Invoicing Offshore Clients from a PT PMA in Indonesia

A foreign investment limited liability company (Perseroan Terbatas Penanaman Modal Asing, or PT PMA) in Bali that delivers services to clients abroad sits inside a tax and currency framework that differs from the outbound side covered by Articles 6 and 7 of this series. The Value Added Tax (Pajak Pertambahan Nilai, or PPN) export rate under PMK 32/PMK.010/2019, the corporate income tax position on worldwide revenue, the Article 24 foreign tax credit, the Bank Indonesia foreign exchange reporting on inbound transfers, and the transfer pricing exposure under PMK 172/2023 form the structural framework. This article works through each in operational sequence.

---

The dominant operating model for a PT PMA in Bali is the services-export model. A consulting business invoicing clients in Australia, Singapore, and the European Union. A design studio invoicing brands in the United Kingdom and the United States. A software development house invoicing a parent company in the Netherlands or a sister company in Singapore. The revenue is foreign sourced from a commercial perspective. The company itself is an Indonesian tax resident and its global revenue falls within the Indonesian tax net under the worldwide income principle of Article 4 of the Income Tax Law.

The framework set out below is the one a foreign owner needs to operate the financial side of a services-export PT PMA from incorporation through annual reporting. The framework is structured around five regulatory anchors and two practical risk areas.

The PPN export rate at 0 per cent under PMK 32/PMK.010/2019

Indonesia operates PPN at a headline rate of 11 per cent on most domestic supplies of taxable goods and services, increased from 10 per cent on 1 April 2022 under Law No. 7 of 2021 (Undang-Undang Harmonisasi Peraturan Perpajakan, or UU HPP). For export transactions, the rate falls to 0 per cent. The zero-rating allows the exporter to recover input PPN paid on the costs of producing the exported supply, which would not be available if the export were treated as exempt instead of zero-rated.

The eligibility of services for the export 0 per cent rate is governed by Minister of Finance Regulation No. 32/PMK.010/2019 (PMK 32/2019), which took effect for service transactions entered into on or after 29 March 2019. PMK 32/2019 revoked the earlier PMK 70/PMK.03/2010 as amended by PMK 30/PMK.03/2011, broadening the list of qualifying services from three categories to a wider set covering most professional services.

A service qualifies as an export of services if the service activity is performed in the Indonesian Customs Area and the result of the service (goods, facilities, conveniences, or rights) is utilised outside the Indonesian Customs Area by a foreign recipient that does not maintain a permanent establishment in Indonesia. The qualifying activities under PMK 32/2019 include construction consulting (feasibility study, planning, and design of buildings located outside Indonesia), business consultation and management, legal consultation, architecture and interior design consulting, human resources consulting, engineering, marketing services, accounting and bookkeeping, financial audit, tax services, toll manufacturing services, repair and maintenance services on goods exported and used abroad, and freight forwarding services on export-oriented goods.

The breadth of the qualifying list means most professional services delivered by Bali-based PT PMAs to offshore clients fall within the zero-rated scope. A consulting business advising a UK client on market entry, a marketing agency creating campaigns for an Australian retailer, a software development house writing code for a Singapore tech company, or an accounting practice supporting a Netherlands parent’s bookkeeping all sit inside the eligible categories.

Substantiating the service export

The 0 per cent rate is conditional on the exporter being able to substantiate that the service was consumed outside Indonesia by an offshore recipient without a permanent establishment in Indonesia. The Directorate General of Taxes (Direktorat Jenderal Pajak, or DGT) audits the substantiation at the PPN return level and can re-characterise a transaction as a domestic supply (and impose the 11 per cent rate plus penalties) where the documentary set is incomplete.

The standard substantiation pack consists of six documents.

1. A written service agreement between the PT PMA and the foreign recipient setting out the scope of services, the consideration, the place of delivery (Indonesia, with consumption abroad), and the recipient’s address and tax identification in the home jurisdiction. The agreement should specify that the services are being procured for use in the recipient’s home jurisdiction and not for any activity the recipient conducts in Indonesia.
   
2. The PPN invoice (Faktur Pajak) issued by the PT PMA under the export tax invoice serial. The invoice carries 0 per cent PPN and is reported in the monthly PPN return as an export of services.
   
3. The Tax Object Letter (Pemberitahuan Ekspor Jasa Kena Pajak, or PEJKP) lodged through the customs reporting system. The PEJKP is the formal export declaration on the service side and is the document the DGT cross-checks against the PPN return.
   
4. Evidence of the offshore consumption of the service, such as delivery records, completion certificates, output deliverables (reports, code, design files) showing delivery to the foreign address, and correspondence confirming receipt at the foreign location.
   
