Indonesia Income Tax – A Quick Summary Of The Local Rules

Indonesia Income Tax

ProCapita Headhunter Indonesia often works for companies that are looking to enter Indonesia and make their 1st local hire. They usually ask us about Indonesia Income Tax Rules…

What are the local Regulations?

So I thought it useful to note down the key items.

In essence Indonesia operates a Progressive Tax System. The more someone earns the higher the income tax rate that applies.

Who Needs to Pay Income Tax in Indonesia?

Anyone that falls into one of the following 3 categories is considered a tax resident and is subject to Indonesian income tax:

  • if the individual lives in Indonesia;
  • or is in Indonesia for more than 183 days within a 12-month period;
  • or if a person is in Indonesia during a fiscal year and intends to reside in Indonesia.

Personal Income Tax Rates

Nearly all elements of income earned by an individual in Indonesia is subject to income tax.

The following Progressive Tax Rates are charged to taxable annual income:

Taxable Income (IDR)Tax RateTax Amount (IDR)
Up to IDR 50 million5 %IDR 2.5 million
Above IDR 50 million and up to IDR 250 million15 %IDR 30 million
Above IDR 250 million and up to IDR 500 million25 %IDR 62.5 million
Above IDR 500 million30 %30% of the relevant amount
Meanwhile, non-resident individuals are subject to a 20 % withholding tax on Indonesia-sourced income.

Personal Deductions

As of 1st January 2016 a person is not taxed on their first IDR 54,000,000 of income earnt.

Also a husband benefits from an additional IDR 4,500,000 deduction.

And there is a further IDR 4,500,000 deduction per child dependent (up to 3).

Tax Payment Process

Companies withhold income tax from an employees salary / earnings each month.

They then transfer the tax payment directly to the Indonesian tax department.

Employee Income Tax in Indonesia must be remitted by the employer to the government on a monthly basis, by the 10th of the following month.

And it must be reported to the tax department by the 20th of the following month.

Tax Returns

Annual Income Tax Return in Indonesia
Annual Income Tax Return in Indonesia

Indonesian tax residents are required to file an Annual Tax Return when their total income exceeds IDR 54,000,000 for a single individual

Or IDR 72,000,000 for a married man with three children/dependents (as of 1st January 2016).

The obligation to complete and submit the annual tax return sits with the individual.

The annual tax return should be filed on or before the 31st of March each year, in regards to earnings made the previous financial year.

If there is any tax due to be paid, the payment must be made before the tax return is lodged.

The penalty for late filing of the annual tax return is IDR100,000. Late payment of tax is subject to an administrative penalty of 2 percent per month, calculated from the payment due date.

While you are here, please check out This Article which gives an overview of the THR Religious Holiday Allowance in Indonesia – also called “the 13th Month Bonus”.

Similarly, This Article which explains BPJS in Indonesia – mandatory Social Security and Healthcare for employees.

For Businesses that are looking to Hire Executive Talent in Indonesia please submit your Enquiry to ProCapita Headhunter Indonesia.

Or you can reach us through our Contact Details. A Senior Executive Recruiter will respond within a few hours.

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James Umpleby, MD of ProCapita Headhunter Indonesia
James Umpleby, MD of ProCapita Headhunter Indonesia
ProCapita Indonesia