Sending Money Offshore: Outbound Payments from a PT PMA

A PT PMA sends money offshore regularly: payments to foreign suppliers, service fees to consultants, royalties to parent companies, interest on shareholder loans, and dividend distributions to foreign shareholders. Each outbound transfer carries an Indonesian withholding tax obligation under PPh Article 26, a Bank Indonesia foreign exchange reporting requirement, and a bank-level documentation set. This article sets out the framework for outbound payments PT PMA owners face on the operational side.

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Indonesia operates a free foreign exchange regime under Law No. 24 of 1999 on Foreign Exchange and Exchange Rate System. Residents and non-residents can freely transfer foreign currency in and out of the country. The control mechanism is post-transaction reporting and at-source withholding, applied through the company’s commercial bank and the tax authority. A foreign owner sending money offshore from a PT PMA is engaging with a three-part framework: the withholding tax under Income Tax (Pajak Penghasilan, or PPh) Article 26; the Bank Indonesia Lalu Lintas Devisa (LLD) foreign exchange transaction reporting regime; and the commercial bank’s compliance documentation set.

This article covers the framework in seven sections. The four payment categories the PT PMA sends offshore. The 20 (twenty) per cent domestic rate under PPh Article 26. The treaty rate position and the difference between the business profits article and the passive income articles. The at-source application: certificate of residence, the DGT Form documentation under PMK 112/2025, and the four conditions for treaty rate application. The Bank Indonesia LLD reporting regime under Bank Indonesia Regulation No. 22/22/PBI/2020. The bank documentation set the commercial bank requests. Worked examples on the four payment categories.

The four categories of offshore payment from a PT PMA

The four payment categories the PT PMA sends offshore each carry different withholding and treaty positions.

The 20 per cent domestic rate and the PPh Article 26 mechanics

PPh Article 26 Indonesia applies at 20 (twenty) per cent on the gross outbound payment in all four categories. The PT PMA is the withholding agent: it calculates the tax, deducts it from the gross payment, sends the recipient the net amount, and remits the withheld portion to the State Treasury through the Core Tax Administration System (Sistem Inti Administrasi Perpajakan, or Coretax).

The operational mechanics run through five steps.

Step	Action	Timing
1	Calculate the withholding at the applicable rate (domestic 20 per cent or reduced treaty rate where conditions are met)	At the point of invoice processing
2	Pay the recipient the net amount through the commercial bank, supported by the documentation set	At the agreed payment date
3	Remit the withheld amount to the State Treasury through Coretax	By the 10th of the following month
4	File the monthly PPh Article 26 return through Coretax	By the 20th of the following month
5	Issue the withholding receipt (bukti potong) to the recipient	Within 7 (seven) days of remittance

The bukti potong is the recipient’s documentary evidence of the Indonesian tax paid. The recipient uses it to claim a foreign tax credit in their home jurisdiction where the treaty supports relief from double taxation. The PT PMA’s failure to issue the bukti potong frequently surfaces in disputes with foreign counterparties whose home tax authority requires the receipt before granting the credit.

Late remittance produces an administrative penalty of 2 (two) per cent per month under the General Tax Provisions Law (Law No. 6 of 1983 as amended by Law No. 7 of 2021), capped at 24 (twenty-four) months. Late return filing produces a separate penalty of IDR 100,000 (one hundred thousand Indonesian Rupiah) per return.

The treaty rate position: business profits versus passive income

The substantive difference between the four payment categories sits in the treaty article that applies and the resulting rate.

Service payments are governed by the business profits article (Article 7 of the OECD Model Tax Convention) in most of Indonesia’s treaties. The article allocates taxing rights on business profits to the recipient’s country of residence in the absence of a permanent establishment (PE) in Indonesia. Where the no-PE condition is satisfied, Indonesia’s domestic withholding right falls away, and the treaty rate is 0 (zero) per cent. The PE threshold is broadly: a fixed place of business in Indonesia, an Indonesian-based dependent agent acting on the recipient’s behalf, or a project lasting beyond the period defined in the specific treaty (typically 183 days to 12 months depending on the treaty).

