Indonesian Pocket Tax Book 2019 - PwC

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Tax ServicesIndonesianPocket Tax Book2019

ContentsCorporate Income TaxTax rates; Tax residence; Tax payments; Business profits; Controlledforeign companies; Capital allowances; Disallowed deductions; Debtto Equity Ratio; Losses; Profit distributions; Deemed profit margins;Special industries and activities; Transfer Pricing1Individual Income TaxNormal tax rates; Concessional tax rates; Main personal relief; Taxresidence; Registration and filing; Tax payments; Benefits-in-kind (BIKs);Social security system18Withholding TaxesArticles 21, 22, 4(2), 23 and 26 income taxes25International Tax AgreementsDouble Taxation Agreements; Tax Information Exchange Agreements;Mutual Administrative Assistance in Tax Matters; Multilateral Instrument;US FATCA34Value Added TaxGeneral; VAT exemption facilities; VAT not-collected facilities46Luxury-goods Sales Tax59Customs and ExciseImport Duty; Export Duty; Excise61Tax ConcessionsIncome tax concessions; LST concession; Concessions on special projectsand special zones66Land and BuildingLand and Building Tax; Tax on land and building transfer;Duty on the acquisition of land and building rights79Stamp Duty83Tax Payments and Tax Return FilingMonthly tax obligations, Annual tax obligations, Early tax refunds85Accounting for Tax91Tax Audits and Tax Assessments93Tax Collection Using Distress Warrant100Tax Dispute and ResolutionObjections; Appeals; Other avenues for tax dispute resolution;Judicial Review Requests to the Supreme Court102Contacts106

Corporate Income TaxCorporate Income TaxTax ratesGenerally, a flat rate of 25% applies. Public companies thatsatisfy a minimum listing requirement of 40% and otherconditions are entitled to a tax cut of 5% off the standardrate, giving them an effective tax rate of 20% (refer to page69). Small enterprises, i.e. corporate taxpayers with anannual turnover of not more than Rp 50 billion, are entitledto a 50% discount of the standard tax rate which is imposedproportionally on taxable income of the part of grossturnover up to Rp 4.8 billion. Certain enterprises with grossturnover of not more than Rp 4.8 billion are subject to FinalTax at 0.5% of turnover.Tax residenceA company is treated as a resident of Indonesia fortax purposes by virtue of having its incorporation or itsdomicile is in Indonesia. A foreign company carrying outbusiness activities through a permanent establishment (PE)in Indonesia will generally have to assume the same taxobligations as a resident taxpayer.Tax paymentsResident taxpayers and Indonesian PEs of foreigncompanies have to settle their tax liabilities either by directPwC IndonesiaIndonesian Pocket Tax Book 20191

Corporate Income Taxpayments, third party withholdings, or a combination ofboth. Foreign companies without a PE in Indonesia have tosettle their tax liabilities for their Indonesian-sourced incomethrough withholding of the tax by the Indonesian party payingthe income.Monthly tax instalments (Article 25 income tax) constitute thefirst part of tax payments to be made by resident taxpayersand Indonesian PEs as a prepayment of their current yearCorporate Income Tax (CIT) liability. A monthly tax instalmentis generally calculated using the most recent CorporateIncome Tax Return (CITR). Special instalment calculationsapply for new taxpayers, finance lease companies, banks,state-owned companies, listed companies and othertaxpayers with periodical reporting requirements.The tax withheld by third parties on certain income (Article 23income tax) or tax to be paid in advance on certain transactions(e.g., Article 22 income tax on imports) also constituteprepayments for the current year CIT liability of the incomerecipient or the party conducting the import (refer to pages 3132 for income items subject to Article 23 income tax and pages25-30 for transactions subject to Article 22 income tax).If the total amount of tax paid in advance through the year(Articles 22, 23, and 25 income taxes) and the tax paid abroad(Article 24 income tax) is less than the total CIT due, thetaxpayer has to settle the shortfall before filing its CITR. Sucha payment is referred to as Article 29 income tax.2Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income TaxCertain types of income earned by resident taxpayersor Indonesian PEs are subject to final income tax. In thisrespect, the tax withheld by third parties (referred to asArticle 4(2) income tax) constitutes the final settlement of theincome tax for that particular income (refer to pages 30-31for income items subject to final income tax under Article4(2) income tax).For foreign companies without a PE in Indonesia, thetax withheld from their Indonesia-sourced income by theIndonesian party paying the income (Article 26 incometax) constitutes a final settlement of their income tax due(refer to pages 32-33 for income items subject to Article 26income tax).Business profitsTaxable business profits are calculated on the basis ofnormal accounting principles as modified by certaintax adjustments. Generally, a deduction is allowed forall expenditure incurred to obtain, collect and maintaintaxable business profits. A timing difference may arise if anexpenditure recorded as an expense for accounting cannotbe immediately claimed as a deduction for tax.Controlled foreign companiesProfits of a Controlled Foreign Companies (CFCs) aresubject to deemed dividend rules in Indonesia. A CFC is aforeign entity that is at least 50% owned by an Indonesiantaxpayer or at least 50% collectively owned by IndonesianPwC IndonesiaIndonesian Pocket Tax Book 20193

