Personal income tax deductions and tax payable丨Indonesia Tax Guide 2025 (15)
tax guide
Tax Guide
Tax guide
Personal Income Tax
Personal income tax
Investing in Indonesia
2025-01-24 09:15:41
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This issue's introduction
Pre-tax deduction
Tax payable
Chapter II Individual Income Tax
Pre-tax deduction
Interest expenses on personal mortgage loans are not deductible. Interest expenses on mortgage loans of a commercial nature can be deducted from rental income.
② Insurance premiums
Employee contributions to pension funds approved by the Ministry of Finance and for pension savings are fully deductible. In addition, the following deemed pension expenses can be deducted from employment income:
A. Professional expenses (or "functional expenses"), which are expenses incurred by permanent employees to earn, receive and maintain income from their employers, are allowed to be deducted at a rate of 5% of gross income (not subject to final tax), but not more than IDR 6 million per year, or IDR 500,000 per month multiplied by the total number of working months in the year;
B. The allowable deduction for pension and pension expenses is 5% of gross income (not subject to final tax), but not more than IDR 2.4 million per year, or IDR 200,000 per month multiplied by the total number of working months in the year. This deduction is only available to pensioners and retirees who receive pension income from their former employers.
The above maximum deduction limits apply to the corresponding source income respectively, not the total income of employment income and pension combined.
③ Donations
According to Government Regulation GR60 of August 20, 2010, Zakat or compulsory religious donations paid to 97 institutions or organizations listed in General Taxation Department Regulation PER-33/PJ/2011 (issued on November 11, 2011 and amended by General Taxation Department Regulation PER-15/PJ/2012 issued on June 11, 2012) can be deducted. The latest list of institutions is based on General Taxation Department Regulation No. 4 of 2022 (PER-04/PJ/2022) issued on October 6, 2022. According to Government Regulation No. 18 of January 1, 2009 (GR-18), compulsory religious donations are not taxable income of the recipient. Regulation No. 4 of 2022 of the State Administration of Taxation stipulates the list of organizations or institutions that can receive zakat or compulsory religious donations for tax deduction.
④ Other expenses
The portion of employment income used for functional expenses can be deducted from employment income, and pensioners can enjoy pension and old-age allowance exemptions.
Corporate income tax rate, scope of collection, taxable income and tax payable for non-resident enterprises丨Indonesian Tax Guide 2025 (7)
In addition, there are the following special provisions for the calculation of individual income tax payable:
(1) The income or loss of a married woman, including accumulated losses from previous years, shall be deemed as the income or loss of her husband, unless the income has been withheld by an employer and the employment relationship has nothing to do with her husband or other relatives; losses can be carried forward for 5 years without restriction and offset from profits in subsequent years. For certain industries specified by the Ministry of Finance, losses can be carried forward for 10 years.
(2) Married persons shall pay taxes together with their spouse unless the following conditions are met:
① The parties have separated according to a court judgment;
② The parties have signed a property separation agreement;
③ The wife chooses to have sole tax rights and obligations.
(3) The income of minors should be included in the taxable income of their parents;
(4) Individuals with annual turnover or total income less than 4.8 billion rupiah can choose to be assessed, but must obtain the consent of the tax bureau within the first three months of the tax year.
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