Corporate tax in Indonesia is a key consideration for any business—local or foreign—looking to operate in the country. As Southeast Asia’s largest economy, Indonesia presents strong potential for foreign direct investment, but navigating its tax landscape is essential to ensure compliance, manage operational costs, and avoid legal and financial risks. Understanding how the corporate tax system works, including applicable rates, filing obligations, and available incentives, is crucial for companies aiming to build a sustainable and compliant presence in the Indonesian market.

Overview of Corporate Tax in Indonesia

Corporate tax in Indonesia is governed by the Directorate General of Taxes (Direktorat Jenderal Pajak or DJP), under the Ministry of Finance. The primary tax applied to corporate income is the Corporate Income Tax (CIT), which is imposed on both resident and non-resident companies that earn income sourced from Indonesia.

Who Is Considered a Taxpayer?

• Resident taxpayers include entities that are established or domiciled in Indonesia. These companies are taxed on their worldwide income.
• Non-resident taxpayers—such as foreign companies without a permanent establishment (PE) in Indonesia—are only taxed on income derived from Indonesia.

If a foreign company operates through a permanent establishment (BUT)—such as a branch, representative office, or project office—it will be subject to the same tax obligations as resident companies for income earned in Indonesia.

Corporate Income Tax Rates

As of 2024, the standard corporate income tax rate in Indonesia is:

• 22% for most companies

However, there are exceptions based on company size:

• 20% for publicly listed companies that meet certain shareholding criteria (minimum 40% of shares offered to the public and traded on the Indonesia Stock Exchange)
• 0.5% of gross revenue for micro, small, and medium enterprises (MSMEs) with an annual turnover below IDR 4.8 billion, under final tax regime (valid for a limited period)
• 11% VAT (Value Added Tax) applies separately for goods and services

It’s important to note that Indonesia is moving toward creating a more competitive tax environment. The government occasionally reviews tax policies to attract more foreign investment, so staying updated is key.

Taxable Income and Deductions

Taxable income in Indonesia is calculated based on net profit, which is gross income minus allowable deductions. These include:

• Operational expenses related to business activities
• Depreciation and amortization
• Employee salaries and benefits
• Interest expenses (with certain limitations)
• Donations (within certain restrictions)

Some expenses are non-deductible, such as:

• Personal expenses
• Profit distribution (dividends)
• Certain entertainment costs
• Income tax penalties or administrative fines

Proper bookkeeping and documentation are critical to support deductions during tax audits.

Withholding Taxes (WHT)

Indonesia imposes various withholding taxes on payments made by resident taxpayers to other parties. Key WHT rates include:

• 15% on dividends, interest, and royalties paid to Indonesian residents
• 20% on payments to non-residents, unless reduced by a Double Taxation Agreement (DTA)

Indonesia has tax treaties with more than 60 countries, including Singapore, Japan, the Netherlands, and the United States. These agreements may lower withholding tax rates or exempt certain types of income from taxation, depending on the nature of the payment and the residency status of the recipient.

To benefit from reduced WHT under a DTA, foreign entities must submit a Certificate of Domicile (SKD) through the Indonesian tax portal.

Tax Compliance and Reporting Obligations

Businesses operating in Indonesia must register with the tax office and obtain a Taxpayer Identification Number (NPWP). Regular tax filings include:

• Monthly tax returns for VAT, employee income tax (PPh 21), and withholding tax (PPh 23, PPh 26)
• Annual corporate income tax return (PPh 25/29) due by the end of the fourth month after the fiscal year ends (typically April 30 for companies using the calendar year)

Failure to comply with tax filing deadlines can result in administrative sanctions, interest penalties, or tax audits.

Transfer Pricing Considerations

Indonesia enforces transfer pricing regulations to ensure that transactions between related parties are conducted at arm’s length. Companies with related-party transactions must prepare and maintain:

• A Master File
• A Local File
• Country-by-Country Reporting (CbCR) for multinational groups

These documents must be available upon request and submitted within a specific timeframe. Non-compliance can lead to transfer pricing adjustments and tax penalties.

Tax Incentives for Foreign Investors

The Indonesian government offers various tax incentives to attract foreign direct investment, especially in priority sectors such as manufacturing, infrastructure, digital economy, and renewable energy. Incentives include:

• Tax holidays for large-scale investments in pioneer industries (e.g., oil refining, petrochemicals, ICT infrastructure)
• Tax allowances, including investment tax credits and accelerated depreciation
• Super deductions for R&D activities, labor-intensive industries, and vocational training
• Special Economic Zones (SEZs) that offer reduced tax rates, customs exemptions, and simplified licensing

Working with a local tax advisor or business consultant can help identify which incentives your company may be eligible for.

