Why a PT PMA Pays the Same Corporate Income Tax as a Local Company

The corporate income tax rate in Indonesia is set by where a company is resident and the income it earns. A foreign-owned PT PMA and a locally owned PT PMDN, on the same figures, meet the same rate.

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A company counts as a resident taxpayer when it is incorporated in Indonesia, or managed from Indonesia, and a PT PMA meets that test from the day it is set up. The rate written for resident companies then applies to it in full. Ownership changes the position in two narrow places, examined later, away from the headline rate.

The standard rate of corporate income tax in Indonesia

The standard corporate income tax rate in Indonesia is 22 per cent, a figure that has applied since 2020. The Harmonisation of Tax Regulations Law (Law No. 7 of 2021) fixed it from the 2022 tax year, cancelling a planned reduction to 20 per cent, and it stays in place for 2026.

The rate reaches every resident company on its net taxable income. A resident company is one incorporated in Indonesia, or managed from Indonesia, and it is taxed on income earned inside and outside the country. A PT PMA falls into this group from incorporation, so its corporate income tax rate is 22 per cent.

A foreign company that operates through a permanent establishment, such as a branch, is taxed at the same 22 per cent on the profits attributable to that establishment, and it carries an additional branch profit tax on after-tax earnings. A PT PMA is a resident company in its own right, so the branch profit tax does not reach it. The difference is one of legal form, the resident company set against the branch.

The reliefs that lower the rate

Three settings move a company below the 22 per cent standard. Each follows a measurable feature of the company, its listing status or its turnover, and each reaches a resident company whether the owner is foreign or local.

Rate or relief	Who it applies to	Source
22 per cent standard rate	Every resident company, on net taxable income	Income Tax Law, as amended by Law No. 7 of 2021
19 per cent public-company rate	A listed company with at least 40 per cent of shares traded on the IDX, and at least 300 shareholders each owning under 5 per cent	Government Regulation No. 30 of 2020
50 per cent reduction, an effective 11 per cent on part of income	A resident company with annual turnover up to IDR 50 billion, on the income from turnover up to IDR 4.8 billion	Article 31E, Income Tax Law
0.5 per cent final tax on turnover	A resident company with annual turnover up to IDR 4.8 billion, for up to three years	Government Regulation No. 55 of 2022

The public-company rate of 19 per cent is a 3 per cent reduction under Government Regulation No. 30 of 2020 on the Reduction of the Income Tax Rate for Domestic Corporate Taxpayers in the Form of Public Companies. It reaches a company that lists at least 40 per cent of its paid-up shares on the Indonesia Stock Exchange, with at least 300 shareholders each owning under 5 per cent, maintained for at least 183 days in the tax year.

Article 31E of the Income Tax Law gives a resident company with annual turnover up to IDR 50,000,000,000 (fifty billion Indonesian Rupiah) a 50 per cent reduction of the 22 per cent rate, applied to the slice of taxable income that corresponds to turnover up to IDR 4,800,000,000 (four billion, eight hundred million Indonesian Rupiah). On that slice the effective rate falls to 11 per cent, while income above the slice is taxed at 22 per cent. The relief is written for the resident corporate taxpayer, the category a PT PMA sits in, so a PT PMA with turnover under the ceiling qualifies.

The reduced slice is the share of taxable income that IDR 4,800,000,000 (four billion, eight hundred million Indonesian Rupiah) bears to total turnover. Take a company with turnover of IDR 30,000,000,000 (thirty billion Indonesian Rupiah) and taxable income of IDR 3,000,000,000 (three billion Indonesian Rupiah). The slice is 16 per cent of the income.

Portion of income	Amount	Rate	Tax
Reduced slice, 16 per cent of income	IDR 480 million	11 per cent	IDR 52.8 million
Remaining income	IDR 2.52 billion	22 per cent	IDR 554.4 million
Total under Article 31E	IDR 3 billion	blended	IDR 607.2 million
Flat rate, for comparison	IDR 3 billion	22 per cent	IDR 660 million

On these figures the reduction saves IDR 52,800,000 (fifty-two million, eight hundred thousand Indonesian Rupiah), and the blended rate is around 20 per cent. The saving widens as turnover falls toward IDR 4,800,000,000 (four billion, eight hundred million Indonesian Rupiah), the point at which the whole taxable income takes the 11 per cent rate.

