Comparing Indonesia’s Income Tax Rates with Other Countries

• Feb 08, 2017

TEMPO.CO, Jakarta – Earlier in August last year, President Joko Widodo instructed the Minister of Finance Sri Mulyani Indrawati to lower corporate income tax (PPh badan) to a globally competitive rate. Individual income tax will also be slashed to maintain peoples’ purchasing power.

Revisions to tax laws are not expected to complete this year nor next year, according to a member of the House of Representatives Andreas Eddy Susetyo.

Income Tax Law revisions are part of revisions to the Taxation Law. The government and the parliament also plan to revise the laws on non-tax revenue (PNBP), general taxation provision (KUP), value-added tax (VAT), the Financial Service Authority (OJK) and Bank Indonesia (BI). The government wishes to lower income tax rates in a bid to improve Indonesia’s global competitiveness. The rate of corporate income tax, for example, is currently set at 25 percent, an 8 percent margin compared to that of Singapore.

The following is Indonesia’s income tax rates compared to other countries.

Indonesia

Corporate income tax rate (PPh badan): 25 percent

Individual income tax rates:

Taxable Income Tax Rate

Rp36-50 million 5 percent

Rp50-250 million 15 percent

Rp250-500 million 25 percent

over Rp500 million 30 percent

Countries with the highest income tax rates

Denmark: 55.56 percent

Spain: 52 percent

Portugal: 48 percent

UK: 45 percent

Papua New Guinea: 42 percent

Countries with zero income tax

Bahrain

Brunei

Kuwait

Oman

Qatar

Saudi Arabia

United Arab Emirates

Source: https://en.tempo.co/read/news/2017/02/08/056844301/Comparing-Indonesias-Income-Tax-Rates-with-Other-Countries