5. Evidence of payment received from the offshore recipient, including the bank credit advice or SWIFT message confirming the inbound transfer from the foreign bank account of the recipient, in foreign currency or IDR equivalent.
   
6. Confirmation that the offshore recipient does not maintain a permanent establishment in Indonesia. The confirmation can take the form of the recipient’s tax residency certificate from the home jurisdiction’s tax authority, plus the recipient’s own representation in the service agreement that it does not have a permanent establishment in Indonesia.

The substantiation pack should be assembled at the time of each export transaction and retained for at least 10 years under Article 28(11) of the General Tax Provisions Law (Undang-Undang Ketentuan Umum dan Tata Cara Perpajakan, or KUP).

Corporate income tax on offshore-sourced revenue

The PT PMA is an Indonesian tax resident under Article 2 of the Income Tax Law (since it is established in Indonesia and its place of management is in Indonesia). As a tax resident, the company is taxed on its worldwide income under Article 4(1) of the Income Tax Law. Foreign-sourced revenue from offshore clients is therefore brought into the Indonesian corporate income tax base in the same way as Indonesian-sourced revenue.

The headline corporate income tax rate is 22 per cent under Article 17 of the Income Tax Law as amended by Law No. 7 of 2021. A 50 per cent reduction on the first IDR 4,800,000,000 (four billion eight hundred million Indonesian Rupiah) of taxable income applies for companies with turnover up to IDR 50,000,000,000 (fifty billion Indonesian Rupiah) under Article 31E of the Income Tax Law, which captures most Bali services-export PT PMAs in their early operating years.

The smaller-turnover final tax regime under Government Regulation No. 55 of 2022 (PP 55/2022) was substantially restructured by Government Regulation No. 20 of 2026 (PP 20/2026), effective 22 April 2026. Under the previous PP 55/2022 framework, the 0.5 (zero point five) per cent final tax on gross turnover up to IDR 4,800,000,000 (four billion eight hundred million Indonesian Rupiah) was available to PT PMAs in their first 3 (three) years of operation. Under PP 20/2026, PT entities (including PT PMAs) are no longer eligible for the regime.

The 0.5 per cent final tax is now available only to individual taxpayers (Orang Pribadi), Perseroan Perorangan (single-shareholder PT vehicles introduced under the Cipta Kerja Law), and koperasi (cooperatives, capped at 4 tax years from registration). PT PMAs that began using the regime under PP 55/2022 before 22 April 2026 retain transitional rights to continue under the prior rules until their original 3-year period expires; new PT PMAs incorporated on or after that date have no access.

The smaller-turnover relief that remains available to PT PMAs is Article 31E of the Income Tax Law, which applies a 50 (fifty) per cent reduction on the 22 (twenty-two) per cent corporate income tax rate for the portion of taxable income proportionate to the first IDR 4,800,000,000 (four billion eight hundred million Indonesian Rupiah) of gross turnover, for companies with annual turnover up to IDR 50,000,000,000 (fifty billion Indonesian Rupiah).

Foreign-currency revenue is translated into IDR at the Minister of Finance’s published exchange rate (KMK rate) at the date the revenue is recognised under the accrual basis. The KMK rate is published weekly and is the rate used for tax purposes. Differences between the KMK translation and the actual rate at which the company subsequently converts the foreign currency to IDR (or keeps the foreign currency in a USD or EUR account) produce a foreign exchange gain or loss in the company’s accounts, taxable or deductible as ordinary income.

Foreign withholding tax and the Article 24 foreign tax credit

A foreign client paying the PT PMA’s invoice may apply its own domestic withholding tax on the payment. Whether the foreign WHT applies depends on the foreign client’s jurisdiction, the nature of the service, and the applicable bilateral tax treaty between Indonesia and the client’s jurisdiction.

Three categories of foreign client position are common in practice.

1. Clients in a jurisdiction with no domestic withholding tax on service fees paid to non-residents typically remit the full invoice amount without deduction. The United Kingdom (subject to specific service categories), Singapore (for most service payments), and Hong Kong (for non-Hong Kong-source services) generally fall in this category.
   
2. Clients in a jurisdiction with domestic withholding tax that is covered by an Indonesia-jurisdiction tax treaty apply the reduced treaty rate where the PT PMA provides a valid certificate of residence and the appropriate treaty form. The treaty rate on service fees varies by treaty. The Indonesia-Australia treaty rate for technical fees is 15 per cent, the Indonesia-Netherlands treaty rate is 10 per cent, and the Indonesia-Singapore treaty rate is 5 per cent for services qualifying as royalty-equivalent under the treaty.
   
