Withholding Tax in Indonesia: Rates, Deadlines and Who Withholds
Withholding tax on services in Indonesia: which article applies, what rate to withhold, and the two dates every month. With worked examples.
- UU 36/2008 — Income Tax Law, Art. 21, 23 and 4(2); Art. 26 as amended by UU No. 6 Tahun 2023
- PMK 168/2023 — Article 21 withholding on non-employees
- PP 9/2022 — final tax on construction services
- PP 34/2017 — final tax on income from land and building rent
- UU KUP as amended by UU HPP 7/2021 — the filing deadline and late-payment interest
- PMK 81/2024 — the payment deadline (Article 94(2)) and the next-working-day rule for payments and monthly returns (Articles 100 and 173)
- UU HPP 7/2021 — VAT rate
Withholding tax on services in Indonesia is the payer’s job, not the supplier’s. If your company buys a service here, you deduct the tax from what you pay, remit it, and give the supplier a slip proving you did. Getting it wrong is your exposure, not theirs.
Indonesia’s Income Tax Law numbers its withholding categories by article — 21, 23, 26 and 4(2) — and which one applies depends on two things: what you bought, and who you paid. This page is the lookup for that, followed by the two dates that matter every month. The number on the invoice matters too: the counterparty’s 16-digit NPWP is what tells you which column you are in.
Which article applies to your payment
| Resident individual (non-employee) | Resident company | Non-resident | |
|---|---|---|---|
| Consulting, management, technical or professional services | Article 21 — progressive, on a deemed base | Article 23 — 2% | Article 26 — 20% |
| Royalties and licence fees | Article 23 — 15% | Article 23 — 15% | Article 26 — 20% |
| Rent of land or buildings | Article 4(2) — 10%, final | Article 4(2) — 10%, final | Article 26 — 20% |
| Rent of other assets (vehicles, equipment) | Article 23 — 2% | Article 23 — 2% | Article 26 — 20% |
| Construction work and construction consulting | Article 4(2) — final, by qualification | Article 4(2) — final, by qualification | Article 26 — 20% |
Every payment to a non-resident sits at 20% in that last column. A tax treaty can reduce it, and the section on Article 26 below explains what that takes.
Key point
Withholding is calculated on the service value before VAT, not on the invoice total. Applying the rate to a VAT-inclusive figure over-withholds on every payment you make.
Article 21 — paying an individual who is not your employee
When you pay a consultant, a trainer or any other individual who is not on your payroll, Article 21 applies. The progressive rates run against a deemed taxable base rather than the full fee.
| Rate | |
|---|---|
| Up to IDR 60,000,000 | 5% |
| Over IDR 60,000,000 to 250,000,000 | 15% |
| Over IDR 250,000,000 to 500,000,000 | 25% |
| Over IDR 500,000,000 to 5,000,000,000 | 30% |
| Over IDR 5,000,000,000 | 35% |
For a one-off fee of IDR 400,000,000 to a non-employee, the working looks like this.
| Description | IDR |
|---|---|
| Gross fee | 400,000,000 |
| Deemed taxable base 50% of gross | 200,000,000 |
| First band 60,000,000 × 5% | 3,000,000 |
| Second band 140,000,000 × 15% | 21,000,000 |
| Tax to withhold | 24,000,000 |
Who actually bears it
The 50% base decides how much tax there is. A separate question decides who pays it, and it is settled by the contract rather than the regulation:
- Gross — the tax comes out of the agreed fee. The consultant invoices IDR 400,000,000, receives IDR 376,000,000, and carries the tax themselves. This is the ordinary arrangement and the one the working above assumes.
- Gross-up — you increase the fee so that what lands after withholding is the figure the consultant wanted. The tax becomes your cost, and a larger one than the tax itself.
- Net — you pay the agreed fee in full and settle the tax on top.
Agree which of these applies before the engagement letter is signed. A consultant who quoted IDR 400,000,000 and expected to receive it will treat the deduction as a dispute rather than a tax.
Article 23 — paying a resident company
This is the ordinary case, and the one most companies meet most often: you buy a service from an Indonesian company and withhold 2% of the fee. Royalties are the exception at 15%, and renting an asset that is not land or a building is also 2%.
Unlike Article 4(2), an Article 23 deduction is not final. The supplier credits it against their own annual liability, which is why the Bukti Potong matters to them — without the slip they cannot claim what you took. The worked invoice at the end of this page shows how that lands in practice.
