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Tax residence and fiscal domicile

i Corporate residence

A company is treated as an Indonesian tax resident if it is established or has its place of management in Indonesia. A foreign corporation can become a tax resident of Indonesia if it has a presence in Indonesia through a PE. Generally, a PE assumes the same tax obligations as a resident taxpayer.

ii Branch or permanent establishment

A foreign company can have a fiscal presence in Indonesia in the form of PE if it has or performs any of the following in Indonesia:

  1. a place of management;
  2. a branch office;
  3. a representative office;
  4. an office building;
  5. a factory, workshop or warehouse;
  6. a site for promotion and sales;
  7. a mining site;
  8. working area of oil and gas;
  9. fishery, husbandry, agriculture, plantation or forestry activities;
  10. construction, installation or assembly projects;
  11. provides services through employees or others for more than 60 days in any 12-month period;
  12. a dependent agent;
  13. an insurance company agent or employee receiving premiums or taking risks in Indonesia; or
  14. computer, electronic or internet devices used in Indonesia for internet (e-commerce) transactions.

The above, however, are subject to the provisions of a relevant tax treaty.

In addition to the standard corporate income tax, a PE is also subject to 20 per cent branch profit tax, which is applied to the net profit after tax of the PE unless the profit is reinvested in Indonesia.