REGULATION OF THE GOVERNMENT OF THE REPUBLIC OF INDONESIA

NUMBER 94 OF 2010
ON
THE CALCULATION OF TAXABLE INCOME AND SETTLEMENT OF INCOME TAX IN THE CURRENT YEAR

BY THE GRACE OF GOD ALMIGHTY

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering:
a. that through the amendment of Law Number 7 of 1983 on Income Tax as amended several times, most
recently by Law Number 36 of 2008 on the Fourth Amendment to Law Number 7 of 1983 on Income Tax, it
is necessary to adjust the provisions on the calculation of Taxable Income and settlement of Income Tax in
the current year;
b. that based on the consideration as referred to in letter a and to implement the provision of Article 35 of
Law Number 7 of 1983 on Income Tax as amended several times, most recently by Law Number 36 of
2008 on the Fourth Amendment to Law Number 7 of 1983 on Income Tax, it has been deemed necessary
to establish Regulation of the Government on the Calculation of Taxable Income and Settlement of Income
Tax in the Current Year.

Observing:
1. Article 5 paragraph (2) of the 1945 Constitution of the Republic of Indonesia;
2. Law Number 7 of 1983 on Income Tax (State Gazette of the Republic of Indonesia of 1983 Number 50,
Supplement to the State Gazette of the Republic of Indonesia Number 3263) as amended several times,
most recently by Law Number 36 of 2008 on the Fourth Amendment to Law Number 7 of 1983 on Income
Tax (State Gazette of the Republic of Indonesia of 2008 Number 133, Supplement to the State Gazette of
the Republic of Indonesia Number 4893).

HAS DECIDED:

To establish:
REGULATION OF THE GOVERNMENT OF THE REPUBLIC OF INDONESIA ON THE CALCULATION OF
TAXABLE INCOME AND SETTLEMENT OF INCOME TAX IN THE CURRENT YEAR.

CHAPTER I
GENERAL PROVISIONS

Article 1

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 Under this Regulation of the Government the following definitions are employed:
1. Law on General Provisions and Procedures of Tax is Law Number 6 of 1983 on General Provisions and
Procedures of Tax as amended several times, most recently by Law Number 16 of 2009 on the Stipulation
of Regulation of the Government in Lieu of Law Number 5 of 2008 on the Fourth Amendment to Law
Number 6 of 1983 on General Provisions and Procedures of Tax
2. Law on Income Tax is Law Number 7 of 1983 on Income Tax as amended several times, most recently by
Law Number 36 of 2008 on the Fourth Amendment to Law Number 7 of 1983 on Income Tax.
3. Law on Value Added Tax on Goods and Services and Luxury Goods Sales Tax is Law Number 8 of 1983
on Value Added Tax on Goods and Services and Luxury Goods Sales Tax as amended several times,
most recently by Law Number 42 of 2009 on the Third Amendment to Law Number 8 of 1983 on Value
Added Tax on Goods and Services and Luxury Goods Sales Tax.

CHAPTER II
TAX OBJECT

Article 2
Tax object in the form of dividend as referred to in Article 4 paragraph (1) letter g of Law on Income Tax shall
exclude the granting of bonus stocks without any deposit which originate from:
a. capitalization of stock premiums (agio saham) to stockholders who have deposited capital or purchased
stocks above the nominal price, as long as the nominal value of the stocks they own after the distribution
of bonus stocks does not exceed the amount of paid-up capital; and
b. capitalization of any excess of fixed asset revaluation as referred to in Article 19 paragraph (1) of Law on
Income Tax.

Article 3
In the event of any transfer of company assets to their employees, the profit in the form of the difference
between the market price of said assets and the remaining book value shall be an income for the company.

Article 4
(1) stock premiums arising from the excess difference between the market value of stocks and the nominal
value of stocks, shall not be included as a tax object.
(2) stock discounts (disagio saham) arising from the excess difference between the nominal value of stocks
and the market value of stocks, shall not be a deduction of gross income.

Article 5
(1) Profit share received or obtained by the holders of participation units in Collective Investment Contracts,
including the gain from the redemption of their participation units, shall not be included as tax objects.
(2) Provision on the profit share, including the gain from the redemption of their participation units as referred
to in paragraph (1) shall also apply to the holders of participation units who are a foreign Tax Subject.

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 Article 6
Direct and/or indirect distribution of profits from retained earnings including retained earnings based on profit
projections for the current year shall be tax objects, except for the profit share as referred to in Article 4
paragraph (3) letter f of the Law on Income Tax.

