Criteria for determining non-resident enterprises and source of income for corporate income tax | Indonesian Tax Guide 2025 (6)
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2025-01-14 09:15:12
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This issue's introduction
Non-resident enterprises
Criteria for determining the source of income
Chapter 1 Corporate Income Tax
1. Non-resident enterprises
A permanent establishment is an entity established outside Indonesia whose business activities are not subject to Indonesian jurisdiction. The establishment location in Indonesia includes:
(1) Management location;
(2) Branch office;
(3) Representative office;
(4) Office;
(5) Factory;
(6) Workshop;
(7) Warehouse;
(8) Promotion and sales location;
(9) Mining and natural resource extraction location;
(10) Oil and gas extraction location;
(11) Fisheries, animal husbandry, agriculture, planting and forestry;
(1 2) Construction, installation or assembly works;
(13) Any kind of service provided by an employee or any other individual for a period exceeding 60 days within a continuous period of 12 months;
(14) A person or entity acting as a controlled agent;
(15) An agent or employee of an insurance company that collects insurance premiums or undertakes insurance business in Indonesia and is established abroad and whose business activities are not subject to Indonesian jurisdiction;
(16) Any electronic transaction provider that conducts business through the Internet by owning, renting or using computers, electronic agents or automated equipment.
Whether an entity is subject to Indonesian jurisdiction shall be determined by the Tax Department on a case-by-case basis.
1.1 Criteria for determining the origin of income
(1) Income from the transfer of equity, stocks and dividends shall be determined according to the location of the enterprise to which the equity belongs;
(2) Income from movable property such as interest, royalties, rent, etc. shall be determined according to the residence or location of the party paying or receiving the interest, royalties or rent;
(3) Income from immovable property such as rent shall be determined according to the location of the immovable property;
(4) Income from services and wages shall be determined according to the location of the payer;
(5) Income from a permanent establishment shall be determined according to the location of the permanent establishment;
(6) Income from the transfer of mining rights and equity of a mining enterprise shall be determined according to the location of the mineral;
(7) Income from the transfer of immovable property shall be determined according to the location of the immovable property;
(8) Income from the transfer of property of a permanent establishment shall be determined according to the location of the permanent establishment.
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