DGT Income Tax Brackets in Indonesia for 2024

The tax system in Indonesia recognises the economic realities faced by the majority of the population, who have limited financial resources, and are typically exempt from almost any taxation. The tax-free poverty threshold for Indonesian income earners also depends on the regions as there is some disparity in purchasing power between the regions and between large urban cities and smaller ones. 

There are several taxes applicable in Indonesia that companies, investors and individuals must comply with. The tax system in Indonesia is administered by the official tax body, the Directorate General of Taxes.

The Income Tax Law provides guidance and support in the form of income tax tables for individuals and businesses. These tax tables have been amended by government regulations periodically over the years. Taxpayers must familiarize themselves with these tax tables and the corresponding tax brackets and tax rates, for effective tax planning and to remain compliant with tax laws in Indonesia.

It is important to note that new effective tax rates (ETR) have been implemented on 1 January 2024 and these are addressed below in the section for personal income tax (PIT).

Here you will learn more about:

• headline tax rates
• personal income tax (PIT) rates
• corporate income tax (CIT) rates
• capital gains tax (CGT) rates
• withholding tax (WHT) rates
• value-added tax (VAT) rates

Headline Tax Rates in Indonesia

Personal Income Tax (PIT) Brackets for Individuals Indonesia for 2024

The Income Tax Law was amended by the Government Regulation No. 58 Year 2023 (“GR-58“) on 27 December 2023 and the Minister of Finance Regulation No. 168 Year 2023 (“PMK-168“) dated 29 December 2023 (which took effect on 1 January 2024). These changes introduced an “Average Effective Rate” (ETR) (“Tarif Efektif Rata-rata (TER)”) with respect to Article 21 Withholding Tax Rates on Income in Connection with Work, Services or Activities of Individual Taxpayers (hereafter referred to as Article 21).

Both amendments sought to simplify the withholding rates in respect of Article 21. Indonesian businesses and their employees will switch from an annual calculation to a new monthly withholding tax system. As a result, these changes may affect the take-home pay of employees and may result in a fluctuation of tax in December.

GR-58 stipulates that: 

• the monthly Article 21 withholding tax calculation for the months of January to November must be performed using an effective tax rate (“ETR”) 
• the annual calculation carried out in December must still be performed using the normal Article 21 progressive income tax rate as prescribed by Article 17(1)(a) of the Income Tax Law
• the final tax underpayment will be based on the December recalculation amount minus the tax that has been withheld from January to November 
• the ETR under GR-58 is applied on the gross income received by the individual in a particular month without applying any annualisation or deduction on the gross income. This is because the ETR has accounted for the applicable deductions such as non-taxable income, occupational expense, and pension contribution/expense 

There are several categories of taxable income in Indonesia including regular and irregular income, pensions, income as a board member, income of freelancers and non-employees. Income is calculated by subtracting allowable deductions from the gross income. Allowable deductions include: 

• occupational expenses such as specified costs related to work
• pension contributions paid to a pension fund or a social security program
• ‘Zakat’ (a form of almsgiving that is mandatory for all Muslims in most countries) paid through an employer to authorized bodies

An individual is treated as a tax resident in Indonesia if they: 

• live in Indonesia
• are present in Indonesia for more than 183 days within a 12 month period
• are in Indonesia during a fiscal year and intend to reside in Indonesia 

A non-resident individual only pays taxes on the income earned in Indonesia.

Classification of Effective Personal Income Tax Rates

According to Article 2 of GR-58, the effective personal income tax rate (ETR) is divided into the monthly effective rate and daily effective rate.

Monthly Effective Tax Rate (ETR)

The monthly ETR applies to the gross income received by an individual on a monthly basis. Monthly ETR is categorised into Category A, B or C based on the taxpayer’s marital status and range of monthly income received considering the tax base not subject to tax (PTKP). Detailed information about applicable monthly rates for each category is tabulated below.

Daily Effective Tax Rate (ETR)

The daily ETR applies to income received by non-resident employees on a daily, weekly, hourly, contractual, or unit/piece basis.

The applicable daily ETR and daily income ranges are:

• 0% for daily income up to IDR 450,000
• 0.5% for daily income above IDR 450,000 up to IDR 2,500,000. 

At this stage, GR-58 does not regulate the applicable ETR nor whether it is applicable for daily income above IDR 2,500,000. 

Monthly Effective Tax Rates for Individuals in Category A

The monthly ETR for Category A applies to the monthly gross income of individuals with a marital status of:

• Single without dependents (S/0)
• Single with one (1) dependent (S/1)
• Married without dependents (M/0)

Monthly Effective Tax Rates for Individuals in Category B

The monthly ETR for Category B applies to the monthly gross income of individuals with a marital status of:

• Single with two (2) dependents (S/2)
• Single with three (3) dependents (S/3)
• Married with one (1) dependent (M/1)
• Married with two (2) dependents (M/2)

Monthly Effective Tax Rates for Individuals in Category C

The monthly ETR for Category C applies to the monthly gross income of individuals with a marital status of:

• Married with three (3) dependents (M/3)

Personal Income Tax Due Dates

Corporate Income Tax (CIT) Rates in Indonesia for 2024

A company domiciled in Indonesia is subject to tax obligations. Similarly, a foreign company with a permanent establishment (PE) in Indonesia is also subject to the Indonesian tax regime. This is a self-assessment tax system where taxpayers pay their CIT on a monthly basis (Article 25) in the current tax year.

While there is a standard corporate tax rate that applies to net taxable income, certain industries may have special tax regimes in place.

Corporate Income Tax Due Dates

Capital Gains Tax (CGT) in Indonesia

Capital Gains Tax (CGT) in Indonesia is summarized below.

Withholding Tax Rates for Residents and Non-Residents in Indonesia

In general, withholding tax (WHT) is levied on residents and non-residents in Indonesia. Where this occurs, it is the payer who is responsible for withholding or collecting the tax concerned. There are several WHTs as follows:

• Article 23/26 Income Tax (PPh 23/26) - payable for most types of services where the recipient of payment is an Indonesian resident. Where non-residents are involved, Article 26 applies
• Final Article 4(2) Income Tax - certain types of income are subject to a final income tax at specified rates. This includes income from rental of land, construction work and proceeds from transfer of building rights
• Article 22 Income Tax (Pph 22) - this typically apples to import of certain customer goods, auctioned imported goods, the purchase of gas fuel and more

It is important that taxpayers have a Tax Identification Number (TIN) or risk being subject to a 100% surcharge in addition to the standard tax rate.

As Indonesia is signatory to several double taxation treaties (DTTs), the WHT rate may vary again and a taxpayer may benefit from the provisions of these treaties.

Value-Added Tax Rate in Indonesia

The VAT law in Indonesia allows the government to change the VAT rate from 5% to 15%. It is expected to increase to 12% in 2025.