Tax
A 2021 harmonisation law, with VAT rising in steps
Law No. 7 of 2021 on Harmonisation of Tax Regulations reset much of Indonesian tax law, raising VAT from 10% to 11% in 2022 with a further increase legislated, adding a top personal rate of 35%, and running a voluntary disclosure programme. Corporate tax settled at 22% after a planned further reduction was cancelled.
Governing law
- Law No. 7 of 2021 on Harmonisation of Tax Regulations — VAT increase, personal rates, disclosure programme.
- Law No. 36 of 2008 on Income Tax — As amended.
In practice
Corporate income tax is 22%, with a 3% reduction for qualifying listed companies. Personal income tax is progressive to 35% on income above IDR 5 billion. VAT is 11%, with a legislated path to 12%. Withholding tax of 20% applies to most non-resident payments, reduced by treaty. Indonesia has a broad treaty network; a certificate of domicile (DGT form) is mandatory to claim treaty rates and is strictly enforced. Transfer pricing documentation thresholds are low by regional standards and penalties are real.