Indonesia income tax rate is progressively based on your salary net. Income tax helps the country to grow economic development. It provides a significant source of government revenue funding public investments in infrastructure and essential services.
Income tax was introduced in Indonesia during the colonial era. The first income tax was implemented by the Dutch colonial government in 1904. It was initially imposed on the individuals and corporations of the Dutch East Indies, which included present-day Indonesia. Over the years, the income system has undergone various changes.
Indonesia Income Tax Rate 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?
Indonesia has adopted a world wide taxation system. This requires paying tax on income earned in Indonesia, as well as any income earned abroad, unless subject to a Double Tax Agreement (DTA).
If you’re an employee in Indonesia, the employer will deduct the tax from your salary depending on your income and submit it to the Government on a monthly basis. However if an individual has multiple income streams, they may be required to submit provisional tax based on income.
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Who qualifies as a tax resident in Indonesia?
According to Indonesia law, Individuals are qualify if they meet these:
- 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-Residents individuals – those who earned in Indonesia but do not qualify for tax – are required to pay withholding tax at 20% on their income. However, where an applicable DTA is in force, it’s possible that no need to pay tax, or the total amount will be reduced.
Also read about: Tax Refund in Indonesia for Foreigners
Submitting income tax in Indonesia
Tax year runs in Indonesia from 1st Jan to 31st Dec. All tax residents and non-residents need 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 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.