3. Clients in a jurisdiction with domestic withholding tax and no Indonesia treaty (or where the treaty does not reduce the WHT) apply the foreign jurisdiction’s domestic WHT rate. The US domestic WHT rate of 30 per cent on certain service categories paid to non-residents is the most material example. The Indonesia-US tax treaty reduces this rate for some service categories. The treaty does not extend the relief to all categories.

Where foreign WHT has been suffered, Article 24 of the Income Tax Law allows the PT PMA to credit the foreign WHT against its Indonesian corporate income tax liability on the same income. The credit is capped at the lower of the foreign WHT actually paid and the Indonesian corporate income tax that would have been due on the foreign-sourced income calculated on a country-by-country basis.

The credit mechanism in practice operates as follows. The PT PMA includes the gross foreign-sourced revenue (the invoice value before foreign WHT) in its Indonesian corporate income tax base. It then claims the Indonesian tax on the same income as a credit against the foreign WHT suffered. The credit is supported by a foreign tax payment certificate or equivalent documentation from the foreign client’s jurisdiction.

Where a foreign client has withheld tax on a payment to a PT PMA, the Indonesian Article 24 foreign tax credit is the mechanism that prevents double taxation. The PT PMA brings the gross revenue into its tax base, claims the credit for the foreign tax suffered, and pays only the difference (where the foreign rate is below the Indonesian rate).

Bank Indonesia LLD reporting and the DHE clarification

Inbound transfers from foreign clients to the PT PMA’s Indonesian bank account trigger reporting obligations under Bank Indonesia’s foreign exchange transactions framework. Bank Indonesia Regulation No. 22/22/PBI/2020 on Foreign Exchange Cash Flow (Lalu Lintas Devisa, or LLD) requires inbound transfers above USD 10,000 (ten thousand United States Dollars) or local-currency equivalent to be reported in the LLD system. The reporting is performed automatically by the receiving Indonesian bank, with the PT PMA supplying the transaction purpose code at the point of receipt.

The transaction purpose code for a service export invoice is typically “Export of Services” under the relevant LLD code category. The bank cross-checks the purpose code against the supporting documentation supplied by the PT PMA (the PPN invoice, the service agreement, the SWIFT message) to confirm the transaction characterisation.

A distinct regime that does not apply to service-export receipts is the natural resources export proceeds retention regime under Government Regulation No. 36 of 2023 as amended by Government Regulation No. 8 of 2025. The DHE Sumber Daya Alam (Devisa Hasil Ekspor Sumber Daya Alam, or DHE SDA) regime requires natural resources exporters in mining, plantation, forestry, and fisheries with export values at or above USD 250,000 (two hundred and fifty thousand United States Dollars) to deposit 100 per cent of their foreign exchange proceeds into designated Indonesian accounts for a 12-month retention period.

The DHE SDA regime is not applicable to a typical Bali services-export PT PMA. The regime is limited to natural resources sectors and does not extend to professional services, consulting, software, design, or other service-export activities. Service-export proceeds from offshore clients may be received freely in foreign currency, may sit in a USD or EUR account at an Indonesian bank, and may be converted to IDR or repatriated abroad at the PT PMA’s commercial discretion. The misconception that service exporters are subject to DHE retention is common among foreign owners and warrants a direct correction at the point of company formation.

Transfer pricing on related-party service exports under PMK 172/2023

A material proportion of services-export PT PMAs in Bali invoice offshore clients that are related parties. The typical structures include a Bali PT PMA invoicing a Netherlands parent company, a Bali PT PMA invoicing a Singapore sister company within a regional group, and a Bali PT PMA invoicing a US parent under a service-level agreement. The related-party nature of the transaction triggers the transfer pricing framework under Article 18 of the Income Tax Law and Minister of Finance Regulation No. 172 of 2023 (PMK 172/2023).

PMK 172/2023 was issued on 29 December 2023 and took effect for the preparation of transfer pricing documentation for fiscal year 2024 onwards. The regulation consolidates the prior framework that had been spread across PMK 213/PMK.03/2016 (transfer pricing documentation), PMK 49/PMK.03/2019 (mutual agreement procedure), and PMK 22/PMK.03/2020 (advance pricing agreements). PMK 172/2023 is now the single consolidated transfer pricing regulation in Indonesia.

The substantive requirement is that the price charged by the PT PMA to the related foreign party must reflect the arm’s length principle: the price that an independent third party would have charged for comparable services. The application of the arm’s length principle is supported by transfer pricing documentation prepared on an ex-ante basis (at the time the price is set, not retrospectively) under the three-tiered structure: the Master File, the Local File, and the Country-by-Country Report.