A separate regime sets a final tax of 0.5 per cent on gross turnover, under Government Regulation No. 55 of 2022 on the Adjustment of Income Tax Regulations, for a resident company with turnover up to IDR 4,800,000,000 (four billion, eight hundred million Indonesian Rupiah). A limited liability company may use it for three years. The regime is built for the smallest turnover band and a short window, so a foreign-owned company carrying an investment plan above IDR 10,000,000,000 (ten billion Indonesian Rupiah) sits outside its profile in practice.

Two points beyond the common rate

Two points sit beyond the common rate. One turns on ownership: the tax on profits paid out to a foreign shareholder. The other follows the size of a company’s group, through the global minimum tax that reaches the largest multinationals.

A dividend a PT PMA pays to a resident Indonesian company is exempt from tax, where the distribution follows a shareholders’ meeting or an interim resolution. A dividend paid to a foreign shareholder is taxed at source under Article 26 of the Income Tax Law, at 20 per cent of the gross amount. A double tax treaty between Indonesia and the shareholder’s country of residence can lower that figure, often to 10 per cent or 15 per cent, where the shareholder provides a certificate of domicile. Indonesia carries a wide network of these treaties, so the figure a foreign owner meets on a dividend depends on residence and documentation. Interest on a shareholder loan and royalties for intellectual property licensed from abroad meet the same 20 per cent under Article 26, each reducible under a treaty, and these are the cross-border payments a foreign owner most often makes alongside a dividend.

This second point follows the size of a group. Minister of Finance Regulation No. 136 of 2024, effective for financial years from 1 January 2025, applies a minimum effective tax rate of 15 per cent to a company that belongs to a multinational group with consolidated global revenue of EUR 750,000,000 (seven hundred and fifty million Euros) or above in at least two of the four preceding years. A group of that size is in scope whether its ultimate parent is foreign or Indonesian. Indonesia’s 22 per cent rate already sits above that floor, so an ordinary PT PMA paying tax at the standard rate owes no additional amount. The minimum tax bites where an incentive, such as a tax holiday, has brought a group’s effective rate in Indonesia below 15 per cent, at which point a top-up restores the floor.

Two things sit outside the common rate: the withholding on a dividend paid to a foreign shareholder, and the global minimum tax on a group above EUR 750 million.

What this means for a foreign owner

For most foreign-owned companies the working number is 22 per cent. The tax is paid in monthly instalments under Article 25 and settled on the annual return. A company with genuinely small turnover, under IDR 50,000,000,000 (fifty billion Indonesian Rupiah), should price in the Article 31E reduction. Dividend planning is where a foreign owner gives the position separate attention, because the rate at which profits leave Indonesia depends on the shareholder’s treaty residence and the certificate that supports it. A group large enough to fall inside the global minimum tax adds the effective-rate test on top, particularly where it relies on an incentive.

The figure that surprises a foreign owner is rarely the rate. It is the way the rate interacts with several other things: the reliefs the company reaches, the withholding tax on the profits it distributes, the treaty documentation a reduced rate requires, and the effective-rate test that a large group must run. Setting these out at the planning stage, against the company’s real turnover and its shareholder structure, is the work the financial services team at TraceWorthy carries for foreign owners, alongside the reporting calendar set out in the first article of this series.

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Frequently asked questions

Is the corporate income tax rate different for a foreign-owned company?

No. The 22 per cent rate applies to every resident company, and a PT PMA is a resident company. A foreign-owned company and a locally owned one pay at the same rate on the same income.

Can a PT PMA use the small business tax reliefs?

Yes, where its turnover is low enough. The Article 31E reduction reaches a resident company with annual turnover up to IDR 50,000,000,000 (fifty billion Indonesian Rupiah), and a PT PMA is a resident company. The 0.5 per cent final regime is built for turnover up to IDR 4,800,000,000 (four billion, eight hundred million Indonesian Rupiah) and a short period, so it rarely fits a foreign-owned company at scale.

What rate applies to dividends paid to a foreign shareholder?

