Tax consultant in Indonesia

There are a couple of considerable changes when it comes to paying corporate income tax in Indonesia in 2024.

The good news is that the government is taking measures to make paying taxes more efficient. It’s easier than before to deduct expenses from your annual profit to reduce the amount of tax you have to pay.

However, it also requires your company to be well-structured in reporting its withholding tax. The government also has more ways to validate that the information you report is accurate.

In this article, we’ll guide you through the 2024 changes to the corporate income tax and how to take the most out of the allowed deductions.

What is the corporate income tax rate in Indonesia?

Companies in Indonesia are divided into three income tax brackets:

Annual revenueTax rate
0.5% of gross revenue0.5% from gross revenue
4.8-50 billion IDR11% from profit
Over 50 billion IDR22% from profit

How is corporate income tax calculated?

Corporate income tax follows a general formula:

Taxable income = Gross income – allowed deductions

Taxable income is then multiplied by the tax rate depending on your annual revenue (see the table above).

What expenses can I deduct to reduce my corporate income tax in Indonesia?

If your revenue is below 4.8 billion IDR, you cannot deduct expenses since the corporate income tax is calculated based on your gross revenue.

If your revenue is over 4.8 billion IDR, the corporate income tax is calculated based on your profit. However, this means you need to keep accurate records of your withholding taxes since only expenses reported in the Withholding Tax report are deductible.

Fortunately, most business expenses are deductible.

Deductible business expenses and withholding tax rates

Business ExpenseWithholding tax (WHT)
Raw materials purchaseN/A
SalaryPPH 21, starts from 5% – 35%
RentalPPH 4.2: 10%
Insurance Premium
Marketing and PromotionWHT: 2% (for residence agency) or 20% (for national agency)Foreign VAT: 10% (If you purchase Ads, for example, or foreign subscriptions)
Foreign exchange lossesN/A
Research and DevelopmentWHT: 2% (for residence agency) or 20% (for national agency)
Donations for Research and DevelopmentN/A
Donation for natural disasterN/A
Donations for Education and SportsN/A
Donation for Education and SportsN/A
Reimbursement for Benefit in Kind (limits apply)N/A

N/A means that there is no withholding tax applied but those are still deductible business expenses as long as they are reported.

When is the corporate income tax reporting deadline in 2024?

All businesses must report their corporate income tax by Apr 30, 2024.

Indonesia Core Tax System

Starting in July 2024, the Indonesian government is launching a new tax system that allows the tax authorities to integrate corporate bank accounts directly into its systems. While its primary objective is to simplify tax recording, it also aims to prevent companies from evading taxes.

While the rollout details are not yet finalized, it’s clear that companies must take tax reporting seriously. Accurate expense recording is also the most efficient way to optimize your income tax.

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