Guide to Corporate Income Tax in Indonesia

When it comes to paying corporate income tax in Indonesia, there have been a few considerable changes in the last years.

The good news is that the government is taking measures to make paying taxes more efficient. It’s now simpler to deduct expenses from your annual profit. This will help 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 latest 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 revenue	Tax rate
Less than 4.8 billion IDR	0.5% from gross revenue
4.8-50 billion IDR	11% from profit
Over 50 billion IDR	22% 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. Only expenses reported in the Withholding Tax report are deductible.

Fortunately, most business expenses are deductible.

Deductible business expenses and withholding tax rates

Business Expense	Withholding tax (WHT)
Raw materials purchase	N/A
Salary	PPH 21, starts from 5% – 35%
Rental	PPH 4.2: 10%
Travel	N/A
Insurance Premium
Marketing and Promotion	WHT: 2% (for residence agency) or 20% (for national agency)Foreign VAT: 10% (If you purchase Ads, for example, or foreign subscriptions)
Amortization	N/A
Foreign exchange losses	N/A
Research and Development	WHT: 2% (for residence agency) or 20% (for national agency)
Donations for Research and Development	N/A
Donation for natural disaster	N/A
Donations for Education and Sports	N/A
Donation for Education and Sports	N/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 2026?

All businesses must report their corporate income tax by Apr 30, 2026.

Indonesia Core Tax System

In July 2024, the Indonesian government launched 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.

With the new rollout, it is clear that companies must take tax reporting seriously. Accurate expense recording is also the most efficient way to optimize your income tax.