Part of the series: The Reporting Year
- PT PMA Reporting Obligations: The Indonesian Company Reporting Year Mapped
- Why a PT PMA Carries the Large Enterprise Classification
- 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.
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.
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.
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.