Corporate Income Taxtaxpayers. The scope of CFC income also covers incomefrom indirectly owned CFC with a minimum of 50%ownership by another CFC, or collective ownership by anIndonesian taxpayer’s CFCs, or collective ownership bya number of CFCs (including under the same or differentIndonesian taxpayers).The ownership threshold that is used to determine theCFC status is the ownership percentage at the end of theIndonesian taxpayer’s fiscal year, which is based on eitherthe percentage of paid-up capital or the percentage paidup capital with voting rights. The only situation in which therules do not apply is when the CFC’s shares are listed on astock exchange.Capital allowancesDepreciationExpenditure incurred in relation to assets with a beneficial lifeof more than one year are categorized and depreciated fromthe month of acquisition by the consistent use of either thestraight-line or the declining-balance method, as follows:1. Category 1 – 50% (declining-balance) or 25% (straightline) on assets with a beneficial life of four years.Examples of assets in this category are computers,printers, scanners, furniture and equipment constructedof wood/rattan, office equipment, motorcycles, specialtools for specific industries/services, kitchen equipment,4Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income Taxmanual equipment for agriculture, farming, forestry andfishery industries, light machinery for the food and drinkindustries, motor vehicles for public transportation,equipment for the semi-conductor industry, toolsand accessories for deep water anchor equipmentrentals, and base station controller for the cellulartelecommunication services.2. Category 2 – 25% (declining-balance) or 12.5%(straight-line) on assets with a beneficial life of eightyears. Examples of assets in this category are furnitureand equipment constructed of metal, air conditioners,cars, buses, trucks, speed-boats, containers and thelike. The category also covers machinery for agriculture,plantations, forestry activity, fisheries, for food anddrink, light machinery, logging equipment, equipmentfor construction, heavy vehicles for transportation,warehousing, and communication, telecommunicationsequipment, equipment for the semi-conductor industry,tools for deep water anchor equipment rentals, and toolsfor cellular telecommunication services.3. Category 3 – 12.5% (declining-balance) or 6.25%(straight-line) on assets with a beneficial life of 16 years.Examples of assets in this category are machines forgeneral mining other than in the oil and gas sector,machines for the textile, timber, chemical and machineryindustries, heavy equipment, docks and vessels fortransportation and communication, and other assets notPwC IndonesiaIndonesian Pocket Tax Book 20195

Corporate Income Taxincluded in the other categories.4. Category 4 – 10% (declining-balance) or 5% (straightline) on assets with a beneficial life of twenty years.Examples of assets in this category are heavyconstruction machinery, locomotives, railway coaches,heavy vessels, and docks.5. Building category – 5% (straight-line) on assets inthe permanent building category with a useful life of20 years; or 10% (straight-line) on assets in the nonpermanent building category with a useful life of tenyears. Included in the cost of the buildings is the Dutyon the Acquisition of Land and Building Rights (BeaPengalihan Hak atas Tanah dan Bangunan/BPHTB).More comprehensive lists of the assets included in eachcategory are set out in certain Minister of Finance (MoF)regulations. Separate lists of assets and depreciation ratesfor the oil and gas sector are also specified in an MoFregulation. Special rules apply to assets used for certainindustries (i.e., forestry, plantation and cattle breeding).AmortisationIntangible property or costs, including the cost of extendingbuilding use rights, rights for business use, rights for useand goodwill with a useful life of more than one year, shouldbe amortised on the following bases, as appropriate:6Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income Taxa. By using the straight-line or the declining-balancemethod at the rates specified in categories 1, 2, 3, and4 under Depreciation (above), based on the useful life ofthe property:Category 1: 4 yearsCategory 2: 8 yearsCategory 3: 16 yearsCategory 4: 20 yearsClassification into the appropriate category isdetermined on the basis of the nearest useful life (e.g.,an intangible asset with a useful life of six years mayfall under Category 1 or Category 2, while an intangibleasset with a useful life of five years is under Category 1).b. The costs of incorporation and expansion of the capitalof an enterprise are claimed in full in the year in whichthe expenditure is incurred or are amortised using eitherthe declining-balance or straight-line method at thefollowing rates:Category 1: 50% declining-balance; 25% straight-lineCategory 2: 25% declining-balance; 12.5% straight-lineCategory 3: 12.5% declining-balance; 6.25% straightlineCategory 4: 10% declining-balance; 5% straight-linePwC IndonesiaIndonesian Pocket Tax Book 20197

