Indonesia: corporate tax guide

What the tax system covers

Indonesian-resident entities are generally within tax on worldwide income. A foreign legal form, the owner's immigration category and the company's actual location of management and operations must be examined separately.

When a company becomes tax resident

Income Tax Law Article 2 treats a body established or domiciled in Indonesia as a domestic taxpayer, subject to the specified government-unit exception. PER-23/PJ/2025 Article 5 explains domicile through the constitutional seat, head office/central administration/financial centre, or centre of management and control in Indonesia. Strategic investment or operational decisions made in Indonesia establish the management-and-control connection. The actual facts determine the location; a foreign incorporation is therefore insufficient to settle the question. Foreign bodies without domestic residence can still have an Indonesian permanent establishment or taxable Indonesian-source payments.

Rates and the tax base

22% ordinary corporate income tax. The ordinary resident-company and permanent-establishment rate applies from 2022. Listed-company reductions, turnover-based regimes, incentives and branch-remittance treatment need separate assessment.

Outbound dividends, interest and royalties

Dividends: 20%. Article 26 domestic gross withholding generally applies to this Indonesian-source payment to a foreign taxpayer without an Indonesian permanent establishment. Treaty relief requires the prescribed residence documentation and substantive entitlement.

Interest: 20%. Article 26 domestic gross withholding generally applies to this Indonesian-source payment to a foreign taxpayer without an Indonesian permanent establishment. Treaty relief requires the prescribed residence documentation and substantive entitlement.

Royalties: 20%. Article 26 domestic gross withholding generally applies to this Indonesian-source payment to a foreign taxpayer without an Indonesian permanent establishment. Treaty relief requires the prescribed residence documentation and substantive entitlement.

CFC attribution needs a separate calculation

DGT explains that Indonesia amended its controlled-foreign-company rules in 2019. The framework can deem foreign-company dividends for relevant resident investors before an actual distribution. Review the current ownership tests, income scope, timing and relief rather than treating retained offshore profits as automatically untaxed. The cited DGT explainer establishes the regime; it is not a substitute for checking the operative regulations for the relevant year.

CFC attribution can occur without a distribution

Indonesia’s CFC framework covers relevant resident ownership of non-listed foreign entities and includes direct and indirect control rules. The Ministry’s PMK107/2017 summary identifies the 50% direct participation threshold, including prescribed combined resident interests. The 2019 amendment narrows the deemed-dividend base to specified income rather than indiscriminately attributing every foreign subsidiary’s accounting profit.

Prepare a complete ownership chart, accounts identifying each income category and a schedule of foreign taxes and actual distributions. Check the operative attribution timing and exceptions before computing the amount. A later cash dividend needs reconciliation with any earlier deemed amount. CFC analysis does not replace the separate question whether the foreign company is itself domiciled or carrying on taxable activity in Indonesia because of the owner’s local decisions.

Release commitments and maintain any continuing business properly

An E33 second-home applicant should confirm how permit termination affects the qualifying deposit or apartment and the record of compliance. Do not withdraw committed funds while continuing to rely on the status without written clarification. An employment or business-related permission may require a different closure sequence, and associated family status needs attention.

Retained property, company interests or Indonesian-source income can require continued tax and banking administration. Confirm future account access, foreign-exchange documentation and updated residence details with the bank. Prepare acquisition costs, current values and ownership records for the receiving country before moving. That country may apply worldwide taxation, CFC rules or different rules for later gains; completing the Indonesian departure does not itself establish the optimal arrival treatment elsewhere.

A foreign company can acquire an Indonesian tax connection

The 2025 residence regulation expressly addresses a company’s centre of management and control. Strategic decisions concerning investment and operations made in Indonesia can be relevant, including important asset transfers, appointment of operational managers and control of dividends. Foreign incorporation and a foreign bank account do not settle the company’s domicile if those decisions are really made from Indonesia.

CFC rules are a separate issue for resident investors in foreign entities. The 2019 changes focus the deemed-dividend framework on specified income categories, including relevant dividends, interest, rents, royalties and gains, with exceptions. Review the ownership chain and actual income rather than assuming all retained profits are exempt or that all foreign companies produce the same attribution. The individual, operating company and investment holding entity need separate analyses.

Decisions made in Indonesia can matter without a local incorporation

PER-23/PJ/2025 gives concrete examples of strategic control: deciding share transfers or capital contributions, transferring or using strategic assets, appointing or removing managers, employees or agents with operating authority, and supervising dividend distributions. It also recognizes head-office, central-administration and financial-centre connections. A founder should map those decisions to the actual people and places rather than rely only on the address on the incorporation document.

For a foreign company that remains nonresident, the DGT describes a separate permanent-establishment regime covering management premises, branches, offices, certain projects and dependent agents, among other connections. The treaty can alter the domestic PE threshold or residence outcome. The practical review therefore has two stages: residence of the entity as a whole, followed by any local establishment or source-income charge if it is not resident.

Foreign companies and income attribution

Deemed-dividend rules address qualifying ownership of unlisted foreign entities, including 50% control gateways and specified passive-income categories after the 2019 amendment; apply detailed direct/indirect tests.

Departure, migration and continuing obligations

Personal residence change and NPWP deletion require facts and evidence; retained business or corporate management has separate consequences.