Article 7
(1) Bank Indonesia surplus which is the object of Income Tax is the surplus of Bank Indonesia according to
the audited financial statement after fiscal adjustment or correction has been made in accordance with the
Law on Income Tax by taking into account the characteristics of Bank Indonesia.
(2) Provisions on the procedures for the calculation and payment of Income Tax upon Bank Indonesia surplus
as referred to in paragraph (1) shall be regulated by a Regulation of the Minister of Finance.

Article 8
(1) Relationship between the related parties as referred to in Article 4 paragraph (3) letter a of Law on Income
Tax may occur due to dependence or attachment to one another directly or indirectly in relation to:
a. business;
b. work; or
c. ownership or control.
(2) Relationship between the related parties in relation to business as referred to in paragraph (1) letter a
between the granting Taxpayer and the receiving Taxpayer may occur if there are routine transactions
between the two parties.
(3) Relationship between the related parties in relation to work as referred to in paragraph (1) letter b between
the granting Taxpayer and the receiving Taxpayer occurs if there is a relationship in the form of work,
provision of services, or the implementation of activities directly or indirectly between the two relevant
parties.
(4) Relationship between the related parties in relation to ownership and control between the granting
Taxpayer and the receiving Taxpayer as referred to in paragraph (1) letter c occurs if there is:
a. a direct or indirect equity participation as referred to in Article 18 paragraph (4) letter a of Law on
Income Tax; or
b. a direct or indirect control relationship as referred to in Article 18 paragraph (4) letter b of Law on
Income Tax

CHAPTER III
CALCULATION OF TAXABLE INCOME

Article 9
(1) Gains or losses from the difference of foreign exchange rates shall be recognized as income or cost
based on the bookkeeping system adopted and conducted in accordance with the Financial Accounting
Standards applicable in Indonesia.
(2) Gains or losses from the difference of foreign exchange rates as referred to in paragraph (1) that are

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 directly related to Taxpayer's business that:
a. is subject to Income Tax that is final; or
b. is not included as tax object,
shall not be recognized as income or cost.
(3) Gains or losses from the difference of foreign exchange rates as referred to in paragraph (1) that are not
directly related to Taxpayer's business that:
a. is subject to Income Tax that is final; or
b. is not included as tax object,
shall be recognized as income or cost so long as such cost is used to obtain, collect, and maintain
income.

Article 10
(1) Input Tax that cannot be credited as referred to in Article 9 paragraph (8) of Law on Value Added Tax on
Goods and Services and Luxury Goods Sales Tax may be deducted from gross income so long as the
relevant Input Tax can be proven:
a. to have actually been paid; and
b. that it is related to expenses that are related to the activities to obtain, collect, and maintain income.
(2) Input Tax that may be deducted from gross income as referred to in paragraph (1) in relation to expenses
to acquire tangible assets and/or intangible assets as well as other costs which have a useful life of more
than 1 (one) year as referred to in Article 11 and Article 11A of Law on Income Tax, shall be capitalized
with said expenses or costs and charged through depreciation or amortization.

Article 11
(1) The development cost of industrial plants that are more than 1 (one) year old and only produces 1 (one)
time, shall be capitalized during the development period and shall be a part of the cost of goods sold at
the time when the produces of the industrial plants are sold.
(2) The cost of raising livestock that is more than 1 (one) year old and only produces 1 (one) time shall be
capitalized during the raising period and shall be part of the cost of goods sold at the time the livestock is
sold.

Article 12
(1) Interest-free loans from stockholders that are received by Taxpayers in the form of limited liability
companies shall be permitted if:
a. such loans originate from the funds of the stockholders themselves and not from other parties;
b. the capital that should have been paid up by the lender stockholders has been fully paid up;
c. lender stockholders are not at loss; and
d. the limited liability company that receives the loan is experiencing financial difficulties for its
business continuity.
(2) If the loan received by the Taxpayer in the form of a limited liability company from its stockholder does not

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 meet the provisions as referred to in paragraph (1), the said loan shall be payable with interest at a
reasonable rate.

Article 13
Expenses and costs that are not allowed to be deducted in determining the amount of Taxable Income for
domestic Taxpayers and permanent establishments, shall include:
a. costs to obtain, collect, and maintain income:
1) that is not a tax object;
2) which tax imposition is final; and/or
3) subject to tax based on Net Income Calculation Norm as referred to in Article 14 of Law on Income
Tax and Special Calculation Norm as referred to in Article 15 of Law on Income Tax.
b. Income Tax borne by the employer.

CHAPTER IV
SETTLEMENT OF INCOME TAX IN THE CURRENT YEAR BY THE TAXPAYERS THEMSELVES

Article 14
Domestic individuals who receive or obtain income above Non-Taxable Income (Penghasilan Tidak Kena
Pajak/PTKP) in relation to work from entities that are not obliged to carry out tax withholding as referred to in
Article 21 paragraph (2) of the Law on Income Tax , must:
a. have a Taxpayer Identification Number;
b. carry out the calculation and payment of payable Income Tax in the current year themselves; and
c. report the calculation and payment of payable Income Tax in the current year in the Annual Tax Return.

