Corporate Income Tax Rate in Indonesia: 22% and the Reductions
What a company pays in Indonesia: the 22% corporate income tax rate, the half rate for smaller companies with a worked example, and the listed-company rate.
References (6)
- Income Tax Law, UU No. 7 Tahun 1983 as amended, latest by UU No. 7 Tahun 2021 and UU No. 6 Tahun 2023. Article 17(1)(b) sets the 22% rate from the 2022 tax year. Article 17(2b) sets the lower rate for a listed company. Article 16(1) defines taxable income and Article 6(2) carries a loss forward. Article 25 sets the monthly instalment. Article 26(4) sets the further tax on a permanent establishment, with PMK No. 14/PMK.03/2011 on reinvestment and treaty rates. Article 29 requires the balance to be paid before the annual return is filed.
- Income Tax Law, Article 31E(1), inserted by UU No. 36 Tahun 2008, and its elucidation, which gives the method for splitting the profit. Article 17(2a) of the same law, since deleted, set 25% from the 2010 tax year.
- Government Regulation in Lieu of Law (Perppu) No. 1 Tahun 2020, Article 5(1)(a), which set 22% for the 2020 and 2021 tax years. UU No. 7 Tahun 2021, Article 18, revokes Article 5(1)(b) of that Perppu, the planned 20% rate.
- PP No. 55 Tahun 2022. Article 65(1) and (2) set the conditions for a listed company. Articles 56 and 57, as amended by PP No. 20 Tahun 2026 from 22 April 2026, set who may use the final tax on turnover. Article II of PP No. 20 Tahun 2026 sets the transition.
- PMK No. 40 Tahun 2023, on the reports a listed company gives the tax office.
- PER-11/PJ/2025, Article 85(1)(b), which lists what a company attaches to its annual return.
The corporate income tax rate in Indonesia is 22% of taxable profit. It applies to a company resident in Indonesia, which includes a foreign-owned limited liability company (a PT PMA), and to a foreign company’s permanent establishment, its taxable presence in Indonesia (Income Tax Law, Article 17(1)(b), as amended by Law No. 7 of 2021, or UU 7/2021).
A resident company with turnover up to IDR 50 billion pays half that rate on part of its profit.
The corporate income tax rate since 2022
The rate is set in the Income Tax Law itself, which fixes it at 22% from the 2022 tax year. The 22% is charged on taxable profit, not on turnover.
The rate was 25% from the 2010 tax year to 2019 and fell to 22% for 2020 and 2021, under an emergency regulation (Perppu No. 1 of 2020, Article 5(1)(a)). A further cut to 20% was planned for 2022 and was cancelled before it applied (UU 7/2021, Article 18), so the rate has stayed at 22%. Guides that still give 25% or 20% as the current rate are out of date. The other taxes a company meets are set out in the wider tax system.
Smaller companies pay half the rate on part of their profit
A resident company with gross turnover up to IDR 50 billion in the year pays half the rate on the taxable profit that comes from its first IDR 4.8 billion of turnover (Income Tax Law, Article 31E(1) and its elucidation). Half of 22% is 11%.
How much of the profit that covers depends on turnover:
- Turnover up to IDR 4.8 billion. All of the taxable profit is taxed at half the rate.
- Turnover above that, up to IDR 50 billion. A share of the profit is taxed at half the rate: IDR 4.8 billion divided by turnover, times taxable profit. The rest is taxed at the full rate.
- Turnover above IDR 50 billion. No reduction. All of the taxable profit is taxed at 22%.
The reduction is worked out in the annual return, on an attachment of its own (Director General of Taxes Regulation PER-11/PJ/2025, Article 85(1)(b)). Our note on filing the corporate return each year covers the return itself.
What a company pays at three levels of turnover
Three examples, each named by its turnover for the year, show how the rule works out.
| Taxable profit | Half rate | Tax | Overall rate | |
|---|---|---|---|---|
| IDR 4 billion | IDR 400 million | On all of it | IDR 44 million | 11% |
| IDR 30 billion | IDR 3 billion | On IDR 480 million | IDR 607.2 million | 20.24% |
| IDR 60 billion | IDR 1 billion | None | IDR 220 million | 22% |
The middle example needs a sum. Its turnover is IDR 30 billion, so 16% of its profit (IDR 4.8 billion divided by IDR 30 billion) is taxed at half the rate and the other 84% at the full rate.
| Description | IDR |
|---|---|
| Half rate on the profit from the first IDR 4.8 billion of turnover 11% × 480,000,000 | 52,800,000 |
| Full rate on the rest 22% × 2,520,000,000 | 554,400,000 |
| Tax for the year | 607,200,000 |
Companies listed on the stock exchange
A listed company can pay a rate 3 percentage points lower, which makes it 19%. At least 40% of its paid-up shares must be traded on an Indonesian stock exchange and held by at least 300 parties, each holding less than 5% of the company’s issued and paid-up shares, for at least 183 days of the tax year. The company reports this to the tax office (Income Tax Law, Article 17(2b); Government Regulation PP 55/2022, Article 65).
The 0.5% tax on turnover and an ordinary PT
Some small businesses pay a 0.5% final tax on turnover in place of tax on profit. Since 22 April 2026 an ordinary PT, the standard limited liability company, can no longer start using it, and a PT PMA is an ordinary PT (PP 55/2022, Article 57, as amended by PP 20/2026). A company already using it is taxed on profit at the ordinary corporate rate once its period ends, with the half rate where its turnover qualifies.
What the rate applies to
Taxable profit is not the profit in the accounts. It is income less the costs the tax law allows, and less any tax loss carried forward, which can be used for up to 5 years (Income Tax Law, Articles 16(1) and 6(2)).
A company pays the tax during the year through monthly income tax instalments (PPh 25), and pays any balance before it files the annual return (Income Tax Law, Article 25 for the instalments and Article 29 for the balance).
A foreign company’s permanent establishment pays the same 22%, plus a further 20% on its after-tax profit unless that profit is reinvested in Indonesia, and a tax treaty may set a lower rate (Income Tax Law, Article 26(4); PMK 14/PMK.03/2011, Articles 1 and 5). Our note on permanent establishment explains when one exists.
What this means for you
The corporate tax rate is 22%. A resident company with turnover up to IDR 50 billion has part of its profit taxed at half of it, and a listed company that meets the conditions can pay 19%. Our corporate tax team prepares your annual corporate return.