Corporate Income Taxc. Costs incurred for acquiring the right to oil and naturalgas concessions with a beneficial life of longer than oneyear are amortised using the production-unit method.d. Costs incurred in the acquisition of mining rights,forest concessions, and other rights to exploit naturalresources and natural products with a beneficial life oflonger than one year are amortised using the productionunit method but may not exceed 20% per annum.e. Costs incurred before the commencement of commercialoperations with a useful life of longer than one year arecapitalised and amortised according to the rates set outin point b (above).Assets arising from Tax Amnesty programIndonesia has rolled out Tax Amnesty program from 1 July2016 to 31 March 2017 and any newly declared assetsunder this program cannot be depreciated or amortisedfor tax purposes. The acquisition costs of these assets arebased on the value declared in the Tax Amnesty DeclarationLetter.Asset transfersSales of a company’s assets (other than land and building)may result in capital gains or losses, calculated as thedifference between the sales proceeds and the tax writtendown value of the assets concerned. Capital gains areassessable whilst a capital loss is tax-deductible only if the8Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income Taxasset concerned is used in the running of the business, i.e.,for obtaining, collecting, and securing assessable income.Revaluation of fixed assetsSubject to the Director General of Tax (DGT) approval,corporate taxpayers and PEs who maintain rupiahaccounting may undertake a revaluation of their noncurrent tangible assets for tax purposes. This may becarried out once every five years. Each revaluation mustinclude all business-related assets which are owned by thecompany and located in Indonesia, except for land (thismay be omitted). Before requesting the DGT’s approval, thecompany concerned must determine that it has settled all ofits outstanding tax liabilities.The revaluation must be conducted on a market or fairvalue basis. The market values must be determined bya government-approved appraiser. These are subject toDGT adjustments if the values, in the DGT’s view, do notrepresent the fair or market values of the assets.Once approved, the depreciation applied to depreciableassets must be based on the new tax book values(approved values) on the basis of a full useful life (in otherwords, as if the assets were new).The excess of the fair market value over the old tax bookvalue of the revalued assets is subject to final income taxat a rate of 10%. Subject to the DGT approval, taxpayersPwC IndonesiaIndonesian Pocket Tax Book 20199

Corporate Income Taxfacing financial difficulties may pay this tax in instalmentsover 12 months.Fixed assets falling under categories 1 and 2 must beretained at least to the end of their useful life. Land,buildings, and assets falling under categories 3 and 4 mustbe retained for at least 10 years after the revaluation date.Additional final income tax at a rate of 10% is imposed onthe original revaluation gains if the revalued assets are soldor transferred before the end of this minimum retentionperiod. This does not apply to:a. Transfer of assets because of force majeur or based on aGovernment decision/policy or a court decision;b. Transferred in the course of a tax-neutral businessmerger, consolidation, or business split;c. Withdrawal of fixed assets of a company because ofirreparable damage.Disallowed deductionsThese include:a. Benefits-in-kind (BIKs) (e.g., free housing, 50% of theacquisition and maintenance costs of certain companyprovided cars), except food and drink provided toall employees, employee benefits required for jobperformance such as protective clothing and uniforms,transportation costs to and from the place of work,accommodation for ship crew and the likes, the costof providing BIKs in remote areas, and 50% of theacquisition and maintenance costs of cellular phones;10Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income Taxb. Private expenses;c. Non-business gifts and aid, except certain religiouscontributions/alms and certain donations;d. Provisions, except for: provision for doubtful accountsfor banking and certain financial institutions, provisionfor insurance companies, deposit security provision forthe Deposit Insurance Corporation (Lembaga PenjaminSimpanan/LPS), reclamation provision for miningcompanies, forestation provision for forestry companies,and area closure and maintenance provision forindustrial waste processing businesses;e. Income tax payments;f. Tax penalties;g. Profit distributions;h. Employer contributions for life, health and accidentinsurance and contributions to unapproved pensionfunds, unless the contributions are treated as part of thetaxable income of employees;i. Expenses relating to income which is taxed at a finalrate, e.g., interest on loans relating to time deposits;j. Expenses relating to income which is exempt fromtax, e.g., interest on loans used to buy shares wheredividends to be received are not subject to income tax;k. Salaries or compensation received by partnership orfirmas members where their participation is not dividedinto shares.PwC IndonesiaIndonesian Pocket Tax Book 201911