For most foreign consultants and service providers servicing the PT PMA from outside Indonesia, the no-PE condition is satisfied and the treaty rate is 0 per cent. The condition fails where the foreign provider has an Indonesian office, Indonesian employees acting on their behalf, or where a project is delivered on-site in Indonesia for an extended period.

Passive income (dividends, interest, royalties) is treated differently. The dividend, interest, and royalty articles of most treaties allocate concurrent taxing rights to both countries, with Indonesia retaining a capped withholding right typically at 10 (ten) to 15 (fifteen) per cent. The recipient pays tax on the income in their home country as well, with the Indonesian withholding available as a foreign tax credit.

Technical service fees sit in a separate category in some newer treaties (the technical services article), with rates typically 5 (five) to 10 (ten) per cent. The technical services article applies where the service involves a transfer of technical knowledge, technical know-how, or technical expertise to the recipient. The line between an ordinary management service (business profits article, 0 per cent) and a technical service (technical services article, 5 to 10 per cent) is read on the substance of the deliverable.

A PT PMA paying a foreign management consultant for advisory services consumed by the PT PMA can typically apply 0 per cent withholding under the business profits article, while the same PT PMA paying a foreign royalty for use of a trademark applies 10 to 15 per cent under the royalty article.

The at-source application: certificate of residence and DGT forms

The treaty rate Indonesia application at source requires the PT PMA to satisfy four conditions at the time of payment and remittance.

1. The recipient must be tax resident in the treaty country, under the residence article of the treaty (typically requiring the recipient to be subject to comprehensive tax on worldwide income in that country).
   
2. The recipient must provide a current Certificate of Residence (typically valid for 12 (twelve) months) from their home tax authority. The certificate is reissued annually and the dates on it must cover the period of the relevant payments
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3. The recipient must provide the DGT Form under Minister of Finance Regulation No. 112 of 2025 (PMK 112/2025), effective 31 December 2025. The unified six-section DGT Form replaced the prior separate DGT-1 (for legal entities) and DGT-2 (for individuals) under DGT Regulations 28/PJ/2018 and 25/PJ/2018. The form is signed and stamped by the recipient’s home tax authority and by the recipient, and submitted electronically through the PT PMA’s Coretax taxpayer portal. Under PMK 112/2025, the beneficial ownership test has been integrated into a unified substantive eligibility test that also incorporates the Principal Purpose Test (PPT) and limitation of benefits provisions. The withholding agent (the PT PMA) has an enhanced verification obligation: it must assess whether the foreign recipient has genuine substantive business activity and whether the principal purpose of the arrangement is treaty access. Reliance on documentary completeness alone is no longer sufficient under audit.
   
4. The PT PMA must keep all of the above on file at the time of payment and remittance. The documentation is checked at any subsequent tax audit and supports the treaty rate position retroactively.

Where any of the four conditions is not met at the time of payment, the domestic 20 (twenty) per cent rate applies and the recipient must claim a refund of the over-withheld tax through the Refund of Excess Withholding Tax procedure under Article 23 of the General Tax Provisions Law. The refund route is slower (typically 6 to 12 months to process) and requires the recipient to engage with the Indonesian tax authority through their Indonesian advisor. The practical position is to assemble the certificate of residence and DGT Form (under PMK 112/2025) in advance of the first payment to a foreign recipient and to refresh the documentation annually.

The Bank Indonesia LLD reporting regime

Outbound transfers above USD 10,000 (ten thousand United States Dollars) or equivalent require a Bank Indonesia LLD reporting (Lalu Lintas Devisa) submission filed by the company’s commercial bank under Bank Indonesia Regulation No. 22/22/PBI/2020 on Reporting of Foreign Exchange Activities.

None of these require pre-approval from Bank Indonesia or another authority. The free foreign exchange regime under Law No. 24 of 1999 remains in place. The additional bank-level reviews produce documentary requests that can extend the transfer processing time by 2 (two) to 5 (five) business days for larger or more complex transactions.

