Dividend Tax in Indonesia: Foreign and Resident Shareholders
Dividend tax in Indonesia turns on who receives it: what a foreign owner has withheld, how a treaty lowers it, and when a resident owes nothing.
- UU PPh (Income Tax Law), as amended by UU No. 7 Tahun 2021. Article 4(3)(f), dividends excluded from tax for a resident company, and for a resident individual who invests them in Indonesia. Article 17(2c), the rate on dividends to a resident individual.
- UU PPh, Article 26(1), (1a), (4) and (5), as amended by UU No. 6 Tahun 2023. Withholding on dividends to a non-resident, the beneficial owner, branch profit tax, and the final nature of the tax.
- PP No. 55 Tahun 2022, Articles 9 to 11. Which dividends qualify, no withholding on dividends to residents, the permitted investments, and the time limits. Articles 9 to 11 are not changed by PP No. 20 Tahun 2026.
- PP No. 19 Tahun 2009, Article 1. The rate on dividends received by a resident individual.
- PMK No. 112 Tahun 2025, set 30 December 2025 and in force 31 December 2025. Articles 8 to 10, the DGT Form, its certification and the payer's upload and receipt. Article 14, reporting a nil amount under a treaty. Article 15, reclaiming tax withheld in excess.
- PMK No. 81 Tahun 2024. Article 94(2), payment of withheld tax by the 15th of the following month. Article 171, the monthly return by the 20th. Articles 370 to 374, the individual's investment report and self-payment.
- UU No. 40 Tahun 2007 (the Company Law). Article 70, the reserve. Article 71, the use of net profit and dividends. Article 72, interim dividends. Article 73, unclaimed dividends.
Dividend tax in Indonesia depends on who receives the dividend. A foreign shareholder has 20% withheld by the PT (Perseroan Terbatas, a limited company) that pays it, and a tax treaty can reduce that. An Indonesian company receiving a dividend pays nothing. An individual resident in Indonesia pays nothing if the dividend is reinvested in Indonesia. Otherwise the rate is 10%, which the individual pays themselves.
| Indonesian company | Individual resident in Indonesia | Foreign shareholder | |
|---|---|---|---|
| Tax | None | None if reinvested, otherwise 10% final | 20% final, or a lower treaty rate |
| Withheld by the PT? | No | No | Yes |
| Reinvesting makes it exempt? | Not needed | Yes, on conditions | No |
| Who pays | Nobody | The individual, if it is due | The PT, out of the dividend |
A foreign shareholder: withheld by the company
A dividend paid to a shareholder who is not resident in Indonesia falls under Article 26 of the Income Tax Law, known as PPh 26 (Pajak Penghasilan, income tax). The paying PT withholds 20% of the gross dividend, and that tax is final (Article 26(1) and (5), as amended by UU 6/2023). It arises when the dividend is paid, made available for payment or falls due.
The exemption for reinvested dividends is not open to a non-resident. It covers resident individuals and resident companies only (Article 4(3)(f)). What counts is tax residence, not nationality, so a foreign owner who lives in Indonesia is taxed as a resident, as the next section explains.
A treaty rate is arranged before the dividend is paid
To benefit from a tax treaty, the foreign shareholder gives the PT a DGT Form (the Directorate General of Taxes’ form), certified by the tax authority of its home country, or with a certificate of residence attached. One form covers up to 12 months, and the shareholder must be the beneficial owner of the dividend (Article 26(1a)). The PT checks the form, uploads it through Coretax, the tax office’s online system, and receives a receipt. It then withholds at the treaty rate. Without that receipt the full rate applies, and any excess can only be reclaimed afterwards (PMK 112/2025, Articles 8 to 10 and 15).
Shareholders resident in Indonesia
An Indonesian company receiving a dividend from another Indonesian company pays no tax on it. There is no minimum holding and no other condition (Income Tax Law, Article 4(3)(f)).
An individual resident in Indonesia has nothing withheld by the PT (PP 55/2022, Article 9(2)(l)). The dividend is exempt if it is reinvested in Indonesia, and all of these conditions apply together (PP 55/2022, Articles 9 to 11):
- the dividend was distributed on a shareholders’ resolution, or as an interim dividend (Article 9(2)(j))
- the money is invested by the end of the third month after the tax year in which the dividend was received
- it goes into a permitted form, such as shares in an Indonesian company, government securities or bank deposits
- the investment is held for at least three tax years
- the individual reports the investment each year through the tax portal (PMK 81/2024, Article 374)
Only the reinvested part is exempt. In the regulation’s own example, a shareholder who invests IDR 50 million of an IDR 90 million dividend is taxed on the remaining IDR 40 million (elucidation of PP 55/2022, Article 11). The taxed part carries 10% final tax (PP 19/2009, Article 1). The individual pays it by the 15th of the month after the dividend was received and reports it in a monthly return (PMK 81/2024, Article 373).
Leaving the profit inside the company is not reinvestment. The exemption needs a dividend to be declared, paid and then invested by the individual. How this fits a director’s or owner’s own return is part of our personal tax work.
When a PT can pay a dividend
The Company Law asks two things of a PT’s profit:
- A capital reserve. Each year, while retained earnings are positive, part of the net profit is set aside, until the reserve reaches at least 20% of issued and paid-up capital (UU 40/2007, Article 70). That figure is a company-law reserve, unrelated to the tax rate above.
- Positive retained earnings. A dividend may be paid only if retained earnings are positive (Article 71(3)).
The general meeting of shareholders decides how net profit is used, including the dividend and the amount put to reserve (Article 71(1)). Our guide to the annual general meeting covers the meeting itself.
| Year-end dividend | Interim dividend | |
|---|---|---|
| Who decides | The general meeting of shareholders | The directors, with the board of commissioners' approval |
| When | After the financial year ends | Before the financial year ends |
| What must be true first | Positive retained earnings, and the reserve set aside | A clause in the articles of association, net assets that stay at or above paid-up capital plus the reserve, and no harm to creditors or operations |
| If the year ends in a loss | Payable only while retained earnings stay positive | Shareholders must return it to the company |
From decision to payment
These are the steps for a dividend paid to a foreign shareholder. For one paid to an Indonesian company or individual, nothing is withheld, so the steps after the decision do not apply.
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Declare it
The shareholders resolve it, or for an interim one the directors, with the commissioners’ approval.
-
Treaty paperwork
Where a treaty applies, the form is uploaded and receipted.
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Keep back the tax
The dividend goes out net of the withholding.
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Deposit the tax
The amount kept back is paid to the state.
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Report it
It appears in the monthly return, even at nil.
For a foreign shareholder, the payment and reporting steps sit inside our monthly withholding service, which covers PPh 26 along with the company’s other withheld taxes (PMK 81/2024, Articles 94(2) and 171; PMK 112/2025, Article 14).
What older guidance still says
Questions people ask
Can the profit simply stay in the company?
Does branch profit tax apply to a PT PMA?
If a treaty takes the rate to nil, is anything still filed?
What happens to a dividend nobody collects?
What this means for you
For a foreign owner, most of the work on dividend tax in Indonesia sits with the paying company, and most of it is timing. Settle any treaty form before the payment date, then treat the dividend like any other monthly withholding. The wider picture of how Indonesian withholding runs month to month is in our guide to withholding tax on payments.