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The Income Tax Law (UU PPh) in English: residence, rates, and where property income fits

Who Indonesia taxes, on what, and at which rate when no special regime applies — for a foreign owner, a PT PMA, and the Indonesian landowner on the other side of a lease.

Written from the Indonesian originals · Editor-reviewed · Law as read on 2026-10-10
By the balipropertyguide.com editorial team · Published 2026-10-10 · Last reviewed 2026-10-10 · 8 min read
3 primary sources cited on this page. How we check what is on this site

The Income Tax Law, the articles a property holder meets

Every income tax on a Bali property — on the sale, on the rent, on a villa business — starts in one law: Law 7/1983 on income tax, amended many times. It decides who is taxed in Indonesia at all, what counts as income, and the rates that apply when no special regime does.

ArticleWhat it decidesUsed on
Income Tax Law art. 2(3)(a), as amended by Law 6/2023 art. 111A resident individual is an individual, Indonesian or foreign, who lives in Indonesia, is in Indonesia more than 183 days in 12 months, or is in Indonesia in a tax year intending to live there.—
Income Tax Law art. 2(4)(b), as amended by Law 6/2023 art. 111A non-resident includes a foreign national in Indonesia for not more than 183 days in 12 months.—
Income Tax Law art. 2(3)(b), as amended by Law 6/2023 art. 111A resident company is a body established or domiciled in Indonesia.PT PMA
Income Tax Law art. 4(1), as amended by Law 7/2021 art. 3Income is any increase in economic capacity, from Indonesia or abroad, that can be used for consumption or to add to wealth.—
Income Tax Law art. 4(1a), as amended by Law 7/2021 art. 3A resident foreigner may be taxed only on income from Indonesia, if they have certain expertise, for 4 tax years from becoming resident.—
Income Tax Law art. 17(1)(a), as amended by Law 7/2021 art. 3Individual rates: 5% to IDR 60m, 15% to IDR 250m, 25% to IDR 500m, 30% to IDR 5bn, and 35% above.—
Income Tax Law art. 17(1)(b), as amended by Law 7/2021 art. 3Company rate: 22%, from tax year 2022.—
Income Tax Law art. 31E(1), as amended by Law 36/2008Smaller companies get a 50% cut in the corporate rate, on the taxable income attributable to the first IDR 4.8 billion of turnover, for domestic companies with gross turnover up to IDR 50 billion.—
Income Tax Law art. 4(3)(f)(1), as amended by Law 7/2021 art. 3Exempt dividends: domestic dividends received by a resident individual who invests them in Indonesia for a certain period, or by a domestic company.—
Income Tax Law art. 17(2c), as amended by Law 7/2021 art. 3Other dividends to resident individuals: at most 10%, final.—

Who is taxed as a resident

A resident individual is an individual, Indonesian or foreign, who lives in Indonesia, is in Indonesia more than 183 days in 12 months, or is in Indonesia in a tax year intending to live there (Income Tax Law art. 2(3)(a), as amended by Law 6/2023 art. 111). A non-resident includes a foreign national in Indonesia for not more than 183 days in 12 months (Income Tax Law art. 2(4)(b), as amended by Law 6/2023 art. 111). A company is resident if it is a body established or domiciled in Indonesia (Income Tax Law art. 2(3)(b), as amended by Law 6/2023 art. 111) — so a PT PMA is an Indonesian taxpayer whoever owns its shares.

Residents are taxed on any increase in economic capacity, from Indonesia or abroad, that can be used for consumption or to add to wealth (Income Tax Law art. 4(1), as amended by Law 7/2021 art. 3), which includes rent and other income from the use of property (Income Tax Law art. 4(1)(i), as amended by Law 7/2021 art. 3) and gains from the sale or transfer of property (Income Tax Law art. 4(1)(d), as amended by Law 7/2021 art. 3). A foreigner who becomes resident may be taxed only on income from Indonesia, if they have certain expertise, for 4 tax years from becoming resident (Income Tax Law art. 4(1a), as amended by Law 7/2021 art. 3).

The rates

Taxable income of a resident individualRate
Up to IDR 60 million5%
Above IDR 60 million to IDR 250 million15%
Above IDR 250 million to IDR 500 million25%
Above IDR 500 million to IDR 5 billion30%
Above IDR 5 billion35%

Source: Income Tax Law art. 17(1)(a), as amended by Law 7/2021 art. 3.