Outbound transfers below the USD 10,000 threshold are not subject to LLD reporting, although the bank-level compliance checks (including AML screening) apply to all transfers regardless of size.

The bank documentation set

The commercial bank’s documentation set for an outbound transfer covers seven items, which the company assembles before initiating the transfer.

• The supporting commercial invoice or contract evidencing the underlying transaction. The invoice should specify the recipient, the service or goods being paid for, the amount, the currency, and the payment terms.

• The PT PMA’s Tax Identification Number (Nomor Pokok Wajib Pajak, or NPWP) and the most recent tax registration certificate, evidencing the company’s tax registration status.

• A foreign exchange transaction declaration form completed by the company, identifying the transaction type (services, dividend, royalty, interest, principal repayment, or capital outflow), the recipient, and the underlying purpose. The form is provided by the bank and is specific to each transaction.

• Evidence of the PPh Article 26 withholding tax remittance, typically the Coretax submission receipt for the relevant period and the bukti potong issued to the recipient.

• The recipient’s bank details, including the SWIFT code, IBAN where applicable, and the bank’s full name and address.

• A board resolution authorising the transfer, for material transactions above the company’s standard authorisation thresholds (typically applied to transfers above USD 50,000 or local-currency equivalent).

• The recipient’s certificate of tax residence and the relevant DGT Form under PMK 112/2025 where the treaty rate is applied to the withholding.

The processing time for a fully-documented outbound transfer is typically same-day to next-day for amounts under USD 50,000 and 2 (two) to 5 (five) business days for larger transfers requiring additional compliance review. The processing time can be reduced by pre-positioning the documentation set with the bank in advance of the transfer date.

The anti-money laundering (AML) compliance layer

Tax compliance under PPh Article 26 and foreign exchange reporting under the Bank Indonesia LLD regime are two of the three regulatory dimensions on every outbound transfer. The third is anti-money laundering compliance, which operates in parallel at the bank level and is the dimension that most often produces a transfer delay where one occurs.

The Indonesian AML framework sits on Law No. 8 of 2010 on the Prevention and Eradication of the Crime of Money Laundering (Undang-Undang Tindak Pidana Pencucian Uang, or UU TPPU), Law No. 9 of 2013 on Terrorism Financing, and OJK Regulation No. 8 of 2023 (POJK 8/2023) on AML, CFT, and CPF Programs in the Financial Services Sector. The reporting obligations to the Financial Transaction Reports and Analysis Centre (Pusat Pelaporan dan Analisis Transaksi Keuangan, or PPATK) fall on the bank executing the company’s transfer. The PT PMA itself is not a reporting party under POJK 8/2023. The PT PMA’s role is to supply the documentation set the bank requires for its own screening and reporting.

The beneficial ownership data on the PT PMA itself, filed at the Ministry of Law under Presidential Regulation No. 13 of 2018 and the most recent implementing regulation Permenkum No. 2 of 2025, feeds into the bank’s customer due diligence on the company. Stale or incomplete BO data on the bank’s file is a common operational trigger for transfer delays even where the underlying transaction is fully tax-compliant and forex-reported.

The full treatment of the AML compliance layer, the PPATK reporting framework, Indonesia’s full FATF membership from October 2023, the sanctions regimes affecting USD, EUR, and GBP transfers, and the bank-level screening reality for a PT PMA’s outbound payments sits in the dedicated Financial Management Article 7 on AML compliance. The article is the companion piece to this one and addresses the operational dimension that the tax-and-forex framework set out above does not reach.

Worked examples on the four payment categories

The arithmetic on each payment category illustrates the substantive difference between the business profits and passive income positions.

Service payment to a Singapore consultant

A PT PMA in Canggu engages a Singapore-based management consultant for IDR 50,000,000 (fifty million Indonesian Rupiah, equivalent to approximately USD 3,200) of brand strategy work delivered remotely. The Singapore consultant carries a current certificate of residence and DGT Form on file under PMK 112/2025.

