In 2024, significant changes have been implemented regarding corporate income tax payments in Indonesia. The government has instituted measures to enhance tax payment efficiency, allowing for easier deduction of expenses from annual profits to mitigate tax liabilities.
However, compliance demands have heightened, necessitating precise reporting of withholding tax by companies. The government has augmented validation mechanisms to ensure the accuracy of reported information.
This article elucidates the 2024 alterations to corporate income tax and guides maximizing allowable deductions.
Corporate Income Tax Structure in Indonesia
Companies in Indonesia are categorized into three income tax brackets based on annual revenue:
- 0.5% of gross revenue
- 11% from profit for revenue between 4.8-50 billion IDR
- 22% from profit for revenue exceeding 50 billion IDR
Corporate Income Tax Calculation
Taxable income is computed as gross income minus allowable deductions and then subjected to the relevant tax rate based on annual revenue.
Allowable Deductions for Corporate Income Tax Reduction
For companies with revenue below 4.8 billion IDR, deductions are not applicable as tax is computed based on gross revenue. However, for those with revenue exceeding 4.8 billion IDR, deductions are contingent upon accurate withholding tax reporting.
Most business expenses are deductible, subject to withholding tax rates as per the following table:
| Business Expense | Withholding tax (WHT) |
| Raw materials purchase | – |
| Salary | PPH 21, starts from 5% – 35% |
| Rental | PPH 4.2: 10% |
| Travel | – |
| 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 | – |
| Foreign exchange losses | – |
| Research and Development | WHT: 2% (for residence agency) or 20% (for the national agency) |
Corporate Income Tax Reporting Deadline
All businesses are mandated to report their corporate income tax by April 30, 2024.
Indonesia Core Tax System
Commencing July 2024, the Indonesian government is implementing a new tax system integrating corporate bank accounts directly into its framework. This initiative aims to streamline tax recording processes and deter tax evasion. While rollout specifics are pending, meticulous tax reporting and expense recording remain imperative for optimizing income tax obligations.
Still Have Questions About Tax in Indonesia?
Navigating Indonesia’s tax landscape can be intricate, requiring specialized knowledge and adherence to evolving regulations. At Come Visit Indonesia, we empower businesses with comprehensive tax consultancy services designed to streamline compliance and optimize financial strategies.
Our team of experienced tax professionals possesses a deep understanding of Indonesian tax laws and regulations. We guide you through the intricacies of corporate tax reporting, ensuring accuracy, timeliness, and adherence to all legal requirements.
Furthermore, we provide valuable insights into tax planning strategies tailored to your specific business operations. This proactive approach helps you minimize tax liabilities and maximize financial benefits within the legal framework.
Partner with Come Visit Indonesia and gain the clarity and confidence you need to navigate Indonesia’s corporate tax landscape with ease. Contact us today to schedule a consultation and unlock the full potential of your business in Indonesia.
