TAXES
LAW
9
W
HT is imposed at 20% on various amounts payable to
non-residents, unless the non-resident has a PE in
Indonesia, whereby the rates applicable to payments
to residents apply. The WHT may be reduced if the foreign
resident is exempt or eligible for a reduced WHT rate by virtue
of a Tax Treaty (“DTA”). In order to qualify for any relief under
a relevant DTA, non-residents must provide a certificate from
the tax authority in their country of residence (Form DGT-1 for
most taxpayers). Banks, pension funds and certain others using
custodian banks may use an alternative form (Form DGT-2),
which requires only certification of the tax residency status,
without the above additional declarations regarding the business
or transaction.
WHT applies to the following:
• Dividends
• Interest, including premiums, discounts and compensation
for loan guarantees
• Royalties
• Rent and other income connected with use of property
• Cross border leases
• Gifts and awards
• Compensation for work by individuals or services or
activities by overseas entities (applies irrespective whether
services are performed outside or inside Indonesia)
KPMG Advisory Indonesia (KAI) has been providing business
advisory services focusing on taxation and related business issues
since 1957. KAI is one of the largest practices in the country,
providing services to multinational corporations, joint ventures
and domestic companies operating in a wide range of business
sectors. Our experienced tax professionals are drawn from a wide
number of countries and backgrounds. Industry specialization,
service line expertise and international exposure, together with
continuous advanced training, equips them to work with our
clients and to be their professional tax advisors in a wide spectrum
of business matters.
• Insurance premiums (the rate of tax is reduced depending
on the nature of the transaction)
- Insured - 10%
- Insurance company - 2%
- Reinsurance company - 1%
• Disposals of shares in unlisted Indonesian companies.
The effective rate of tax is 5% of the gross transfer value. If
a foreigner is buying the shares in a company, the company
must pay the WHT before the transfer of ownership can be
recorded.
Branch Profits Tax
PE’s of foreign enterprises are subject to 20% WHT on their
after-tax income unless eligible for a reduced rate by virtue
of a DTA.
KPMG Advisory Indonesia
Jacob Zwaan, LL.M.(taxation)
Partner
+62 21 5799 5147
Corporate Taxation
Withholding Tax on Payments to Non-Residents
KPMG Advisory Indonesia
33
rd
Floor, Wisma GKBI 28
Jl Jend Sudirman
Jakarta 10210 - Indonesia
Phone : +62 21 570 4888
Fax
: +62 21 570 5888
Website :
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