Article 26 sets 20 per cent on the gross dividend paid to a non-resident. A tax treaty can lower this, often to 10 per cent or 15 per cent, where the shareholder supplies a certificate of domicile. A dividend paid to a resident Indonesian company is exempt.

Does the global minimum tax apply to a PT PMA?

Only where the company belongs to a multinational group with consolidated global revenue of EUR 750,000,000 (seven hundred and fifty million Euros) or above. Because Indonesia’s 22 per cent rate sits above the 15 per cent floor, an ordinary PT PMA owes no top-up, and the test bites where an incentive has lowered the effective rate.

Is a PT PMA taxed on income earned outside Indonesia?

Yes. A resident company is taxed on income from inside and outside Indonesia, with relief available for foreign tax paid. A PT PMA is a resident company, so the worldwide basis applies to it.

What is the public company rate, and can a foreign-owned company reach it?

A listed company with at least 40 per cent of its shares traded on the Indonesia Stock Exchange, and at least 300 shareholders each owning under 5 per cent, maintained for at least 183 days in the tax year, pays 19 per cent under Government Regulation No. 30 of 2020. A foreign-owned company that meets the listing conditions qualifies.

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This article provides general information on Indonesian corporate income tax as at May 2026 and does not constitute legal, tax or accounting advice. Tax rates, reliefs and treaty terms change, and the position for any individual company depends on its residence, turnover, shareholder structure and the incentives it carries. Obtain advice specific to your circumstances before acting on any point set out above.

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Acronyms and Indonesian-language terms

Term	Full form	Meaning in this series
BKPM	Badan Koordinasi Penanaman Modal	The Investment Coordinating Board, now within the Ministry of Investment and Downstreaming, which receives the investment activity report and sets the licensing and capital rules.
BPJS	Badan Penyelenggara Jaminan Sosial	The social security administering bodies for health and for employment, to which an employer pays monthly contributions.
HPP	Harmonisasi Peraturan Perpajakan	The Harmonisation of Tax Regulations Law, Law No. 7 of 2021, which fixed the corporate income tax rate and the value added tax rate.
IDX	Indonesia Stock Exchange (Bursa Efek Indonesia)	The exchange on which a company lists to reach the 19 per cent public-company rate.
LKPM	Laporan Kegiatan Penanaman Modal	The investment activity report, the quarterly return on the realisation of a company’s investment.
NIB	Nomor Induk Berusaha	The Business Identification Number, the foundational licence issued through OSS.
OSS	Online Single Submission	The risk-based electronic licensing system that issues the NIB and receives the LKPM.
PKP	Pengusaha Kena Pajak	A Taxable Enterprise, the status a company takes for value added tax once its turnover reaches the registration threshold.
PPN	Pajak Pertambahan Nilai	Value added tax.
PPnBM	Pajak Penjualan atas Barang Mewah	The Sales Tax on Luxury Goods, charged on designated luxury items alongside value added tax.
PT PMA	Perseroan Terbatas Penanaman Modal Asing	A foreign-investment limited liability company, the entity through which a foreign investor operates in Indonesia.
RPTKA	Rencana Penggunaan Tenaga Kerja Asing	The Foreign Worker Utilisation Plan, the approval an employer secures before engaging a foreign worker.
SABH	Sistem Administrasi Badan Hukum	The Legal Entity Administration System of the Ministry of Law, through which corporate changes and the annual report deed are lodged.
WLKP	Wajib Lapor Ketenagakerjaan Perusahaan	The mandatory company manpower report filed with the Ministry of Manpower.