CHAPTER V
SETTLEMENT OF INCOME TAX IN THE CURRENT YEAR THROUGH OTHER PARTIES

Article 15
(1) Withholding of Income Tax by the parties as referred to in Article 21 paragraph (1) of the Law on Income
Tax shall be conducted at the end of the month:
a. of which the payment occurred; or
b. of which the relevant income is payable,
depending on which event occurred first.
(2) Collection of Income Tax by the parties as referred to in Article 21 paragraph (1) of the Law on Income Tax
shall be conducted:
a. at the time of payment; or
b. at other certain times as regulated by the Minister of Finance.

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 (3) Withholding of Income Tax by the parties as referred to in Article 23 paragraph (1) and paragraph (3) of
the Law on Income Tax, shall be conducted at the end of the month:
a. of which income is paid;
b. made available for the payment of income; or
c. of which the payment of the relevant income is due,
depending on which event occurred first.
(4) Collection of Income Tax by the parties as referred to in Article 26 paragraph (1) of the Law on Income Tax
shall be conducted at the end of the month:
a. of which income is paid;
b. made available for the payment of income; or
c. of which the payment of the relevant income is due,
depending on which event occurred first.

Article 16
In the event that the withholding of Income Tax of Article 23 of the Law on Income Tax or Article 26 of the Law on
Income Tax based on the provisions as referred to in Article 15 is conducted in a different tax year from the tax
year of income acknowledgment, then said Income Tax which has been withheld may be credited on the tax year
of which the withholding is conducted.

Article 17
With Regulation of the Director-General, the time of acknowledgement of income and costs in certain cases may
be stipulated in accordance with Government policies.

Article 18
(1) Income Tax for royalty payments as referred to in Article 23 paragraph (1) letter a number 3 of the Law on
Income Tax conducted by way of profit sharing shall be withheld by the party who is obliged to pay it.
(2) Provisions regarding the basis for withholding Income Tax for royalty payments as referred to in paragraph
(1) shall be regulated by a Regulation of the Director-General of Tax.

Article 19
In the event that the income is not subject to Income Tax that is final under a separate Regulation of the
Government, such income shall be subject to Income Tax based on the tariff as referred to in Article 17 of the
Law on Income Tax.

Article 20
Income Tax withheld or collected based on the withholding or collection tariff as referred to in Article 21
paragraph (5a), Article 22 paragraph (3), and Article 23 paragraph (1a) of the Law on Income Tax, may be
credited toward the payable Income Tax for the relevant tax year after the relevant Taxpayer has obtained a
Taxpayer Identification Number.

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 Article 21
(1) Taxpayers who during the current tax year are able to prove that they will not have payable Income Tax
due to:
a. experiencing fiscal losses;
b. having the right to compensate for fiscal losses; or
c. having greater Income Tax that has been paid than the Income Tax that will be payable,
may submit an application for exemption from withholding and/or collection of Income Tax by other parties
to the Director-General of Tax.
(2) Taxpayers whose income is only subject to a tax that is final may submit an application for exemption from
withholding and/or collection of Income Tax that may be credited to the Director-General of Tax.
(3) Further provisions on procedures for the submission of application for exemption from withholding and/or
collection of Income Tax by other parties as referred to in paragraph (1) and paragraph (2) shall be
regulated by a Regulation of the Director-General of Tax.

Article 22
In calculating Income Tax as referred to in Article 26 paragraph (4) of the Law on Income Tax, for permanent
establishment which have payable Income Tax in a tax year, fiscal loss cannot be compensated again with
Taxable Income after the deduction of Income Tax.

Article 23
(1) Income Tax payable from the Taxable Income after deduction of tax from a permanent establishment in
Indonesia as referred to in Article 26 paragraph (4) of the Law on Income Tax must be paid in full before
the Annual Income Tax Return is submitted.
(2) In the event that the Taxpayer in the form of permanent establishment extends the period for the
submission of Annual Income Tax Return as referred to in paragraph (1), the Income Tax payable based
on the interim calculation shall be paid in full prior to the submission of notification of the extension of the
Annual Income Tax Return submission period.

CHAPTER VI
IMPLEMENTATION OF INTERNATIONAL AGREEMENT ON DOUBLE TAX AVOIDANCE TREATY AND
INFORMATION EXCHANGE

Article 24
(1) Double Tax Avoidance Treaty is only valid for individuals or entities who are:
a. domestic Tax Subjects from Indonesia; and/or
b. Tax Subjects from partner countries for double tax avoidance treaty,
proven with a Certificate of Resident.
(2) Further provisions on the procedures for the implementation of Double Tax Avoidance Treaty as referred

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 to in paragraph (1) shall be regulated by a Regulation of the Director-General of Tax.

