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How will the Harmonized Tax Law affects corporate income tax?

Indonesia’s parliament has approved the Harmonized Tax Law (HTL), which will overhaul the existing tax structure. The laws have scrapped the plans to reduce the corporate income tax (CIT) in Indonesia. 

[tips title="Did You Know"]Through the HTL, the government has scrapped its plans to reduce the CIT rate to 20 percent for 2022 and has opted for it to remain at 22 percent. [/tips]

What is the corporate income tax rate in Indonesia?

The rate is still lower than the average CIT rate in ASEAN (22.17 percent), G20 nations (24.17 percent), and the average rate in the Organization for Economic Cooperation and Development (OECD) countries (22.81 percent)

There are several facilities given to businesses regarding the CIT if they fulfil the following conditions: 

  • Companies that are listed on the stock exchange that offer the minimum requirement of 40 percent of total share capital are subjected to a three percent tax cut from the standard rate, allowing them to pay a 20 percent CIT;
  • Companies that have an annual turnover of 50 billion rupiah (US$3.5 million) are eligible for a 50 percent tax cut from the standard rate, which is imposed proportionally on the part of the gross turnover of up to 4.8 billion rupiah (US$336,000); and
  • Companies with gross turnover of no more than 4.8 billion rupiah (US$336,000) are subject to a 0.5 percent tax of total turnover.

 

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