Under the Indonesia-Singapore treaty’s business profits article, the rate is 0 (zero) per cent where the Singapore consultant has no PE in Indonesia. The PT PMA pays the consultant the full IDR 50,000,000 (or the agreed USD equivalent) without withholding. The PT PMA still files a monthly PPh Article 26 return showing the payment at the 0 per cent rate and issues a bukti potong for record purposes.

Dividend to a Singapore parent company (substantial stake)

The same PT PMA declares a dividend of IDR 800,000,000 (eight hundred million Indonesian Rupiah) to its Singapore parent company, which owns 100 per cent of the PT PMA’s shares. The parent provides a current certificate of residence and DGT Form under PMK 112/2025, including substantiation of the 365 (three hundred and sixty-five) day minimum-share-ownership period required for the reduced dividend treaty rate.

Under the Indonesia-Singapore treaty’s dividend article, the rate for substantial holdings (25 per cent or more) is 10 (ten) per cent. The PT PMA withholds IDR 80,000,000 from the gross dividend, pays the parent IDR 720,000,000 net, remits IDR 80,000,000 to the State Treasury through Coretax by the 10th of the following month, and issues a bukti potong.

Interest to a UK shareholder lender

A PT PMA in Bali pays IDR 100,000,000 (one hundred million Indonesian Rupiah) of annual interest to a UK shareholder under a properly-documented shareholder loan within the 4 to 1 thin capitalisation cap. The shareholder provides certificate of residence and DGT Form under PMK 112/2025.

Under the Indonesia-UK treaty’s interest article, the rate is 10 (ten) per cent. The PT PMA withholds IDR 10,000,000, pays the UK shareholder IDR 90,000,000 net, and remits the withheld amount through Coretax. The interest is deductible to the PT PMA against the corporate income tax at 22 (twenty-two) per cent, producing a net Indonesian fiscal position close to neutral on the cross-border interest payment.

Royalty to a US licensor

A PT PMA in Bali licenses a trademark from a US-based licensor and pays IDR 150,000,000 (one hundred and fifty million Indonesian Rupiah) of annual royalty. The licensor provides certificate of residence and DGT Form under PMK 112/2025.

Under the Indonesia-US treaty’s royalty article, the rate is 10 (ten) per cent for industrial royalties. The PT PMA withholds IDR 15,000,000, pays the US licensor IDR 135,000,000 net, and remits the withheld amount. The licensor claims the IDR 15,000,000 as a foreign tax credit against their US federal tax on the royalty income, typically reducing the US tax to zero on the Indonesian-sourced royalty (subject to the US foreign tax credit rules and any Pillar Two top-up considerations).

Where this sits in TraceWorthy’s work

TraceWorthy’s financial services team performs the structuring of outbound payment routes for PT PMAs, the calculation and remittance of PPh Article 26 withholding through Coretax, the assembly of treaty documentation (certificates of residence, DGT Forms under PMK 112/2025) to support at-source treaty rate application, the preparation of the bank documentation set for each outbound transfer, and the response to bank compliance queries on larger or unusual transactions. We work with foreign owners to set the offshore payment workflow at the point of first cross-border activity and refine it as the company’s offshore counterparty base grows.

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This article provides general information on outbound payments and withholding tax for a PT PMA in Indonesia under PPh Article 26 of the Income Tax Law, Bank Indonesia Regulation No. 22/22/PBI/2020 on Foreign Exchange Reporting, and the relevant double tax treaties as at May 2026. It does not constitute legal, tax, accounting or regulatory advice. Withholding rates, treaty rates, Bank Indonesia reporting thresholds, and bank documentation requirements are set by regulation and treaty and can change. The position for any individual transaction depends on the nature of the payment, the recipient’s tax residency, the documentation supporting the treaty application, and the commercial bank’s compliance framework. Obtain advice specific to your circumstances before acting on any point in this article.

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