Getting Corporate Tax Right in Indonesia

Corporate tax in Indonesia is a critical aspect of doing business in the country. While the system is becoming more investor-friendly, it still requires a clear understanding of local tax laws, reporting obligations, and strategic planning—especially for foreign companies.

Whether you’re setting up a new entity or expanding existing operations, getting tax compliance right from the start can save your company from costly penalties and help maximize profitability.

At Double M, we help foreign companies navigate Indonesia’s corporate tax system with confidence—from company setup and tax registration to ongoing tax reporting and advisory. If you’re planning to invest in Indonesia, let’s talk about how we can support your tax and compliance needs.

Accounting firm in Bali is an essential partner for any business operating on the island, from local entrepreneurs to international investors. As Bali evolves into a vibrant hub for startups, tech professionals, hospitality ventures, and foreign-owned companies, the need for reliable financial services continues to grow. Choosing the right accounting partner helps ensure compliance with Indonesian tax laws, streamline financial processes, and reduce risk, allowing you to focus on expanding your business. From bookkeeping and tax filing to payroll and regulatory support, a professional accounting firm in Bali can provide the local expertise and peace of mind needed for sustainable success.

Why Hire an Accounting Firm in Bali?

Doing business in Indonesia comes with unique financial and legal requirements. Indonesia has strict tax reporting rules, monthly filing obligations, and mandatory employee contributions. Navigating this landscape without expert help can lead to unnecessary penalties, delays, and missed opportunities.

An experienced accounting firm in Bali can help your business in several important ways:

• Ensure Tax Compliance: Stay aligned with Indonesian tax regulations, including VAT, corporate income tax, PPh21 (employee tax), and withholding tax.
• Maintain Accurate Bookkeeping: Keep your financial records clean, organized, and audit-ready.
• Manage Payroll & BPJS Contributions: Handle salary calculations, tax withholdings, and social security payments efficiently.
• Provide Financial Transparency: Deliver clear monthly reports to help you make informed business decisions.
• Support PT PMA Companies: Assist foreign-owned businesses with local reporting, licensing, and regulatory obligations.

Whether you run a boutique hotel, café, coworking space, or digital consultancy, a local accounting partner helps reduce risk and ensures you’re operating legally and efficiently in Bali.

Key Services Provided by Accounting Firms in Bali

Not all firms offer the same level of support. When searching for the right accounting firm in Bali, make sure they offer a comprehensive set of services tailored to your business model. Here are the most essential services to expect:

1. Bookkeeping & Financial Reporting

Accurate and timely bookkeeping is the foundation of any well-run business. Your accountant should maintain detailed records of daily transactions, reconcile accounts, and provide monthly financial statements like profit & loss reports, balance sheets, and cash flow summaries.

2. Tax Compliance & Filing

Indonesia’s tax system requires monthly and annual filings—even for small businesses. A reliable firm will manage your corporate taxes, VAT (PPN), employee income tax (PPh 21), and withholding taxes (PPh 23), ensuring everything is submitted on time.

3. Payroll & Employee Management

If you employ staff in Bali, payroll services are a must. A good firm will calculate salaries, manage BPJS contributions, issue payslip, and submit relevant payroll taxes. They can also advise on labor law compliance and employment contracts.

4. Company Setup & Compliance (Optional)

Some firms also support business establishment, especially for foreign-owned companies (PT PMA). They can help with tax registration (NPWP), NIB (business license), OSS system compliance, and ongoing reporting to BKPM.

5. Audit Preparation & Internal Controls

While not every business needs an audit, proper preparation can protect your company. A trusted accounting firm will help organize your financial documents and assist with government inspections if required.

What to Consider When Choosing an Accounting Firm in Bali

With so many firms located in areas like Denpasar, Canggu, Ubud, and Seminyak, it’s important to choose a partner who understands your specific business needs. Here’s what to look for:

Local and International Expertise
Choose a firm that understands both Indonesian tax law and international standards—especially if you’re a foreign investor or run a PT PMA. This ensures you stay compliant both locally and abroad.

Bilingual Support
Communication matters. Select a firm with English-speaking accountants who can clearly explain Indonesian tax concepts and provide transparent financial advice.

Industry Experience
Look for a firm that has worked with clients in your sector, whether it’s hospitality, digital services, e-commerce, or real estate. Industry-specific knowledge makes a big difference in tax treatment and compliance strategy.

