Tax residence and fiscal domicilei 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:
- a place of management;
- a branch office;
- a representative office;
- an office building;
- a factory, workshop or warehouse;
- a site for promotion and sales;
- a mining site;
- working area of oil and gas;
- fishery, husbandry, agriculture, plantation or forestry activities;
- construction, installation or assembly projects;
- provides services through employees or others for more than 60 days in any 12-month period;
- a dependent agent;
- an insurance company agent or employee receiving premiums or taking risks in Indonesia; or
- 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.