Taxes and Tax Schemes in Indonesia | What You Need to Know in 2025

Indonesia, the largest economy in Southeast Asia, operates a complex but increasingly modernized tax system that affects both residents and foreigners. Located across a vast archipelago, Indonesia has emerged as a popular destination for digital nomads and international professionals, particularly in hubs like Jakarta and Bali, making its tax system increasingly relevant for a global audience.

Indonesia's economy has shown remarkable resilience and growth, supported by a robust domestic market and increasing foreign investment. The country has made significant strides in digitalizing its tax system and implementing policies to attract international talent and business, including special provisions for digital nomads and remote workers.

The expat community in Indonesia continues to grow, with many drawn to the country's combination of business opportunities, lifestyle benefits, and relatively moderate tax rates. Major sectors like technology, finance, and tourism provide numerous opportunities for foreign professionals, while recent visa reforms have made it easier for digital nomads to work legally from Indonesia.

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Indonesian Income Tax

Indonesia employs a progressive income tax system with rates ranging from 5% to 35% for residents. The tax system is based on worldwide income for tax residents, while non-residents are taxed only on Indonesian-source income at a flat rate of 20%. Recent reforms have introduced special provisions for digital nomads and remote workers, potentially affecting how their income is taxed.

Tax rates for residents in 2025:

If you want to have a better understanding of the taxes you should pay on personal income in Indonesia, you can use the personal tax calculator in the Taxation section of the Indonesia page.

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Indonesian Tax on Overseas Income

‍Indonesia's approach to overseas income is particularly relevant for expats and digital nomads. Tax residents are subject to tax on their worldwide income, but relief is available through tax credits for foreign taxes paid. The country has double taxation agreements with numerous countries, providing potential relief from double taxation.

Tax residency applies to individuals who:

• Reside in Indonesia
• Stay in Indonesia for more than 183 days in any 12-month period
• Stay in Indonesia during a tax year with the intention to reside

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Indonesian Tax on Investments

‍Investment income in Indonesia receives varying treatment depending on the type and source. Dividend income from Indonesian companies is subject to withholding tax, while capital gains from stock market transactions are taxed at 0.1% of the transaction value. Property investment attracts both rental income tax and a land and building tax.

Key investment tax rates:

• Dividend withholding tax: 10-20%
• Interest income: 15-20%
• Capital gains on property: 2.5%
• Stock market transactions: 0.1%

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Indonesian Corporate Taxation‍

Corporate tax in Indonesia stands at 22%, with potential reductions for public companies meeting certain criteria. The country offers various incentives for foreign investment, including tax holidays for pioneer industries and tax allowances for specific sectors and regions.

Small and medium enterprises with annual gross turnover up to IDR 50 billion benefit from a reduced tax rate of 0.5% of monthly turnover. This can be particularly relevant for expats establishing small businesses or consultancies.‍

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Special Tax Regimes

‍Indonesia has introduced several special tax regimes aimed at attracting foreign talent and investment:

The Digital Nomad Visa program, introduced recently, allows remote workers to stay in Indonesia while working for overseas companies. Income earned from foreign sources during this period may receive special tax treatment, though specific regulations continue to evolve.

Tax holidays and incentives are available for investments in priority sectors and underdeveloped regions, offering potential opportunities for expat entrepreneurs and investors.‍

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Regional Comparison

Tax Planning for Indonesia‍

Effective tax planning in Indonesia requires careful consideration of several key factors:

Residency timing can significantly impact tax liability. Strategic planning of arrival and departure dates can help optimize tax position, particularly for those spending part of the year in Indonesia.

Income source documentation is crucial, especially for digital nomads and remote workers. Clear separation of foreign and Indonesian-source income can help optimize tax treatment.

Investment structuring should consider available double tax treaties and local investment vehicles. Property investments, in particular, require careful planning due to various applicable taxes.