Corporate Income TaxDebt to Equity RatioA single ratio of 4:1 is generally applicable, which means theamount of debt allowable in order to obtain full deductibilityof the financing cost is limited to four times the equityamount. Exemption applies to certain taxpayers.LossesLosses may be carried forward for a maximum of five years.However, for a limited category of businesses in certainregions or businesses subject to certain concessions, theperiod can be extended for up to 10 years. The carrying backof losses is not allowed. Tax consolidation and group relief isnot available.Profit distributionsTax is liable to be withheld from dividends as follows:a. Resident recipientsDividends received from an Indonesian company bya limited liability company incorporated in Indonesia(Perseroan Terbatas/PT), a cooperative, or a state ownedcompany, are exempt from income tax if the followingconditions are met: the dividends are paid out of retained earnings; and for PTs and state owned companies, the companyearning the dividends holds at least 25% of the paidin capital in the company distributing the dividends.If these conditions are not met, the dividends areassessable to the company earning the dividends atthe ordinary tax rate together with the company’s other12Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income Taxincome. Upon declaration, dividends are subject toArticle 23 income tax withholding at 15%. The amountwithheld constitutes a prepayment of the CIT liability forthe company earning the dividends. Dividends receivedby resident individual taxpayers are subject to finalincome tax at a maximum rate of 10%.b. Non-resident recipients:20% (lower for treaty countries) final withholding tax isdue on dividends paid to a non-resident recipient.Deemed profit marginsThe following businesses have deemed profit margins fortax purposes:DeemedProfit inGrossRevenueEffectiveIncomeTax RateDomestic shipping operations4%1.20% 1Domestic airline operations6%1.80% 1Foreign shipping and airlineoperations6%2.64% 1Foreign oil and gas drillingoperations15%3.75% 21% of exportvalue0.25% 2Certain Ministry of Traderepresentative officesPwC IndonesiaIndonesian Pocket Tax Book 201913

Corporate Income TaxNotes:1 The effective income tax rate (eitr) is calculated using the old tax rate of 30% because theMoF has not revised the decrees which regulate the deemed profit margins.2 The eitr is calculated using the current tax rate of 25%, Branch Profit Tax (BPT) rate variesaccording to availability of a reduced rate based on tax treaties.Special industries and activitiesCertain contractually based concessions are available inIndonesia. These include Production Sharing Contracts(PSCs), Contract of Works (CoWs) and Mining BusinessLicenses (Izin Usaha Pertambangan/IUP).Companies engaged in upstream oil and gas typically have tocalculate CIT in accordance with their PSCs. The PSCs canbe “conventional” with CIT effectively based on cost recoveryprinciples or “gross split” which more closely follow thegeneral CIT rules.Certain companies engaged in metal, mineral and coal miningare governed by CoWs for the CIT calculation. Differentprovisions may apply including in respect of CIT rates,deductible expenses and how taxable income is calculated.CoW arrangements are however no longer available underthe 2009 Mining Law and recent mining will generally followan IUP concession. The Mining Law stipulates that generalprevailing tax laws/regulations apply to these mining projects.Specific tax regulations however also exist for non-coalmining IUPs.14Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income TaxTransfer PricingThe Income Tax Law defines related parties as:a. Taxpayer has capital participation directly or indirectly atleast 25% upon another Taxpayers; the relationship betweenTaxpayers through ownership at least 25% upon two or moreTaxpayers; or relationship between two or more Taxpayersmentioned later;b. Taxpayer controls the other Taxpayer or two or moreTaxpayers are under the same control, either directly orindirectly; orc. There are family relationship either blood relationship or bymarriage in vertical and/or horizontal lineage of one degree.Transactions between related parties must be consistent withthe arm’s length principle. If the arm’s length principle is notfollowed, the DGT is authorised to recalculate the taxableincome or deductible costs arising from such transactionsapplying the arm’s length principle.Under the General Tax Provisions and Procedures (KetentuanUmum dan Tata Cara Perpajakan/KUP) Law, the governmentrequires specific transfer pricing documentation to prove thearm’s length nature of related-party transactions. Transferpricing documentation is frequently requested during taxaudits because transfer pricing issues are subject to closescrutiny by the Indonesian Tax Office (ITO).The MoF issued a new regulation dated 30 December 2016regarding transfer pricing documentation which requiresPwC IndonesiaIndonesian Pocket Tax Book 201915