Legal instruments cited in the series

Instrument	Full title	What it governs in the series	Article
Entity, capital and governance
Law No. 40 of 2007	Law on Limited Liability Companies	The requirement that at least 25 per cent of authorised capital is issued and fully paid.	2
Law No. 6 of 2023	Job Creation Law, enacting the Government Regulation in Lieu of Law on Job Creation	The removal of the fixed minimum authorised capital for a company.	2
Govt Regulation No. 7 of 2021	Ease, Protection and Empowerment of Cooperatives and Micro, Small and Medium Enterprises	The enterprise size bands that classify a PT PMA as a large enterprise.	2
Minister of Law Regulation No. 49 of 2025	Requirements and Procedures for the Establishment, Amendment and Dissolution of Limited Liability Company Legal Entities	The annual report, approved by deed and lodged through SABH.	1
Licensing and investment reporting
Law No. 25 of 2007	Law on Investment	The duty on every investor to report investment realisation, the basis of the LKPM.	1, 4
BKPM Regulation No. 5 of 2025	Regulation of the Minister of Investment and Downstreaming, also Head of BKPM, on Risk-Based Business Licensing and Investment Facilities	The minimum paid-up capital, the investment plan, and the LKPM frequency and sanctions.	2, 4
Minister of Law and Human Rights Regulation No. 22 of 2023	On the investor stay permit, as amended in 2024 and 2025	The personal shareholding figure of IDR 10,000,000,000 (ten billion Indonesian Rupiah) for the investor permit.	2
Corporate and indirect tax
Income Tax Law	Law No. 7 of 1983 on Income Tax, as amended	The corporate income tax base, the Article 25 instalments, the Article 26 withholding on payments abroad, and the Article 31E turnover relief.	3
Law No. 7 of 2021	Law on the Harmonisation of Tax Regulations	The 22 per cent corporate income tax rate and the value added tax rate.	1, 3
Govt Regulation No. 30 of 2020	Reduction of the Income Tax Rate for Domestic Corporate Taxpayers in the Form of Public Companies	The 19 per cent rate for a qualifying listed company.	3
Govt Regulation No. 55 of 2022	Adjustment of Income Tax Regulations	The 0.5 per cent final tax on turnover up to the small-business ceiling.	3
MoF Regulation No. 131 of 2024	On Value Added Tax on Goods and Services	The value added tax base and the 12 per cent rate on goods carrying the Sales Tax on Luxury Goods.	1
MoF Regulation No. 136 of 2024	On the Global Minimum Tax	The 15 per cent minimum effective rate for groups with consolidated revenue of EUR 750,000,000 (seven hundred and fifty million Euros) and above.	3
Employment, social security and records
Law No. 7 of 1981	Law on Mandatory Manpower Reporting in Companies	The basis of the WLKP.	1
Govt Regulation No. 34 of 2021	On the Utilisation of Foreign Workers	The RPTKA, and the WLKP as a precondition for a foreign-worker permit.	1
Law No. 24 of 2011	Law on the Social Security Administering Bodies	The basis of the monthly BPJS contributions.	1
Law No. 8 of 1997	Law on Company Documents	The ten (10)-year retention period for company records.	1
Regional comparators
Foreign Investments Act of 1991	Philippine Foreign Investments Act	The minimum paid-in capital for a foreign-owned domestic-market enterprise, set beside the Indonesian figure.	2
Foreign Business Act of 1999	Thai Foreign Business Act	The minimum capital for a foreign business, set beside the Indonesian figure.	2

Where to read these instruments

The text of every Indonesian law, government regulation and ministerial regulation listed above sits in the national legal database maintained by the Audit Board, at peraturan.bpk.go.id, and on the government portal peraturan.go.id. As an example, Law No. 25 of 2007 on Investment is at peraturan.bpk.go.id/Details/39903.

For the operational side, the tax authority at pajak.go.id carries guidance on the income tax and value added tax points, while the licensing system at oss.go.id and the investment ministry at bkpm.go.id carry the licensing and capital procedures, together with the forms for the investment activity report. The two regional comparators sit with their own authorities, the Philippine Securities and Exchange Commission and the Thai Department of Business Development.

Each instrument in the reference table above links to its authoritative source. Most resolve to the Audit Board database, with the two Minister of Finance regulations housed in the Ministry of Finance database and the two foreign comparators housed by the Philippine Official Gazette and the Thai Department of Business Development. A direct document link can move when a database is reorganised, so the database root and portals above remain the reliable point of re-entry should any link change.

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This reference summarises instruments as cited in the Reporting Year series, current at May 2026, and does not constitute legal, tax or accounting advice. Regulations are amended and replaced, and the position for any individual company depends on its own facts. Confirm the current text of any instrument at the source before relying on it.