Companies and permanent establishments pay 22%, from tax year 2022 (Income Tax Law art. 17(1)(b), as amended by Law 7/2021 art. 3). Listed companies meeting conditions pay 3 percentage points lower (Income Tax Law art. 17(2b), as amended by Law 7/2021 art. 3). A smaller company gets a 50% cut in the corporate rate, on the taxable income attributable to the first IDR 4.8 billion of turnover, for domestic companies with gross turnover up to IDR 50 billion (Income Tax Law art. 31E(1), as amended by Law 36/2008).

Dividends out of a PT PMA

Exempt: domestic dividends received by a resident individual who invests them in Indonesia for a certain period, or by a domestic company (Income Tax Law art. 4(3)(f)(1), as amended by Law 7/2021 art. 3). Dividends to resident individuals otherwise: at most 10%, final (Income Tax Law art. 17(2c), as amended by Law 7/2021 art. 3). Dividends to a non-resident shareholder are a different article — withholding at 20% of the gross amount (Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111), subject to any tax treaty. Article 26.

When these rates do not apply

The general rates give way where income is in the final-tax list: bank interest and bonds; lottery prizes; share and securities transactions; transfers of land and/or buildings, construction services, real estate business and rental of land and/or buildings; and other certain income including business income of taxpayers with a certain gross turnover (Income Tax Law art. 4(2), as amended by Law 7/2021 art. 3). That is why the sale of a villa carries 2.5% of the gross value (PP 34/2016 art. 2(1)(a)), a lease 10% of the gross rent (PP 34/2017 art. 4(1)), and a small business’s turnover 0.5% (PP 55/2022 art. 56(2)) — each a regulation made under that list. Article 4(2), the final-tax gateway.

Which law last wrote each article

ArticleSubjectLast written by
2Who is a taxpayer, residence, permanent establishmentLaw 6/2023 art. 111
4What income is, final-tax income, exempt incomeLaw 7/2021 art. 3
17RatesLaw 7/2021 art. 3
26Withholding on payments to non-residentsLaw 6/2023 art. 111
31ERate cut for companies up to IDR 50bn turnoverLaw 36/2008
32ATax treatiesLaw 7/2021 art. 3

Law 36/2008 took effect on 1 January 2009 (Law 36/2008, closing article); Law 7/2021 was enacted on 29 October 2021 (Law 7/2021, signature block). There is no official consolidated text on JDIH BPK. Each article above is read in the amending law named, which reproduces it in full.

This is commentary, not tax advice. Treaty rates and the Finance Minister regulations under the law are not on this page.

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This one is not a formality. Under PP 18/2021 art. 69(1) a foreigner can only hold a home while holding a valid immigration document, and the land office asks for it again at every extension and renewal.

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Questions on this page

What is the corporate income tax rate in Indonesia?

22% from tax year 2022 (Income Tax Law art. 17(1)(b), as amended by Law 7/2021). A domestic company with gross turnover up to IDR 50 billion gets a 50% cut on the taxable income attributable to the first IDR 4.8 billion of turnover (art. 31E(1)).

What are the income tax brackets for individuals?

5% up to IDR 60 million of taxable income, 15% to 250 million, 25% to 500 million, 30% to 5 billion, 35% above (art. 17(1)(a), as amended by Law 7/2021).

When does a foreigner in Bali become an Indonesian tax resident?

When living in Indonesia, present more than 183 days in 12 months, or present in a tax year intending to live there (art. 2(3)(a), as amended by Law 6/2023). A foreigner present 183 days or fewer is a non-resident (art. 2(4)(b)).

Does a PT PMA pay 22% on villa income?

On profit, at the corporate rate, with the art. 31E cut if turnover is within IDR 50 billion — unless the income is final-taxed under art. 4(2), as rent from a lease is. Since PP 20/2026 an ordinary PT can no longer elect the 0.5% turnover tax. Our reading of how the rules combine.

Sources cited on this page

  1. Law 36/2008 (Income Tax Law amendment) — JDIH BPK
  2. Law 7/2021 (HPP) art. 3 — JDIH BPK
  3. Law 6/2023 art. 111 — JDIH BPK

Every rule above was read in the Indonesian original on 20 September 2026, not from an English summary. How we check this.

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