Corporate Income Tax Indonesia: Rates, Reliefs, and Rules for Foreign Companies

This guide is written for foreign companies operating in Indonesia through a PT PMA, and for the finance teams and founders preparing to incorporate one. It answers the question every foreign investor asks first: the applicable Corporate Income Tax Indonesia rate for a foreign-owned entity, and what actually changes that rate.

The standard Corporate Income Tax Indonesia rate is 22 percent of net taxable income, and it applies to every PT PMA regardless of size. Qualifying publicly listed companies pay 19 percent. Smaller taxpayers with annual turnover up to IDR 50 billion can apply Article 31E relief, which lowers the rate to 11 percent on the portion of taxable income tied to the first IDR 4.8 billion of gross turnover.

In practice, foreign founders often carry over a 0.5 percent micro-enterprise assumption picked up from older guides or webinars. Since PP No. 20/2026 took effect, that assumption understates a PT PMA’s year-one tax liability, leading to unexpected tax underpayments or overpayments, which is why getting the incorporation budget for a PT PMA right from the outset matters more than it used to.

What Is the Standard Corporate Income Tax Rate in Indonesia for Foreign Companies?

Under Article 17 of the Income Tax Law, as amended by Undang-Undang No. 7 Tahun 2021 on Harmonisasi Peraturan Perpajakan (the HPP Law), the general Corporate Income Tax Indonesia rate has stood at 22 percent since fiscal year 2022, according to Indonesia’s Directorate General of Taxes (DJP).

This 22 percent rate applies in full to every PT PMA (Perseroan Terbatas Penanaman Modal Asing, meaning a foreign-owned limited liability company), with no separate lower bracket for foreign ownership. It also applies to foreign companies operating through a permanent establishment in Indonesia.

Rate	Who It Applies To	Legal Basis
22%	Resident companies and permanent establishments, net taxable income	Article 17, UU No. 7/2021 (HPP Law)
19%	Listed companies meeting the 40% free-float requirement	Article 17(2b), UU No. 7/2021
11%	Portion of income tied to first IDR 4.8bn turnover, turnover up to IDR 50bn	Article 31E, Income Tax Law
0.5%	Local individuals and single-shareholder PT Perorangan only, turnover under IDR 4.8bn	PP No. 55/2022, amended by PP No. 20/2026

This table is the short version of the whole article. Every section below expands on one row, including who qualifies, how the math works, and who lost access in 2026.

How Does the Reduced 19% Rate for Listed Companies Work?

A company qualifies for the 19 percent rate only if at least 40 percent of its paid-in shares are listed for trading on the Indonesia Stock Exchange, held by at least 300 separate parties, with no single holder owning 5 percent or more.

Both conditions must be maintained for a minimum of 183 days within the relevant tax year. If either condition lapses during the year, the company loses the discount for that tax year and reverts to the standard 22 percent rate.

For most newly incorporated PT PMAs, this route is not relevant in year one. It becomes a realistic option only once a foreign-owned company is mature enough to consider a public listing, typically well after the initial market-entry phase.

What Is Article 31E Relief and Who Can Use It?

Article 31E of the Income Tax Law gives a 50 percent discount off the standard rate, applied only to the portion of taxable income proportionate to the first IDR 4.8 billion of a company’s annual gross turnover. That works out to an effective 11 percent rate on that slice of income.

Eligibility is tied to turnover, not entity type or nationality of ownership. A PT PMA qualifies on the same terms as a domestic company: any corporate taxpayer with annual gross turnover up to IDR 50 billion can apply the relief. Above that threshold, the full turnover is taxed at 22 percent.

A Worked Example of Article 31E Relief

A company with IDR 6 billion in gross turnover and IDR 900 million in taxable income would split its tax calculation as shown below, since only part of its turnover falls under the IDR 4.8 billion threshold.

Component	Amount (IDR)	Rate Applied
Gross annual turnover	6,000,000,000	—
Total taxable income	900,000,000	—
Portion under Article 31E	720,000,000	11%
Remaining portion	180,000,000	22%

This blended calculation is one of the most commonly miscalculated figures in first-year filings, since founders often apply one flat rate to the entire taxable income instead of splitting it proportionally.

What Changed for PT PMA and Regular Multi-Shareholder PT Companies Under PP No. 20/2026?

Government Regulation No. 20 of 2026 (Peraturan Pemerintah Nomor 20 Tahun 2026), issued by the Government of Indonesia and effective from 22 April 2026, amends PP No. 55/2022 and narrows access to the 0.5 percent final tax facility for MSMEs. This is a major regulatory shift for foreign investors and general corporate entities entering or operating in Indonesia.

Before this change, a newly incorporated PT PMA or regular multi-shareholder PT with turnover below IDR 4.8 billion could opt into the simplified 0.5 percent final tax on gross revenue instead of the standard corporate tax system. PP No. 20/2026 removes that option entirely for all PT PMA and regular multi-shareholder PT entities, regardless of how small the initial revenue is or how new the company is.

New Entities: Every PT PMA and regular multi-shareholder PT registered after 22 April 2026 is barred from entering the 0.5 percent scheme. These entities are immediately placed under the general corporate income tax regime (PPh Badan), which is calculated on net profit rather than gross turnover.
Existing Entities: Entities that were already using the 0.5 percent facility before 22 April 2026 move onto transitional provisions. They keep the benefit for the remainder of their original utilization window, but no newly incorporated PT PMA or regular multi-shareholder PT can enter the scheme going forward.

Because this shift affects the very first tax return a new entity files, foreign investors and shareholders must factor this 2026 rule, along with standard corporate net profit tax obligations, into their financial models right from the start, rather than correcting budgets post-incorporation.