Transparent Pricing
Get a detailed quote upfront. Whether the firm charges a monthly retainer, per-service fee, or hourly rate, clear pricing will help avoid surprises and ensure you get value for your money.

Who Needs an Accounting Firm in Bali?

Here are a few examples of who should consider hiring an accounting partner:

• Foreign entrepreneurs setting up a PT PMA in Bali
• Hospitality businesses like hotels, villas, cafés, or tour agencies
• Remote agencies or startups registered in Indonesia
• Freelancers and digital nomads with local tax obligations
• Retail shops or boutiques looking for financial clarity

Whether your business is just starting or already growing fast, the right accounting partner can help you build a strong financial foundation in Bali.

Final Thoughts

Hiring an experienced accounting firm in Bali is one of the smartest moves you can make for your business. From tax filing and bookkeeping to payroll and compliance, a reliable partner ensures that your finances are in good hands—so you can focus on running and growing your business.

Before choosing a firm, take time to review their services, experience, and communication style. A great accounting partner will not only keep you compliant but also become a trusted advisor on your journey in Indonesia.

Need help from a trusted accounting firm in Bali? Reach out to a local expert and get a consultation tailored to your business goals.

Global tax optimization has become essential for multinational companies in an increasingly interconnected world. Efficient tax planning helps businesses reduce their overall tax burden while ensuring compliance with the complex tax regulations in various countries. This guide will explore key strategies for optimizing taxes globally and provide insights into how businesses can benefit from a well-structured tax approach.

Why Global Tax Optimization is Important

As businesses expand into international markets, they face a myriad of tax regulations that vary significantly from country to country. Without a strategic tax plan, companies may end up paying more in taxes than necessary or facing legal challenges due to non-compliance. Global tax optimization ensures that businesses:

1. Minimize tax liabilities by taking advantage of favorable tax laws.
2. Comply with international tax regulations, avoiding penalties or litigation.
3. Improve cash flow by reducing the amount of tax owed across multiple jurisdictions.

Understanding how different tax systems interact and identifying opportunities to optimize taxes can lead to significant cost savings for businesses.

Key Strategies for Global Tax Optimization

1. Transfer Pricing

Transfer pricing refers to the pricing of goods, services, and intangibles exchanged between related entities in different countries. Multinational companies must ensure that their transfer pricing practices align with the arm’s length principle, which mandates that transactions between related entities are conducted at market value. Properly managed transfer pricing helps businesses allocate profits to jurisdictions with lower tax rates, reducing overall tax liabilities.

2. Utilizing Tax Treaties

Tax treaties are agreements between countries to prevent double taxation and foster cross-border trade. By understanding and leveraging tax treaties, businesses can minimize withholding taxes on dividends, interest, and royalties. This allows companies to optimize their global tax position by ensuring they are not taxed multiple times on the same income.

3. Profit Repatriation

Profit repatriation involves bringing profits earned in foreign subsidiaries back to the parent company. Strategic repatriation planning helps businesses minimize taxes on these profits, often by utilizing lower-tax jurisdictions or taking advantage of exemptions in domestic tax laws. Businesses can defer or reduce repatriation taxes by carefully planning when and how to bring foreign earnings home.

4. Holding Company Structures

Establishing a holding company in a jurisdiction with favorable tax laws is a common strategy for global tax optimization. Holding companies can benefit from reduced corporate taxes, favorable tax treaties, and more efficient repatriation of profits. By using a tax-efficient holding company structure, multinational companies can reduce their global tax exposure and improve operational efficiency.

The Importance of Compliance

While optimizing global taxes can offer significant benefits, businesses must also prioritize compliance with local and international tax laws. Tax authorities are increasingly scrutinizing multinational companies’ tax practices, and failure to comply with regulations can result in costly penalties and reputational damage.

To stay compliant, businesses should work with experienced tax professionals who understand the nuances of global tax laws and can ensure that the company’s tax optimization strategies meet regulatory requirements.

Conclusion

Effective global tax optimization is crucial for multinational businesses looking to maximize their profitability and ensure compliance with tax regulations in multiple jurisdictions. By employing strategies such as transfer pricing, leveraging tax treaties, and structuring profit repatriation effectively, companies can reduce their tax liabilities while staying within the bounds of the law.

To learn more about navigating complex tax environments, consider exploring our article about Tax Litigation Services in Indonesia.

