What are the personal income taxes structured in Indonesia?

In Indonesia, personal income tax is governed by the national tax regulations and is applicable to both residents and non-residents based on their income sources. Here’s a comprehensive overview of how personal income tax works in Indonesia:

Tax Residency

Residents: Individuals who reside in Indonesia for more than 183 days in a calendar year or who have a permanent home in the country are considered tax residents. Residents are taxed on their worldwide income.
Non-Residents: Non-residents are taxed only on income derived from Indonesian sources. This includes income from employment, business activities, and other sources within Indonesia.

Income Tax Rates

For Tax Year 2024, the income tax rates for individuals are progressive, meaning the rate increases with higher income levels:

Up to IDR 60 million: 5%
Over IDR 60 million to IDR 250 million: 15%
Over IDR 250 million to IDR 500 million: 25%
Over IDR 500 million: 30%

Taxable Income

Taxable income includes wages, salaries, bonuses, and other forms of compensation. It also encompasses income from investments, rental properties, and other sources. Certain deductions and allowances are available to reduce the taxable income, such as:

Personal Allowance: A set amount is deducted from the gross income to determine taxable income. This allowance may vary based on individual circumstances.
Dependent Allowances: Taxpayers may claim allowances for dependents, which can also reduce the taxable income.

Tax Filing and Payment

Annual Tax Return: Taxpayers are required to file an annual tax return, which summarizes their income and tax liabilities for the year. The tax return must be submitted to the Indonesian Tax Office by March 31st of the following year.
Withholding Taxes: Employers are responsible for withholding taxes from employees’ salaries and remitting them to the tax authorities. This is done on a monthly basis.

Special Considerations

Non-Resident Tax Rate: Non-residents are subject to a final withholding tax rate on certain types of income, which varies depending on the nature of the income.
Double Taxation Agreements: Indonesia has agreements with several countries to avoid double taxation. These agreements can affect how foreign income is taxed and provide relief from paying taxes in multiple jurisdictions.

Additional Information

For more detailed and specific guidance, including the latest updates and any changes in tax regulations, refer to the PwC Tax Summaries - Indonesia or consult with a local tax advisor. Staying informed about the latest tax regulations and rates is crucial for effective financial planning and compliance.

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Indonesia