Corporate Income Tax– The Corporate Income Tax (CIT) rate in Indonesia was recently reduced to 22% for the years 2020 and 2021. This CIT rate will be further cut to 20% commencing 2022. The chart below provides a comparative view of the standard CIT Rates of 7 major ASEAN economies, and in doing so, a measure of their relative business friendliness. While the prevailing rate in Indonesia is higher than some of its neighbors’ it is below the average and what is particularly of interest is the government’s decision to further reduce rates from 2022. Not only will this make Indonesia more comparable to other growing economies in the region, but it will encourage commercial growth and help in realizing the true potential of South East Asia’s largest economy.
Furthermore, public companies that meet a minimum listing requirement of 40% will receive an additional 3% cut in CIT rates, thus, facing a 19% CIT rate for 2020 and 2021, and a 17% CIT rate for 2022. This reduction in the CIT rate is a mark of the government’s efforts to boost economic activity in Indonesia and mitigate the economic fallout from COVID-19.
Personal Income Tax–The Personal Income Tax (PIT) rates for individual income are as follows:
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