Indonesia

A tax resident is generally taxed on worldwide income, although this may be mitigated by the application of double taxation agreements (DTAs). However, the Omnibus Law has added a provision to the Income Tax Law stipulating that foreigners who have become domestic tax subjects by reason of becoming tax resident in Indonesia can be taxed only on Indonesian-sourced income (including if paid offshore) if they meet certain skill requirements. This will only be available for the first four years they become tax resident. This territorial taxation system may not be applicable when the foreigner receives income from overseas and utilises the applicable tax treaty between Indonesia and the source country. Indonesian citizens that are living outside of Indonesia for more than 183 days in 12 months and meet certain requirements can also be considered as foreign tax subjects.

Non-resident individuals are subject to a general WHT at 20% in respect of their Indonesian-sourced income. Concessions are, however, available where a DTA is in force.

The rates applied to taxable income are shown below.

Individual tax rates

* Indonesian rupiah

Tax on severance payments

Severance payments are taxed separately at the following rates*:

* The rates are final and applied only if the payment is made at once, or in two years at the maximum if the payment is made in sequence. For payments for year three onwards, the ordinary individual tax rates apply.

Tax on lump-sum pension payments

The final tax rates for lump-sum pension payments from a government-approved pension fund and old-age security saving payments from Badan Penyelenggara Jaminan Sosial Ketenagakerjaan (BPJS Ketenagakerjaan) (see Social security contributions in the Other taxes section) are as follows*:

* The rates are final and applied only if the payment is made at once, or in two years at the maximum if the payment is made in sequence. For payments for year three onwards, the ordinary individual tax rates apply.

Local income taxes

There are no local taxes on individual income in Indonesia.