well as any income earned abroad, unless subject to a Double Tax Agreement (DTA).
Income tax for Indonesian-based income is typically deducted at the progressive rates above via statutory withholdings by the employer, which are then submitted to the government on a monthly basis. However, if an individual has multiple income streams, they may be required to submit provisional tax payments based on income earned the previous year.
Who qualifies as a tax resident in Indonesia?
According to Indonesian Income Tax law, individuals are classed as Indonesian tax residents if they fall under the following categories:
● They live in Indonesia
● They reside in the country for more than 183 days over a 12-month period
● They are in Indonesia for part of a financial year with intention to reside there (evidenced by visas, employment contracts, etc)
Do non-resident individuals have to pay tax?
Non-resident individuals – those who earn income in Indonesia but do not qualify as tax residents – are required to pay a general withholding tax at 20% of their Indonesian-based income. However, where an applicable DTA is in force, it’s possible that no tax will need to be paid, or the total amount will be reduced.
Guidance for expats in Indonesia
Territorial Tax Treatment
Indonesia’s Income Tax Law enables eligible foreigners – who have recently become tax residents in Indonesia – to be taxed only on Indonesia-sourced income. This is available to individuals who possess certain eligible skills in science, technology, engineering and maths (STEM) subjects and on the condition that they will be sharing this knowledge with at least one Indonesian citizen.
This tax benefit is available for the first four years of residency in Indonesia, inclusive of any time the individual spends outside of the country. This tax benefit may not be available to individuals who receive income from overseas and already benefit from a tax treaty between Indonesia and the source country.
Submitting income tax in Indonesia
The tax year in Indonesia runs from 1st January to 31st December. All tax residents and non-residents earning income in Indonesia are required to complete an annual tax return for the previous tax year by 31st March. While employers take care of deducting income tax via withholdings for residents, employees are still required to register as a taxpayer and file tax returns annually.
Individuals can register as a taxpayer and submit all relevant forms on the Indonesia Department of Finance website.
Got more questions on income tax in Indonesia, or interested in doing business in the country? Find out everything you need to know about payroll, tax, social security, employee benefits, work permits, employment law and more in activpayroll’s Guide to Doing Business in Indonesia. This is available as a free PDF to download.