How income tax works in Indonesia
An individual is generally an Indonesian domestic tax subject if they live in Indonesia, are present for more than 183 days in a 12-month period, or show an intention to reside there. Residents generally include worldwide income in the annual calculation.
Taxable income is generally net income less PTKP, the non-taxable income allowance. The baseline PTKP is IDR 54 million for an individual, with additional amounts for a spouse, a jointly assessed wife and up to three dependants under the applicable conditions.
Employment income is collected through PPh 21 payroll withholding and annual reconciliation. Business, investment, final-tax and foreign-source items can follow different rules, so the annual return is not simply a monthly salary calculation.
Non-residents are generally taxed on Indonesian-source income. Article 26 commonly applies 20% withholding on gross dividends, interest, royalties, rent and specified services, but an applicable tax treaty can reduce the rate when documentation and beneficial-owner conditions are met.
Income tax brackets in Indonesia
| Bracket | Rate | Notes |
|---|---|---|
| Up to IDR 60m | 5% | Annual taxable income after deductions |
| Over IDR 60m to 250m | 15% | Annual taxable income |
| Over IDR 250m to 500m | 25% | Annual taxable income |
| Over IDR 500m to 5bn | 30% | Annual taxable income |
| Over IDR 5bn | 35% | Annual taxable income |
Tax rates at a glance
- Resident individual PIT
- 5% - 35%Progressive
- PTKP baseline
- IDR 54m
- Non-resident Article 26
- 20% / treaty rate
- Employee BPJS health
- 1%
- Employee JHT
- 2%
- Employee JP
- 1%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Employees and expatsLocal foundersRegional managersIndependent professionalsLong-term residents
Watch out for
- The 5% bracket is applied to taxable income, not gross salary. PTKP status, deductible costs, benefits in kind, final-tax income and tax credits can change the result.
- BPJS is a payroll cost in addition to income tax. Health insurance is generally 4% employer and 1% employee, while employment-security contributions include JHT, JKK, JKM, JP and sometimes JKP.
- A foreign citizen's visa or work permit does not by itself settle tax residence. Days present, housing, intention to reside, treaty residence and the source of the work all need to be reviewed.
Frequently asked questions
What is the income tax rate in Indonesia?
Resident individual taxable income is taxed progressively at 5%, 15%, 25%, 30% and 35%. The highest 35% bracket applies to taxable income above IDR 5 billion after applicable deductions.
Do expats pay income tax in Indonesia?
Yes, if they are Indonesian tax residents or earn Indonesian-source income. Residents generally report worldwide income, while non-residents usually face source-country tax and withholding on Indonesian payments.
What is PTKP in Indonesia?
PTKP is the non-taxable income allowance used before applying the progressive rates. The baseline allowance is IDR 54 million for an individual, with additional allowances for qualifying family circumstances.