The documentation obligations apply where the PT PMA meets one of the relevant thresholds. Local File preparation is required where the gross revenue of the company exceeds IDR 50,000,000,000 (fifty billion Indonesian Rupiah) in the prior fiscal year, where the value of tangible goods related-party transactions exceeds IDR 20,000,000,000 (twenty billion Indonesian Rupiah), or where the value of services, royalties, interest, or other related-party transactions exceeds IDR 5,000,000,000 (five billion Indonesian Rupiah) per category. Master File preparation accompanies Local File preparation. Country-by-Country Reporting is required only for multinational groups with consolidated revenue exceeding IDR 11,000,000,000,000 (eleven trillion Indonesian Rupiah).

For a Bali services-export PT PMA invoicing related offshore parties, the practical impact of PMK 172/2023 is twofold. The pricing of the service must be set on an arm’s length basis at the time of the contract, supported by a benchmarking analysis that compares the PT PMA’s pricing to comparable independent transactions. The pricing analysis is documented in the Local File, which must be available within four months of the fiscal year-end. The DGT can adjust the pricing on audit and apply additional corporate income tax on the recalculated arm’s length profit, plus penalties.

Permanent establishment risk in the client’s jurisdiction

A separate risk on the inbound revenue side arises in the client’s jurisdiction. The Indonesian framework does not reach this exposure. Where the PT PMA’s staff, agents, or representatives perform service activities in the foreign client’s jurisdiction (instead of purely in Indonesia), the activity may constitute a permanent establishment of the PT PMA in the foreign jurisdiction. The consequence of permanent establishment recognition is that the foreign jurisdiction taxes the PT PMA on the profits attributable to the permanent establishment under its domestic corporate income tax rules.

The permanent establishment threshold is set in the relevant bilateral tax treaty’s permanent establishment article (typically Article 5 of the treaty, following the OECD Model). The standard triggers are a fixed place of business in the foreign jurisdiction (an office, branch, workshop), a building site or construction project lasting beyond the 6 or 12 month threshold depending on the treaty, a dependent agent in the foreign jurisdiction with authority to conclude contracts on behalf of the PT PMA, and (under more recent treaty wording) the provision of services in the foreign jurisdiction by employees or other personnel for an aggregate period exceeding 183 days in a 12 month period.

For a Bali services-export PT PMA whose staff travel to client jurisdictions to deliver services on-site, the services-permanent establishment trigger is the most material risk. A consulting team based in Bali that spends six months over the course of a year working at the client’s office in Singapore, Australia, or the United Kingdom may create a services-permanent establishment in that jurisdiction. The foreign tax authority can then assess the PT PMA on the profits attributable to the foreign activity.

The two operational disciplines that reduce permanent establishment exposure are documentation and structuring. The service agreement should specify that services are delivered from Indonesia and that any on-site work in the client’s jurisdiction is incidental, limited in duration, and not the core service activity. Where on-site presence is unavoidable for material engagements, the company should track the cumulative days each team member spends in each jurisdiction across the relevant 12-month period and obtain advice on the specific treaty position before the threshold is reached.

Where this sits in TraceWorthy’s work

TraceWorthy’s tax and accounting team performs the monthly PPN return preparation including the service-export documentation pack, the annual corporate income tax return with the Article 24 foreign tax credit calculation, the transfer pricing benchmarking and Local File preparation for related-party service exports under PMK 172/2023, the LLD code allocation at the point of inbound transfer, and advisory on permanent establishment positioning for clients with material cross-border service delivery. We work with foreign owners to design the service-export framework at the point of company formation and review it as the offshore client base scales.

---

This article provides general information on the framework affecting invoicing offshore clients from a PT PMA in Indonesia as at May 2026. It does not constitute legal, tax, accounting or regulatory advice. The Indonesian framework operates under the Income Tax Law (as amended by Law No. 7 of 2021), the PPN provisions and Minister of Finance Regulation No. 32/PMK.010/2019, Government Regulation No. 55 of 2022 on the small-turnover final tax regime, Bank Indonesia Regulation No. 22/22/PBI/2020 on foreign exchange reporting, and Minister of Finance Regulation No. 172 of 2023 on transfer pricing. The bilateral tax treaty network and the foreign jurisdictions’ domestic withholding tax rules evolve. The position for any individual PT PMA depends on the nature of its services, the client jurisdictions involved, the documentation supporting each export transaction, and the related-party status of its clients. Obtain advice specific to your circumstances before acting on any point in this article.

---