Financial projections service in Indonesia plays a crucial role in helping businesses plan for future growth and manage their financial health effectively. By providing detailed forecasts of revenue, expenses, and profitability, these services enable companies to make informed decisions and strategize for long-term success in the Indonesian market.

Why Financial Projections are Essential for Businesses

Strategic Planning

Accurate financial projections are vital for strategic planning. They offer a roadmap for future growth by estimating future revenues, costs, and profitability. This foresight helps businesses set realistic goals, allocate resources efficiently, and make informed investment decisions. For companies operating in Indonesia, understanding local market conditions and economic factors is crucial for creating reliable projections.

Risk Management

Financial projections help identify potential risks and uncertainties. By forecasting various financial scenarios, businesses can prepare for possible challenges and develop strategies to mitigate risks. This proactive approach is particularly important in the dynamic Indonesian market, where economic conditions and regulatory changes can impact business operations.

Investor Attraction

Investors seek businesses with clear, data-driven financial plans. Financial projections service in Indonesia provides detailed and credible financial forecasts that can attract potential investors. By showcasing a well-thought-out financial strategy and demonstrating future profitability, businesses can enhance their appeal to investors and secure necessary funding.

Budgeting and Financial Control

Effective budgeting is based on accurate financial projections. By predicting future income and expenses, businesses can create realistic budgets and monitor their financial performance against these projections. This control is essential for maintaining financial stability and ensuring that the business stays on track to achieve its goals.

Choosing the Right Financial Projections Service in Indonesia

Expertise and Local Knowledge

When selecting a financial projections service provider in Indonesia, choose a firm with expertise and a deep understanding of the local market. Providers with experience in Indonesian economic conditions, regulations, and industry trends can deliver more accurate and relevant projections.

Comprehensive Services

Ensure that the service provider offers a full range of financial projections services, including revenue forecasts, expense planning, cash flow analysis, and profitability projections. A comprehensive approach ensures that all aspects of the financial forecast are thoroughly addressed.

Data Accuracy and Methodology

The reliability of financial projections depends on the accuracy of data and the methodology used. Choose a provider that utilizes up-to-date and credible data sources and employs robust forecasting techniques to ensure the precision and relevance of the projections.

Conclusion: The Importance of Financial Projections Service in Indonesia

Investing in financial projections service in Indonesia is essential for effective strategic planning, risk management, and financial control. By leveraging accurate forecasts, businesses can navigate the complexities of the Indonesian market, attract investors, and achieve long-term success. Reliable financial projections not only help in setting realistic goals but also in adapting to market changes and ensuring sustained growth.

For comprehensive financial management, it’s also valuable to consider related services such as Tax Litigation Services in Indonesia. Together with financial projections, these services provide a well-rounded approach to managing your business’s financial health and regulatory compliance. With the right support, businesses can confidently plan for a prosperous future in Indonesia’s dynamic market.

Tax Litigation Services in Indonesia helps businesses and individuals resolve disputes with tax authorities. This includes managing conflicts from tax audits, assessments, and decisions by the Directorate General of Taxes (DGT) or the Tax Court. These services involve representing clients through the dispute process and providing strategic advice to achieve favorable outcomes. Expert guidance is essential to navigate and resolve tax issues effectively.

What is a Tax Litigation Service?

Tax litigation refers to the legal process that occurs when a taxpayer disputes a decision made by the tax authorities. This process can involve various stages, including:

1. Tax Audit Disputes: When the DGT conducts an audit and finds discrepancies, it may issue a tax assessment. If the taxpayer disagrees with this assessment, a dispute may arise.
2. Objections and Appeals: Taxpayers have the right to file an objection against a tax assessment. If this objection is rejected, the next step is to file an appeal with the Tax Court.
3. Tax Court Litigation: Should the appeal process lead to litigation, the case is heard in the Tax Court, which is the judicial body specifically tasked with resolving tax disputes in Indonesia.
4. Civil Review: If the Tax Court’s decision is unsatisfactory, there is an option to seek a civil review by the Supreme Court of Indonesia under certain conditions.

The Role of Tax Litigation Services in Indonesia

Engaging a Tax Litigation Service in Indonesia provides businesses with the expertise required to navigate the complexities of tax disputes. Here’s how these services can assist:

• Expert Representation: Tax litigation professionals represent clients in dealings with the DGT, the Tax Court, and other relevant bodies. This representation is crucial in ensuring that the merits of the case are effectively presented and defended.
• Strategic Advice: Beyond just legal representation, a tax litigation service offers strategic advice on how to approach disputes, whether it’s negotiating with the tax authorities or deciding when to escalate a matter to the Tax Court.
• Comprehensive Support: From the initial stages of a tax audit to the final resolution in court, tax litigation services provide end-to-end support. This includes preparing and filing objections, representing clients in court, and even pursuing civil review if necessary.
• Mitigating Risks: One of the primary goals of tax litigation services is to mitigate the risks associated with tax disputes. This includes advising on compliance to avoid disputes and resolving issues efficiently when they arise.