Corporate Income Taxtaxpayers under certain criteria to prepare transfer pricingdocumentation, namely: Master file, Local file, and Countryby-Country Report (CbCR).Detailed transfer pricing disclosures are required in theCITR. These include: The nature and value of transactions with related parties; The transfer pricing methods applied to thosetransactions and the rationale for selecting the methods;and Whether the company has prepared transfer pricingdocumentation.ITO provides specific technical guidelines to carry outtransfer pricing audits.Transfer pricing disputes may be resolved through thedomestic objection and appeal process or, where thedispute involves a transaction with a related party in acountry that is one of Indonesia’s tax treaty partners, theparties may request double tax relief under the MutualAgreement Procedures (MAP) article of the relevant taxtreaty. MAP may be applied concurrently with domesticdispute resolution process. There is a restriction that aMAP application cannot be lodged when the Tax Courthas declared an end to the court hearing process and anexisting MAP will cease when the Tax Court announces itsdecision.16Indonesian Pocket Tax Book 2019PwC Indonesia

Corporate Income TaxThe tax law authorises the DGT to enter into AdvancePricing Agreements (APAs) with taxpayers and/or anothercountry’s tax authority on the future application of the arm’slength principle to transactions between related parties andtherefore taxpayers should not expect an APA to be ‘rolledback’ to address any transfer pricing matters in open yearsin relation to the same/similar transactions. Once agreed,an APA will typically be valid for a maximum of three taxyears after the tax year in which the APA is agreed or fouryears if the process involving cooperation with foreign taxauthorities that escalate an APA application to be an MAP inorder to settle any ongoing double taxation in accordancewith a relevant tax treaty.PwC IndonesiaIndonesian Pocket Tax Book 201917

Individual Income TaxIndividual Income TaxNormal tax ratesMost income earned by individual tax residents is subject toincome tax at the following normal tax rates:Taxable IncomeUp to Rp 50,000,000RateTax Rp.5%2,500,000Above Rp 50,000,000 up toRp 250,000,00015%30,000,000Above Rp 250,000,000 up toRp 500,000,00025%62,500,000Above Rp 500,000,00030%30% of therelevant amountConcessional tax ratesThe final tax rates for severance payments (if paid within twoyears) are as follows:RateTax Rp.Up to Rp 50,000,000Gross IncomeNilNilAbove Rp 50,000,000 up toRp 100,000,0005%2,500,000Above Rp 100,000,000 up toRp 500,000,00015%60,000,00018Indonesian Pocket Tax Book 2019PwC Indonesia

Individual Income TaxGross IncomeAbove Rp 500,000,000RateTax Rp.25%25% of therelevant amountThe final tax rates for lump-sum pension payments from agovernment-approved pension fund, old-age security savingpayments from BPJS Ketenagakerjaan (workers’ socialsecurity program) if paid within two years are as follows:Gross IncomeUp to Rp 50,000,000Above Rp 50,000,000RateTax Rp.NilNil5%5% of the relevantamountPayments for year 3 onwards, the usual normal tax rates(please refer to page 18) will be applied.Main Personal ReliefAnnual non-taxable income (Penghasilan Tidak Kena Pajak/PTKP) for resident individuals is as follows:Rp.Taxpayer54,000,000Spouse4,500,000Each dependant (max. of 3)4,500,000Occupational expenses (5% of gross income,max. Rp. 500,000/month)6,000,000PwC IndonesiaIndonesian Pocket Tax Book 201919

Individual Income TaxRp.Employee contribution to BPJS Ketenagakerjaanfor old age security savings (2% of gross income)Pension maintenance expenses (5% of grossincome, max. Rp 200,000/month)Full amount2,400,000Tax residenceAn individual is regarded as a tax resident if he/she fulfilsany of the following conditions: He/she resides in Indonesia; He/she is present in Indonesia for more than 183 days inany 12-month period; He/she is present in Indonesia during a fiscal year andintends to reside in Indonesia.Note: The provisions of tax treaties may override these rules.Non-resident individuals are subject to withholding tax ata rate of 20% (Article 26 income tax, subject to a relevanttax treaty provisions) on Indonesia-sourced income (asspecified on pages 32-33).Registration and filingResident individual taxpayers who receive or earn annualincome exceeding the PTKP threshold must register withthe ITO and file annual income tax returns (Form 1770).The tax return should disclose all the individual’s income,including compensation from employment, investment20Indonesian Pocket Tax Book 2019PwC Indonesia

