New services subject to 2% withholding tax in Indonesia

A new regulation issued in July seeks to clarify and expand the tax base with regard to services subject to withholding tax at 2% under Article 23 of the Income Tax Law. Taxpayers should be aware of how the changes may impact them, particularly in cases where there has been dispute or doubt with regard to the tax base. As a general rule, taxpayers paying an Indonesian resident corporate for a service should withhold 2% from the invoice amount (before VAT), unless there are clear reasons why this should not be done. Taxpayers providing services and finding that withholding by clients is causing overpayment of taxes should consider whether there are reasons to claim that this tax should not apply or, where applicable, should apply on a lower tax base.We provide some further detail which you can access below.

VDB Loi is a network of leading law and advisory member firms and affiliated companies that comprises nine partners and over 100 lawyers and advisors, with offices in Cambodia, Indonesia, Laos, Myanmar and Vietnam, and representatives in Singapore and Tokyo. We provide the highest quality solutions for transactions and taxation. For more information, visit our website at www.vdb-loi.com.

You can find more information on our Indonesia office here.