Why Businesses Need Tax Litigation Services

Indonesia’s tax environment is governed by a complex set of laws and regulations, and the consequences of non-compliance can be severe. Disputes with tax authorities can lead to significant financial penalties, disrupt business operations, and cause reputational damage. Engaging a Tax Litigation Service in Indonesia offers several key benefits:

• Expert Knowledge: Tax litigation professionals have in-depth knowledge of Indonesian tax law and the workings of the Tax Court. This expertise is critical in navigating disputes successfully.
• Time Efficiency: Handling tax disputes can be time-consuming, especially for businesses that need to focus on their core operations. Tax litigation services take on this burden, allowing businesses to concentrate on growth.
• Cost-Effective Resolution: While litigation can be costly, the cost of not engaging expert services can be much higher if a dispute leads to severe penalties or unfavorable rulings. A well-managed litigation strategy can lead to more favorable outcomes.

Choosing the Right Tax Litigation Services in Indonesia

When selecting a Tax Litigation Service in Indonesia, businesses should consider the following factors:

• Experience and Expertise: The service provider should have a strong track record in handling tax disputes, including experience in the Tax Court and knowledge of Indonesian tax law.
• Comprehensive Services: Look for a provider that offers a full range of services, from pre-litigation advice to representation in court and assistance with civil review.
• Client Focus: The best tax litigation services work closely with clients to understand their business objectives and tailor their approach accordingly.

How Can Double M Help?

Double M is here to guide you through tax disputes in Indonesia. With our strong experience in tax law, we offer full support at every stage of the process, from audits to resolving disputes.

Expert Representation: We represent you in dealings with the DGT and other authorities, making sure your case is strong and well-prepared.

Custom Solutions: We know each tax issue is different, so we provide advice and strategies that fit your specific needs.

Complete Support: From the start of a tax audit to the final resolution, we’re with you every step of the way, handling everything for a smooth process.

Risk Reduction: We help you avoid penalties and achieve the best possible outcomes by offering proactive advice on compliance and dispute resolution.

Trust Double M to help you navigate tax disputes in Indonesia with confidence. Also, you may want to read our article on Tax Optimization in Indonesia to learn more about optimizing your taxes and reducing risks.

Tax optimization in Indonesia is about leveraging available incentives, complying with transfer pricing regulations, and structuring corporate entities efficiently. By staying informed about regulatory changes and engaging with experienced local tax advisors, businesses can reduce tax liabilities while maintaining compliance. This proactive approach enhances financial performance and strengthens competitive positioning in the market.

Understanding the Indonesian Tax System

The Indonesian tax system is characterized by a range of taxes at both national and regional levels. The primary taxes businesses must consider include corporate income tax, value-added tax (VAT), withholding tax, and various local taxes. Corporate income tax is currently set at a standard rate of 22%, which applies to both domestic and foreign companies operating in Indonesia. VAT is levied at 11% on the sale of goods and services, while withholding taxes apply to dividends, interest, royalties, and other payments to non-residents.

Additionally, Indonesia offers several tax incentives and holidays to attract foreign investment in specific sectors. Understanding these incentives and how they apply to your business can play a crucial role in tax optimization. Companies should familiarize themselves with the Indonesian tax calendar to ensure timely filing and payment of taxes, thus avoiding penalties and interest charges.

Strategic Use of Tax Incentives for Tax Optimization in Indonesia

Indonesia offers a range of tax incentives to promote investment in priority sectors, such as manufacturing, infrastructure, and technology. These incentives include tax holidays, reduced tax rates, and investment allowances. By strategically aligning business activities with these incentives, companies can significantly reduce their tax burden.

For instance, the government provides a tax holiday for investments in pioneer industries, which can exempt a company from corporate income tax for up to 20 years, depending on the scale of investment. Additionally, businesses investing in special economic zones (SEZs) or industrial parks may benefit from reduced tax rates and other fiscal incentives.

To maximize the benefits of these incentives, businesses should conduct a thorough analysis of their eligibility and the long-term impact on their operations. Engaging with local tax advisors and regulatory bodies can help in identifying and applying for relevant incentives.