Individual Income Taxincome, capital gains, overseas income and other income,as well as providing a summary of the individual’s assetsand liabilities. An Indonesian shareholder in a CFC is deemedto receive a dividend with respect to the CFC income. Pleaserefer to pages 3-4 regarding CFCs.A family is generally regarded as a single tax reporting unitwith a single tax identity number (Nomor Pokok Wajib Pajak/NPWP) in the name of the head of the family (typically thehusband). His wife and his dependant children’s incomemust be reported on the same tax return in his name;they may or may not be taxed together with his incomedepending on whether their income is subject to Article 21income tax.Tax paymentsA substantial part of individual income tax is collectedthrough withholding by third parties. Employers are requiredto withhold Article 21/26 income tax on a monthly basisfrom the salaries and other compensation payable to theiremployees. If an employee is a resident taxpayer, theamount of tax withheld should be based on the normal taxrates (as set out above). If he/she is a non-resident taxpayer,the withholding tax is 20% of the gross amount (and may beset at a lower rate under a tax treaty).Various other payments to individuals also call forwithholding tax obligations from the payers. These include,among others:PwC IndonesiaIndonesian Pocket Tax Book 201921

Individual Income Tax Pension payments made by government-approvedpension funds;Severance payments;Old-age security saving payments from BPJSKetenagakerjaan;Fees for services;Prizes/awards.Typically the amount of tax withheld from these types ofincome (Article 21 income tax) is based on normal tax ratesas set out above.The tax withheld on fees for non-employee individualsand certain professionals, such as lawyers, notaries,accountants, architects, doctors, actuaries and appraisers,are required to be calculated based on 50% of the grossincome at the prevailing rates.Interest earned on severance payments transferred to amanpower severance pay management board is subjectto a final tax of 20% if the board is a bank, or to a 15%withholding tax under Article 23 income tax in other cases.Benefits-in-kind (BIKs)BIKs, such as cars, housing, education, home leave andreimbursement of an employee’s Indonesian tax liabilityprovided by the employer, are typically not assessable in thehands of the employee. This also applies to BIKs which arerequired for the execution of a job, for example protective22Indonesian Pocket Tax Book 2019PwC Indonesia

Individual Income Taxclothing, uniforms, transportation costs to and from theplace of work and accommodation for ship crew and thelikes, and the cost of providing BIKs in remote areas.However, BIKs are taxable in the hands of the employee ifthey are provided by: Final-taxed companies; and Companies taxed at a deemed-profit (includes airlineand shipping companies).Some other taxpayers may also have specific tax treatmentregarding the taxability of BIKs.Social security systemEmployers are responsible for ensuring that their employeesare covered by a social security program. Employees’contributions are collected by the employers throughpayroll deductions. These must be paid together with theemployer’s contributions.From 1 January 2014, a comprehensive social securityprogram covers all Indonesian citizens is in place. Thetransition from the previous system is being done gradually.The new social security system is administered by:1. Social Security Agency for health insurance (BPJSKesehatan) - covering health insurance2. Social Security Agency for worker’s social security (BJPSKetenagakerjaan) - covering accidents, insurance, oldage savings, death insurance and pensionsPwC IndonesiaIndonesian Pocket Tax Book 201923

Individual Income TaxThe current premium contributions are as follows:Areas coveredAs a percentage of regularsalaries/wagesBorne byemployersBorne byemployees0.24-1.74%-Death insurance0.3%-Old age savingsWorking accident protection3.7%2%Health care*4%1%Pension**2%1%*) Maximum calculation base is Rp 8,000,000/month**) Maximum calculation base is updated annualy based on BPJS regulationThe compulsory requirement to join the new social securityscheme applies to all employees, including expatriates whohave been working in Indonesia for more than six months.The compu

Stamp Duty 83 Tax Payments and Tax Return Filing 85 Monthly tax obligations, Annual tax obligations, Early tax refunds Accounting for Tax 91 Tax Audits and Tax Assessments 93 Tax Collection Using Distress Warrant 100 Tax Dispute and Resolution 102

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