Personal Tax Reporting

Scope of Personal Tax Reporting (Individual Tax Report):

An individual is regarded as a tax resident if the person fulfils any of the following conditions:

• The person resides in Indonesia;
• The person is present in Indonesia for more than 183 days in any 12-month period;
• He/she is present in Indonesia during a fiscal year and intends to reside in Indonesia.
  Note: The provisions of tax treaties may override these rules.
  Non-resident individuals are subject to withholding tax at a rate of 20% (Article 26 income tax, subject to a relevant tax treaty provisions) on Indonesia-sourced income.

Resident individual taxpayers who receive or earn annual income exceeding the PTKP threshold must register with the Tax Office and file annual income tax returns (personal tax reporting). The tax return for this personal tax reporting should disclose all the individual’s income, including compensation from employment, investment income, capital gains, overseas income and other income, as well as providing a summary of the individual’s assets and liabilities. 

A family is generally regarded as a single tax reporting unit with a single tax identity number (NPWP) in the name of the head of the family (typically the husband). His wife and his dependant children’s income must be reported on the same tax return in his name; they may or may not be taxed together with his income depending on whether their income is subject to Article 21 income tax.

Tax Payment:

A substantial part of individual income tax is collected through withholding by third parties. Employers are required to withhold Article 21/26 income tax on a monthly basis from the salaries and other compensation payable to their employees. If an employee is a resident taxpayer, the amount of tax withheld should be based on the normal tax rates. If he/she is a non-resident taxpayer, the withholding tax is 20% of the gross amount (or a tax treaty rate).

Various other payments to individuals also call for withholding tax obligations from the payers. These include, among others:

• Pension payments made by government-approved pension funds;
• Severance payments;
• Old-age security saving payments from BPJS Ketenagakerjaan;
• Fees for services;
• Prizes/awards.

Terms of service fee: 1 year period