Transfer Pricing Compliance for Tax Optimization in Indonesia

Transfer pricing regulations are designed to prevent profit shifting and ensure that transactions between related parties are conducted at arm’s length. Indonesia has stringent transfer pricing rules that require businesses to maintain detailed documentation and justify the pricing of intercompany transactions.

Compliance with transfer pricing regulations is crucial for tax optimization as non-compliance can lead to significant tax adjustments and penalties. Companies should establish robust transfer pricing policies and documentation practices to demonstrate that their intercompany transactions comply with the arm’s length principle.

Moreover, businesses should consider advanced pricing agreements (APAs) with the Indonesian tax authorities. APAs provide certainty regarding transfer pricing methods and reduce the risk of future disputes and adjustments. By proactively managing transfer pricing, companies can enhance tax efficiency and reduce the risk of penalties.

Efficient Corporate Structuring for Tax Optimization in Indonesia

Corporate structuring plays a vital role in tax optimization. By carefully designing the corporate structure, businesses can take advantage of favorable tax treaties, reduce withholding tax rates, and optimize the overall tax position. Indonesia has an extensive network of double tax treaties with various countries, which can provide relief from double taxation and reduce withholding tax rates on cross-border payments.

For instance, establishing a holding company in a jurisdiction with a favorable tax treaty with Indonesia can help in minimizing withholding taxes on dividends, interest, and royalties. Additionally, businesses can consider setting up regional headquarters in Indonesia to benefit from regional incentives and consolidate regional profits, potentially reducing overall tax liabilities.

When restructuring, it is important to ensure compliance with the General Anti-Avoidance Rule (GAAR) and other anti-abuse provisions in Indonesian tax law. Engaging with experienced tax advisors can help in designing an efficient and compliant corporate structure.

Conclusion

Tax optimization in Indonesia requires a strategic approach, combining a deep understanding of the local tax system with effective planning and compliance. By leveraging tax incentives, ensuring transfer pricing compliance, optimizing corporate structures, and embracing tax technology, businesses can achieve significant tax savings while maintaining compliance with Indonesian tax regulations.

Additionally, you may want to read our article on tax litigation services in Indonesia to learn more about how to effectively navigate disputes with tax authorities and safeguard your business interests.

Personal income tax in Indonesia is taxed upon earnings such as salary, dividend, pension money, or interests. The Indonesian government taxes a specific percentage of these fees. Individuals, whether residents or non-residents, must pay personal income tax according to calculations. Typically, employers deduct personal income taxes, often managed by a dedicated HR department in charge of the payroll. However, it is also important for the taxpayers to know about their responsibilities.

Residents of Personal Income Tax in Indonesia

In Indonesia, the government divides personal income tax rates according to the amount of taxable income you earn. Here are the details:

If you earn up to IDR 50 million, the government charges you 5%. If your income falls within the range of IDR 50 million to IDR 250 million, the government charges you 15%. For income between IDR 250 million to IDR 500 million, the government imposes a 25% tax rate. If your taxable income exceeds IDR 500 million, the government levies a 30% tax rate.

Personal Income Tax Exemption

in Indonesia Based on the regulations, everyone who receives revenue in Indonesia is obliged to pay personal tax. However, there are several people who are exempt from paying personal income tax. Diplomatic staff and consulate staff from foreign countries with significant contributions to their Indonesian counterparts. Military personnel and civilian staff from foreign armed forces. Representatives from international organizations

Personal Income Tax Rates

In Indonesia, the government divides personal income tax rates according to the amount of taxable income you earn. Here are the details:

If you earn up to IDR 50 million, the government charges you 5%.
If your income falls within the range of IDR 50 million to IDR 250 million, the government charges you 15%.
For income between IDR 250 million to IDR 500 million, the government imposes a 25% tax rate.
If your taxable income exceeds IDR 500 million, the government levies a 30% tax rate.

Tax Return Documents in Indonesia

ITaxpayers in Indonesia need to lodge their personal income taxes for the annual tax return period from January 1st to December 31st by March 31st of the following year.

How can Double M help?

You are obliged to pay personal income taxes if you make money in Indonesia. With Double M’s help, you will be able to calculate and pay your personal income taxes while complying with the regulations.

Withholding tax in Indonesia is a system where a third party is given the responsibility to cut or collect taxes from a certain payment. They later pay that amount to the government in order to comply with the regulations. Within the context of personal income taxes, withholding tax is paid in installments which are done by cutting certain amounts by the third party as a part of the tax services.

