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The Personal Tax Card (NPWP) is an essential document for both individuals and business entities that are tax residents in Indonesia. It allows for the regulation of income tax by the Indonesian government and is used in personal and corporate income tax declarations.
We can consider the Personal NPWP Card as important as the Identity Card (KTP). NPWP must be owned by people who have fulfilled certain requirements, including expatriates who live in Indonesia.
Additionally, if you are an expat and planning to live or work in Indonesia, it is mandatory for you to register for an NPWP.
Local Taxpayers (Indonesian Citizens)
- Must reside in Indonesia.
- Mandatory for all Indonesian citizens earning above the non-taxable threshold.
- Taxed on worldwide income.
- Required to file annual tax returns and periodic tax returns.
- Subject to progressive rates based on net income.
- Enables various financial activities, such as opening bank accounts and property purchases.
- Dependents do not need NPWP unless they earn income independently.
Expatriate Taxpayers (Foreign Nationals)
- Must reside in Indonesia for more than 183 days or hold a KITAS/KITAP.
- Mandatory for all expatriates who are tax residents.
- Taxed on Indonesian-sourced income (for non-residents, only local income).
- Required to file annual tax returns and periodic tax returns if classified as SPDN; not required if classified as SPLN.
- Non-residents face a flat rate of 20% on gross income; residents have progressive rates based on net income.
- Allows lower tax rates on certain incomes and facilitates financial transactions in Indonesia.
- Dependents typically do not need NPWP unless they have their own income.
Tax Rates for Resident Individual Taxpayers
Thresholds based on the update on 31 July, 2024:
Taxable Annual Income | Personal Income Tax Rate (Rp) |
|---|---|
Rp 1-60 million | 5% |
Portion of income between Rp 60-250 million | 15% |
Portion of income between Rp 250 million-500 million | 25% |
Portion of income over Rp 500 million to Rp 5 billion | 30% |
Above RP 5 billion | 35% |
Important Notes: An extra 20% is levied on people who do not have a tax number (NPWP) on top of progressive income tax rates above. Register your NPWP now!
Scope of taxable income in Indonesia
According to the Personal Income Tax Law, income must be defined as any increase in economic capacity. It can consist of, among others, employment income, and personal investment income. Income includes:
- Employment income
- Income from the exercise of an independent profession or business
- Passive income (dividends, royalties, interest, insurance gains)
- Capital gains (from the sale or transfer of property)
- Rents and other income from the use of property
Document Requirements
- Copy of Individual ID (KTP) or Passport and KITAS for foreign individuals
- Domicile Certificate or Domicile Letter if any
- Personal contact information such as e-mail, phone number, and occupation
*Important Note: Progessive rate will be calculated end of the year, but starting from 2023, based on PP NO. 58 , year 2023, the government implemented additional regulation for incoming tax ( Average Effective Rate/ TER
Register Your Tax ID in Indonesia with LMI Consultancy
- Consult your inquiry with our professional consultant
- Submit necessary document
- Proceed with the payment
- Application process
- Receive the complete document
Other Popular Company Setup Services in Indonesia
Corporate NPWP Registration
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Established in 2016, LMI Consultancy has been supporting countless individuals in understanding the intricacies of visas, business setup, tax & accounting, and property investment in Indonesia, providing a comprehensive and dependable service.
We take pride in being an ethical and innovative company that places a strong emphasis on exceptional customer service and strives to set a new standard in our industry, guaranteeing a smooth and encouraging experience for our clients.
FAQ
What if I do not have an NPWP ID?
Failure to pay taxes will result in criminal penalties and fines according to pph21.
How much should I pay for my individual tax?
There are some progressive tax obligations that regulate the amount of tax according to your income. You can contact our tax consultant for more information regarding your tax compliance.
Should I obtain NPWP if I am staying with a Single Entry/Business Entry Visa?
Expatriates and non-citizens of Indonesia are obligated to pay tax only if they have been staying in Indonesia for more than 183 days. This commonly applies to KITAS and KITAP holders who plan to stay permanently, work, or conduct a commercial business in Indonesia.
Disclaimer : Our services in LMI Consultancy provide consulting services focused on ensuring client compliance with applicable immigration and legal regulations in Indonesia. We do not provide or facilitate the production of official government documents, nor do we offer any expedited or preferential access to government services.
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