Indonesia Corporate Income Tax: A Quick-Reference Answer

Indonesia Corporate Income Tax is levied at a standard 22 percent rate on net taxable income, reduced to 19 percent for qualifying listed companies and to an effective 11 percent under Article 31E relief on the first IDR 4.8 billion of turnover-based taxable income for smaller taxpayers. Since PP No. 20/2026 took effect on 22 April 2026, PT PMA, regular PT, CV, and general partnerships can no longer use the 0.5 percent MSME final tax, which is now reserved for local individuals and single-shareholder PT Perorangan.

How Should a Foreign-Owned PT PMA Plan Its Tax Budget From Day One?

The practical takeaway from PP No. 20/2026 is direct: a new PT PMA should budget for 22 percent corporate income tax, or 11 percent on the qualifying portion of income under Article 31E, from the day it incorporates. There is no startup grace period for foreign companies under the current framework.

In practice, the foreign investors who adjust fastest are the ones that model cash flow around the standard rate before their first invoice is issued, rather than discovering the gap at the first annual filing deadline.

This is where the Vivos and Business Hub Asia partnership adds practical value for founders reading this from Singapore. Accounting and tax specialists can help build a company’s tax position into its financial model before incorporation, rather than after the first return is due.

What Pain Points Do Foreign Investors Face Under the New Rules?

A few recurring issues surface once a foreign-owned PT PMA moves onto the standard tax system for the first time. Understanding them early reduces the risk of an unpleasant surprise at filing time.

Financial models built during the planning stage in Singapore or elsewhere often still assume the old 0.5 percent facility, understating year-one liabilities.
Coretax, the DJP’s integrated digital filing platform, requires accurate monthly and annual submissions with limited room for manual correction from abroad.
Article 31E’s proportional calculation is frequently misapplied, with foreign founders taxing all income at one flat rate instead of splitting it.
PP No. 20/2026’s anti-fragmentation rules increase scrutiny on structures that split revenue across related entities to stay under a threshold.
Cash flow can tighten in year one without the lighter 0.5 percent cushion that some foreign investors had originally planned around.

Turning Indonesia’s 2026 Tax Reset Into a Confident Start

While the 2026 updates narrow certain tax incentives, Indonesia remains an overwhelmingly attractive destination for foreign investment. The key is building a realistic financial model based on the standard corporate tax rate from day one, while correctly applying Article 31E relief where eligible.

Brought to Vivos readers through our content partnership with Business Hub Asia, this guide combines high-level market advisory with frontline expertise in Indonesian corporate services. Getting your tax position right before incorporation, rather than scrambling to fix it after your Coretax filing, is essential to a smooth entry.

Reach out to our team today to review your corporate structure, project your turnover, and consult on the best path forward for your expansion.

Frequently asked questions

What is the standard Corporate Income Tax Indonesia rate for foreign companies in 2026?

The standard rate is 22 percent of net taxable income, applying to every PT PMA and to foreign companies operating in Indonesia through a permanent establishment, under Article 17 of the Income Tax Law as amended by UU No. 7/2021.

Can a foreign-owned PT PMA still use the 0.5% final tax rate?

No. PP No. 20/2026, effective 22 April 2026, excludes every PT PMA from the 0.5 percent MSME final tax, regardless of nationality of ownership or revenue size. Existing PT PMAs already enrolled before that date keep the benefit only for their remaining transitional period.

What is Article 31E and how much can it reduce a tax bill?

Article 31E gives a 50 percent discount on the standard rate, applied to the portion of taxable income tied to the first IDR 4.8 billion of gross turnover, for taxpayers with annual turnover up to IDR 50 billion. The effective rate on that portion is 11 percent.

When did PP No. 20/2026 take effect?

PP No. 20/2026 was issued and took effect on 22 April 2026. It amends PP No. 55/2022 on the adjustment of income tax regulations, primarily narrowing eligibility for the 0.5 percent final tax facility.

Do existing PT PMAs already using the 0.5% rate lose it immediately?

No. Entities that entered the 0.5 percent facility before 22 April 2026 continue under transitional provisions for the remainder of their original utilisation window. The exclusion applies to new PT PMA registrations from that date forward.

What is a PT PMA?

PT PMA stands for Perseroan Terbatas Penanaman Modal Asing, meaning a foreign-owned limited liability company. It is the standard legal entity foreign companies use to conduct business activities directly within Indonesia, and it is the entity type this guide focuses on.

How does a company qualify for the 19% listed-company rate?

A company must have at least 40 percent of its paid-in shares listed on the Indonesia Stock Exchange, held by at least 300 parties each owning under 5 percent, maintained for at least 183 days within the tax year.

What is the IDR 4.8 billion threshold used for?

IDR 4.8 billion is the gross turnover threshold used in two separate contexts: as the ceiling for full 0.5 percent final tax eligibility for individuals and PT Perorangan, and as the income slice that receives the reduced 11 percent rate under Article 31E for larger taxpayers.

Are independent professionals like consultants or content creators still eligible for 0.5%?

Generally no. PP No. 20/2026 explicitly excludes independent professionals, consultants, and digital content creators from sheltering under the 0.5 percent micro-regime, even where they operate through PT Perorangan structures.

Where can businesses verify the official text of PP No. 20/2026?

The regulation is published in Indonesia’s official legal database. It can be verified directly through the JDIH regulation database maintained under Indonesia’s state administration, alongside guidance published by the Directorate General of Taxes (DJP).

This article summarises Indonesian corporate tax regulations as of 11 August 2026 (PP No. 20/2026 and UU No. 7/2021) and is general information, not tax or legal advice. Confirm current requirements with Indonesia’s Directorate General of Taxes or a qualified tax advisor before making filing or structuring decisions.