What are the Types of Withholding Tax in Indonesia?

 In Indonesia, there are several types of withholding tax payments. Such as withholding tax under Article 21 (PPh 21), withholding tax under Article 22 (PPh 22), withholding tax under Article 23 (PPh 23), withholding tax under Article 26 (PPh 26), withholding tax under Article 4 Chapter 2 (PPh 4 Ayat 2), and withholding tax under Article 15 (PPh 15). 

Withholding Tax under Article 21

In this article, it is stated that employers have to withhold tax from salaries and severance payments to their laid off employees while also paying tax to the State Treasury for the employee’s behalf. The employer is obliged to file the article 21 withholding tax on the 10th to 20th day of the following month when the tax is due to be paid. The tax taken from the employee’s salary can be claimed as tax credit on the employee’s annual tax return. It is important to note that taxpayers with no Tax ID Number (NPWP) will be charged 20% higher than the normal rate. 

Withholding Tax under Article 22

In this article, the taxes are taken from the company’s imported goods, income from the State Treasurer or other state-owned enterprises, or from the purchase of luxury products. For companies that are importing goods, the withholding tax rate stands at 2.5%. For unregistered importers, the withholding tax rate stands at 7.5%. Purchases of luxurious goods like cruisers, yachts, aircrafts etc are charged with a tax rate of 5%.  

Withholding Tax under Article 23

This article stipulates that certain payments made to taxpayers are due to be cut by a withholding tax rate of 15%. These stipulations apply for payments like dividends, interest, swap premiums, loan fees, royalties, prizes, and bonuses. 

Withholding Tax under Article 4 Chapter 2

This article further regulates that withholding taxes must be paid for incomes like rental of land and buildings, transfers of land and building rights, construction services, IPO, saving deposits, bank certificates, discount on bonds, lottery prizes, and dividends. 

Withholding Tax under Article 15

This final article regulates a withholding tax rate of 1.8% for the charter of local airlines, 1.2% for using the services of a local shipping company, and 2.64% for foreign shipping and airlines. 

How can Double M help?

Withholding Tax is a type of tax that is collected by a third party to be deposited for the government later on. With Double M’s help, you will be able to calculate and pay these taxes while complying with the regulations.

Outsourced accounting service in Indonesia is a term used for all-in accounting services provided by an external party. Typically, outsourced accountants provide the-day-to-day management of payable accounts, receivable accounts, financial reporting, cash flow reporting and many others. Outsourced accountants generally consist of several individuals forming a small team, which will cost considerably less than hiring actual employees. 

Types of Outsourced Accounting Service in Indonesia

1. Bookkeeping

In this service, we will organize your pre-existing books and ledgers. Should it be necessary, we shall create new ones. Furthermore, we will assist you in keeping tabs of claim forms, bank slips, bank statements, and various accounting reports that your company might have. 

2. Financial Reports

In this service, we will record, organize, and compile records of your monthly accounts. Including balances, statements, receivables, and payables. Everything will be organized in order and will be ready for your disposal within your preferred timeline. 

3. Payment Records

When conducting business, it is very likely that you will strike a partnership with external vendors. With outsourced accounting service in Indonesia, we will assist you in reviewing and managing invoices from vendors. We will make sure everything is orderly and make sure the figures are exactly correct. 

4. Financial Planning

In doing business, planning your finances properly is strongly advised. In this service, we will give you suggestions on budgeting, forecast your financial condition in the future, and make sure everything goes smoothly. 

5. Account Review

Streamlining and improving the accounting system is a must in order for the company to succeed. Therefore in this service, we will renew your accounting policies to the current developments. We will make sure that even the tiniest details will be kept in the records properly.

Benefits of Outsourced Accounting

1. Freedom

Most outsourced accounting service in Indonesia these days use cloud-based accounting software. With this method, you will be free to access your accounting records from anywhere in the world at any given time. 

2. Cost Saving

It is quite expensive to hire and train dedicated accounting personnel. However, by hiring an outsourced accountant, you will eliminate potential hiring and training costs. 

3. Continuity

When you hire accounting staff and they leave the company, important information goes out with them. By using outsourced staff, there is no risk of knowledge loss and you can get some continuity. 

Type of Companies That Use Outsourced Accounting Service in Indonesia

1. Small Business

Small businesses do not usually need full-time accountants, considering that they are mostly still in the process to establish other departments. As such, recruiting outsourced accountants usually becomes a solution

2. Company Struggling to Hire

There are many cases where companies struggle to recruit full-time accountants, be it for requirements or experience reasons. When it happens, they tend to use outsourced accounting service in Indonesia. 

