4. Value
Added Tax and Sales Tax on Luxury Goods
In
normal cases, 10% Value Added Tax (VAT) is applied
to imports, manufactured goods and most of the services.
In addition, there is also sales tax on luxury goods
ranging from 10% to 75%.
5.
Tax
Incentives
Based on the Government
Regulation No. 45/1996, the domestic and foreign investors
will be granted tax incentives ("income tax will
be borne by the government") for a maximum period
of 10 years (12 years for those established outside
Bali and Java islands). The criteria for such tax
incentives is provided in a Presidential Decree No.
7/1999. These include investment priority sectors,
strategic role in economic development, employment
creation, location, and partnership with cooperative.
6.
Withholding Taxes
Payment
of dividends, interests, royalties and technical &
management fees for services performed in Indonesia
to Indonesian and non-Indonesian residents are subject
to withholding tax. The withholding tax rates vary,
depending on whether it is paid to a resident or non-resident
as follows:
|
Payments
to Indonesian residents (except
for technical and
management services which is 6%)
Payments
to non-Indonesia residents 20%
|
15%
20%
|
7. Stamp
Duty
Stamp duty is nominal
only at either Rp. 3,000 or Rp. 6,000 on certain documents.
The rate of Rp. 6,000 is applicable for letters of
agreement and other letters, Notary Deed and Land
Deed including its copies. For all documents bearing
a sum of money, the rate is Rp. 6,000 when the value
stated in the document is more than Rp. 1 million,
and Rp. 3,000 when the value is between Rp. 500,000
and Rp. 1 million. Below Rp. 500,000 is not subject
to stamp duty. For checks, the rate is Rp. 3,000 regardless
of monetary value stated.
8. Land
and Building Tax
Tax
is payable annually for land, building and permanent
structures. The effective rates are nominal, usually
not more one tenth of one percent per annum (0.1%)
of the value of the property.
9.
Avoidance
of Double Taxation Agreements
To
avoid incidental double taxation on certain income
such as profits, dividends, interests, fees and royalties,
Indonesia has signed agreements (tax treaties) with
50 countries as follows:
1.
Australia
2.
Austria
3.
Belgium
4.
Bulgaria
5.
Canada
6.
Czechoslovakia
7.
Denmark
8.
Egypt
9.
Finland
10.
France
11.
Germany
12.
Hungary
13.
India
14. Italy
15.
Japan
16.
Jordan
17. Kuwait
18. Luxembourg
19. Malaysia
20. Mauritius
21. Mongolia
22. Netherlands
23. New
Zealand
24. Norway
25. Pakistan
|
26. The
Philippines
27.
Poland
28.
Romania
29.
Saudi Arabia
30.
Seychelles
31.
Singapore
32.
Slovakia
33.
South Africa
34.
South Korea
35.
Spain
36.
Sri Lanka
37.
Sweden
38.
Switzerland
39.
Syria
40. Taiwan
41. Thailand
42. Tunisia
43. Turkey
44. Ukraine
45. United
Arab Emirates
46. United
Kingdom
47. United
States of America
48. Uzbekistan
49. Venezuela
50. Vietnam
|
Withholding
tax rates applied to residents of these
countries may be reduced based on the provision
of the particular tax treaty.
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