How corporate tax works in Indonesia
Indonesian-resident companies and permanent establishments generally calculate taxable profit by deducting allowable business costs, depreciation and amortisation from gross income. The standard corporate income tax rate is 22%.
A domestic company with gross income up to IDR 50 billion can generally receive a 50% rate reduction on the portion of taxable income attributable to up to IDR 4.8 billion of gross revenue. This produces an effective 11% rate on the qualifying profit portion, not on all revenue.
A qualifying public company can use a 19% rate when at least 40% of paid-up shares are publicly traded and the other statutory conditions are satisfied. Foreign companies without an Indonesian entity can still face Article 26 withholding or permanent-establishment exposure.
Eligible micro, small and medium businesses may use a final turnover regime, commonly 0.5% of gross turnover, under the applicable rules. Individual taxpayers also have a turnover threshold exemption for the first IDR 500 million in a tax year, so this regime must not be treated as a universal company tax rate.
Tax rates at a glance
- Standard CIT
- 22%Standard
- Qualifying public company
- 19%
- Small-company facility
- 11% effective on eligible profit
- Eligible MSME final tax
- 0.5% of turnover
- Branch-profit remittance
- 20% / treaty
- VAT registration threshold
- IDR 4.8bn turnover
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Operating companiesManufacturers and exportersLocal foundersRegional service businessesCompanies building Indonesian substance
Watch out for
- The MSME final-tax regime can be simpler, but it taxes turnover rather than profit and has business-form, turnover and duration conditions. Companies should model ordinary CIT before choosing it.
- VAT, Article 23 and Article 26 withholding, import taxes, transfer pricing, payroll BPJS and local taxes can be more operationally important than the 22% CIT rate.
- A company incorporated outside Indonesia can still create Indonesian tax exposure through a permanent establishment, Indonesian-source payments, local agents, management activity or digital-business rules.
Frequently asked questions
What is the corporate tax rate in Indonesia?
The standard Indonesian corporate income tax rate is 22%. Qualifying publicly listed companies can access a 19% rate, and smaller companies may qualify for a 50% reduction on a defined portion of taxable income.
Does Indonesia have a small-business tax regime?
Yes. Eligible MSMEs may use a final tax based on turnover, commonly 0.5%, subject to taxpayer type, turnover limits and time limits. It is not automatically available to every company or every business activity.
Do foreign companies pay tax in Indonesia?
They can. Indonesian-source payments may attract Article 26 withholding, and a foreign company with a permanent establishment can be taxed on attributable business profits. Tax treaties can change the result.