Article 4(2) — construction, and rent of property
Construction is the one area where the rate turns on the supplier’s paperwork rather than on what they did. You withhold roughly half as much from a contractor holding the right certificate as from one without it — which is why the certificate is worth asking for before the first invoice, not after it.
- Construction work — small-scale or individual certificate 1.75%
- Construction work — other certified contractors 2.65%
- Integrated construction work — certified 2.65%
- Construction consulting — certified 3.5%
- Construction work — no certificate 4%
- Integrated construction work — no certificate 4%
- Construction consulting — no certificate 6%
- Rent of land or buildings 10%
PP 9/2022 for construction; PP 34/2017 for land and building rent
These are final taxes. The supplier does not credit them against an annual liability the way an Article 23 deduction is credited — the tax is settled at the point of payment.
Article 26 — paying someone outside Indonesia
Payments to a non-resident for services, royalties, dividends or interest are withheld at 20%. A tax treaty between Indonesia and the recipient’s country may reduce that, and sometimes to nil — but the reduction is not automatic. The recipient has to establish their entitlement before you pay, and without that evidence the 20% stands.
Indonesia’s treaty network and the current rates are published by the Directorate General of Taxes.
The two dates, every month
-
Withhold
Deduct the tax when the payment is made, calculated on the value before VAT.
-
Pay it over
Remit what you withheld last month to the tax office.
-
File the return
Submit the monthly withholding return for the same period.
-
Issue the Bukti Potong
Give the supplier their withholding slip. Without it they cannot claim the credit.
What happens if you are late
The payment deadline, the 15th, is set by PMK 81/2024, Article 94(2); the filing deadline, the 20th, and the consequence of missing either sit in the General Provisions and Tax Procedures Law (UU KUP), as amended by UU HPP 7/2021. Where either date falls on a weekend or public holiday it moves to the next working day (PMK 81/2024, Articles 100 and 173). Late payment attracts interest, and the monthly rate is not fixed in the law. The Ministry of Finance sets it by decree each month, so the rate that applies is the one in force for the month you were late. Separately, a mismatch between what you withheld and what the tax office expects is a common trigger for an SP2DK — a formal request to explain the data on your return. An SP2DK is not an audit, but it is answered in writing, to a deadline, and a weak answer is how an audit starts.
Where withholding tax on services usually goes wrong
Four things that go wrong, and what to do instead
-
The service is put in the wrong category, so the wrong article and rate are applied all year.
What to checkDecide the category once, against the regulation, and write down the reason. A consistent wrong answer is easier to correct than an inconsistent one.
-
A treaty rate is available but never claimed, so 20% goes out when less was due.
What to checkEstablish the recipient's treaty entitlement before the payment leaves, not when the return is prepared.
-
The tax is withheld correctly but remitted late, because nobody owns the 15th.
What to checkPut both dates in one calendar with a named owner. A date that lands on a weekend or public holiday moves to the next working day, and no further.
-
Bukti Potong are issued inconsistently, and suppliers chase them at year end.
What to checkIssue each slip as part of filing, not as a separate task. The set is then complete when the annual return is prepared.
A worked invoice, end to end
A resident consulting company, VAT-registered, invoices you IDR 10,000,000 for services. Article 23 applies at 2%, and VAT is added on top of the service value.
| Description | IDR |
|---|---|
| Service fee before VAT | 10,000,000 |
| Withholding tax Article 23, 2% × 10,000,000 | (200,000) |
| Sub-total | 9,800,000 |
| VAT effective 11% × 10,000,000 | 1,100,000 |
| Amount you pay the supplier | 10,900,000 |
The supplier receives IDR 10,900,000 and a Bukti Potong for IDR 200,000. The IDR 200,000 goes to the tax office, not to them, and they credit it against their own liability. Keeping the full set of slips is part of ordinary bookkeeping — they are needed again at year end.
What to do with this
Withholding is not difficult, but it is unforgiving: the obligation sits with the payer, the dates are fixed, and the evidence has to exist before anyone asks for it. If you would rather the calendar were somebody else’s problem, our corporate tax and compliance service carries it monthly.
Note
This article is general guidance and is not a substitute for advice on your own transactions. Rates and thresholds change; confirm the current position before you act.