3. Non-Profit Organizations

Just like their name, profit and finances and cash flow management are not typically the main priorities of this type of company, but there are times where they are still needed. Therefore in this scenario, it becomes a good solution to hire outsourced accountants. 

How can Double M help?

Using Outsourced Accounting Service in Indonesia is a great way to manage your finances. With Double M’s help, you can focus on other aspects of businesses and leave the accounting matters to us.

Fintech Company in Indonesia has been thriving for quite sometime. Financial technology, commonly abbreviated as fintech, is a new form of technology that aims to disrupt the usage of traditional financial methods in providing financial services. Generally, there are four pillar areas of fintech: Artificial Intelligence, Blockchain, Cloud computing, and big data. Most people know Fintech in Indonesia for their usage of smartphone technology for mobile banking, investing, loan services, and cryptocurrency. In recent years, fintech companies are growing larger in Indonesia, both in numbers and revenues.

Reasons Why Fintech Company in Indonesia is Thriving

Here are 5 reasons why fintech company in Indonesia is thriving:

1. High Demographic, High Internet Usage, Low Bank Usage

With a population almost reaching the figure of 280 million, Indonesia is the fourth most populous country in the world. Around 204 million, or 70% percent of the population are active internet users. Considering the fact that fintech is internet-based, it makes Indonesia such a fertile market for these enterprises to invest in.

During the peak of the Covid-19 pandemic in 2020, about 129 million Indonesian used e-commerce and conducted transactions which amounted to IDR 266 trillion in total transaction value. As the most popular form of online payment these days, fintech companies are reaping the benefits of this upwards trend.

According to the e-Conomy SEA Report conducted by Google, Temasek, and Bain & Company, it was stated that 92 million Indonesians are unbanked, meaning they do not have any bank account at all, while 47 million are underbanked, meaning that they have a bank account but do not have access to credit cards as form of payment. This is an enormous opportunity for fintech companies that provide internet banking and digital payment services. 

2. Government Support

Law and regulation compliance often become a tricky obstacle in the financial sector. Strict laws and regulations are there to protect the consumers. In Indonesia, the government realizes the needs for an inclusive financial system. That is precisely why every fintech in Indonesia operates under the license, authorization, and guidance from the OJK (Financial Services Authorities). The Minister of Finance, Sri Mulyani also reaffirmed the intent of the Indonesian government to support the optimization of fintech company in Indonesia. Apart from easing regulations, the Indonesian government also collaborates alongside fintechs for the distribution and sales of Surat Berharga Negara (National Securities). The government also struck a deal with fintech companies to distribute cash relief for at-risk citizens during the peak of the Covid-19 pandemic.

3. Huge Investment

Investment is an instrumental factor for the success of a company, and fintech company in Indonesia is no exception. According to Statista, global fintech financing went from USD 59.2 billion and almost quadrupled to USD 320.2 billion in 2021. This upward trajectory is also evident in Indonesia which is constantly rising. In 2018 there were 46 fintech financing being done with a total valuation of USD 300 million.

A year after, the number of deals increased to 65 with a total valuation of USD 700 million. In 2020, the number of deals went down to 57 with a total valuation of USD 500 million, this could be seen as the impact of the Covid-19 pandemic.

After the temporary downfall, the numbers substantially increased to 97 deals worth USD 1.6 billion in 2021, tripling the previous numbers. Throughout the first half of 2022, the number of deals went down to 51 but the total valuation increased to USD 1.8 billion. This constant growth in investment shows the confidence of the market to the Indonesian fintech ecosystem. As Indonesia progresses closer in its quest to become one of the world’s biggest internet economies, fintech company in Indonesia will reportedly continue to prosper and excel.

4. SMEs

The Conversation suggests that there are more than 60 million SMEs in Indonesia. They contribute to 60% of the country’s economy and absorb 97% of the workforce. This shows that SMEs are one of the linchpins of the country’s economy, However, only 12% of them were able to get financing or bank loans. The Covid-19 pandemic made the situation worse, considering approximately 50% or 30 million SMEs were closing because demands are diminishing. This becomes a huge opportunity for fintech company in Indonesia, especially for those operating in loan services/P2P lending. With millions of SMEs looking to bounce back, the fintech ecosystem will be back to its absolute peak.

How can Double M help?

Fintech company in Indonesia play a huge part in Indonesia’s economy. Double M can help you establish your own fintech company or link you with existing fintech company for business matchmaking.