Social security contributions
Indonesia does not have a comprehensive social security system; however, there is a worker’s social security program (BPJS Ketenagakerjaan) that provides work accidents protection, death insurance, old age savings, healthcare, and pension. The program is maintained by a designated state-owned company, BPJS Ketenagakerjaan, which has conducted the social security schemes in Indonesia and calls for premium contributions for the following:
|Areas covered||As a percentage of regular salaries/wages|
|Borne by employer (%)||Borne by employee (%)|
|Working accident protection (1)||0.24 to 1.74||-|
|Death insurance (1)||0.3||-|
|Old age saving (1)||3.7||2|
- Calculation base is basic salary plus fixed allowance.
- Maximum calculation base is IDR 12 million/month starting 1 January 2020.
- Maximum calculation base is updated annually based on BPJS regulation.
Employers are responsible for ascertaining that their employees are covered by workers' social security programs under two government social security agencies as follows:
- Social Security Agency for Health Insurance (BPJS Kesehatan), covering health insurance.
- Social Security Agency for Workers' Social Security (BPJS Ketenagakerjaan), covering working accidents, deaths and old age, and pensions.
Employees’ contributions are collected by the employer through payroll deductions. These must be paid to BPJS together with the contributions borne by the employers.
The government introduced a new insurance program (i.e. unemployment insurance) to provide further protection to employees affected by employment termination. The implementation is still subject to further regulations.
Under this insurance program, which will likely be managed by the Social Security Agency (Badan Penyelenggara Jaminan Sosial), the government will provide benefits to the affected employees in the form of cash, access to job market information, and training.
Public housing savings
Please see the Other taxes section in the Corporate tax summary for a description of the public housing savings.
Value-added tax (VAT)
With a few exceptions, VAT is applicable on deliveries (sales) of goods and services within Indonesia at a rate of 11% starting 1 April 2022 onwards. VAT on export of goods is zero-rated whilst the import of goods is subject to VAT at a rate of 11% starting 1 April 2022 onwards. Zero-rated VAT is also applicable on certain exported services, but subject to a Minister of Finance (MoF) limitation. Please see the Other taxes section in the Corporate tax summary for the VAT on export services by type.
Services performed within the Customs Area for customers outside of the Customs Area are considered as locally delivered and are therefore subject to the regular VAT rate of 11% starting 1 April 2022 onwards. Inbound use or consumption of foreign services or intangible goods, with a few exceptions, is also subject to a self-assessed VAT at a rate of 11% starting 1 April 2022 onwards.
The VAT law allows the government to change the VAT rate within the range of 5% to 15%.
In general, VAT collection is based on the accrual principle, whereby VAT must be collected at the time of delivery of taxable goods or services. The term delivery, in this case, is defined as the time when risk and ownership of goods have been transferred or when income from a service delivery can be reliably estimated or measured. In the accrual system, income or receivables are acknowledged when a transaction takes place, regardless of whether the transaction has been paid for or not. The recognition of revenue or receivables is indicated by the issue of a commercial invoice, which is a source document for this recognition and a basis for recording it.
Starting 1 April 2022, the HPP Law changes the status of several non-VATable objects under the existing law. Some become VATable objects, some remain as non-VATable objects but with certain requirements, and some become VATable objects but with an exemption facility as strategic goods/services. In addition, several goods/services are also removed from the strategic goods/services category.
Individuals may be designated as taxable entrepreneurs (Pengusaha Kena Pajak or PKP) if they have their own business activities that deliver VAT-able goods/services with an annual value of a minimum of IDR 4.8 billion. PKPs are required to report their business activities and settle the VAT liabilities on these every month, with payment and filing being due no later than the last day of the month following the taxable delivery.
Net wealth/worth taxes
There are no net wealth/worth taxes in Indonesia.
Inheritance, estate, and gift taxes
There are no inheritance, estate, and gift taxes in Indonesia. Income from lottery prizes is subject to a 25% final income tax.
Land and buildings tax (Pajak Bumi dan Bangunan or PBB) is due annually at maximum 0.3% of the regional government-determined market value.
A transfer of land and building will cause income tax on the deemed gain on the transfer/sale to be charged to the transferor/seller. The tax is set at 2.5% of the greater of the gross transfer value or the regional government-determined market value.
In a land and building transfer, the acquirer is liable for duty on the acquisition of land and building rights (Bea Pengalihan Hak atas Tanah dan Bangunan or BPHTB) at 5% of the greater of the transaction value or the regional government-determined market value.
Sale of shares taxes
Generally, capital gains from sale of shares are subject to normal income tax. Sale of shares on Indonesian stock exchanges is subject to a 0.1% final income tax rate on the proceeds. Founder shareholders may choose to pay tax at 0.5% of the market price of their shares upon listing. If they do not choose this, gains on subsequent sales are taxed under ordinary rules (under certain tax treaties, this tax may not be due).
Luxury and excise taxes
In addition to VAT, some goods are subject to luxury-goods sales tax (LST) upon import or delivery by the manufacturer to another party at rates currently ranging from 0% to 95%.
Stamp duty is nominal and payable as a fixed amount of IDR 10,000 on certain documents.
Please see the Other taxes section in the Corporate tax summary for a description of the carbon tax.