Article 25
(1) The Director-General of Tax may implement agreements with partner countries for the purpose of
information exchange, mutual approval procedures, and collection assistance.
(2) Provisions on the procedures for the submission of information exchanges, the implementation of mutual
agreement procedures, and the implementation of assistance in the collection of taxes shall be regulated
by a Regulation of the Director-General of Tax.

Article 26
(1) In the event that there are taxation provisions that are regulated in international agreements which differ
from the taxation provisions that are regulated under the Law on Income Tax, the taxation treatment shall
be based on the provisions in the said agreement until the expiry of the said agreement, provided that said
agreement is in accordance with the Law on International Agreements.
(2) The implementation of taxation treatment as referred to in paragraph (1) shall be conducted after obtaining
approval from the Minister of Finance.
(3) Further provisions regarding the implementation of taxation treatments as referred to in paragraph (2)
shall be regulated by a Regulation of the Minister of Finance.

CHAPTER VII
SEPARATE BOOKKEEPING AND CHANGE OF BOOK YEAR

Article 27
(1) Taxpayers must maintain separate bookkeeping in the event of:
a. owning a business for which the income is subject to Income Tax that is final and not final;
b. receiving or obtaining incomes which are tax object and non-tax object; or
c. obtaining and not obtaining taxation facilities as regulated in Article 31A of the Law on Income Tax.
(2) Joint costs for Taxpayers as referred to in paragraph (1) that cannot be separated in order to calculate the
amount of Taxable Income shall be allocated proportionally.

Article 28
(1) Taxpayers who change the book year and have obtained approval from the Director-General of Tax as
referred to in Article 28 paragraph (6) of the Law on General Provisions and Procedures of Tax, shall
report the income received or obtained in the part of the book year that is not included in the new book
year in a separate Annual Income Tax Return for the relevant Part of the Tax Year.
(2) The remaining fiscal losses that may be compensated which originate from the tax years prior to the
change of the book year may be compensated with income for the Part of the Tax Year and the next Tax
Year.

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 CHAPTER VIII
CORPORATE INCOME TAX EXEMPTION OR REDUCTION FACILITIES FOR INVESTMENT PURPOSES

Article 29
(1) Taxpayers who undertake new investment that are pioneer industries, who do not obtain the facilities as
referred to in Article 31A of the Law on Income Tax may be granted corporate Income Tax exemption or
reduction facilities as referred to in Article 18 paragraph (5) of Law Number 25 of 2007 on Investment.
(2) Pioneer industries as referred to in paragraph (1) are industries which have broad linkages, provide high
added-value and externalities, introduce new technologies, as well as have strategic values for the
national economy.

Article 30
Provisions regarding the granting of corporate Income-Tax exemption or reduction facilities as referred to in
Article 29 shall be regulated by a Regulation of the Minister of Finance.

CHAPTER IX
MISCELLANEOUS PROVISIONS

Article 31
Tax calculation for Taxpayers whose book year ends before 1 July 2009 shall be conducted based on the
provisions in Law Number 7 of 1983 on Income Tax as amended several times, most recently by Law Number 17
of 2000 on the Third Amendment to Law Number 7 of 1983 on Income Tax.

Article 32
Tax calculation for the current year up to December 2008, for the 2009 tax year, for Taxpayers whose book year
ends after 30 June 2009, shall be conducted in accordance with the provisions of Law Number 7 of 1983 on
Income Tax as amended several times, most recently by Law Number 17 of 2000 on the Third Amendment to
Law Number 7 of 1983 on Income Tax.

Article 33
Limited-term tax facilities obtained by Taxpayers before 1 January 2009 shall remain valid until the end of the
relevant tax facility period.

CHAPTER IX
CLOSING PROVISIONS

Article 34
Upon the effective enforcement of this Regulation of the Government, Regulation of the Government Number
138 of 2000 on the Calculation of Taxable Income and Settlement of Income Tax in the Current Year (State

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 Gazette of the Republic of Indonesia of 2000 Number 253, Supplement to the State Gazette of the Republic of
Indonesia Number 4055), is repealed and declared invalid.

Article 35
This Regulation of the Government comes into force from the date of its promulgation.
For public cognizance, it is hereby ordered that this Regulation of the Government be promulgated in the State
Gazette of the Republic of Indonesia.

Established in Jakarta,
On 30 December 2010
THE PRESIDENT OF THE REPUBLIC OF INDONESIA,
Signed.
DR. H. SUSILO BAMBANG YUDHOYONO

Promulgated in Jakarta,
On 30 December 2010
THE MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA,
Signed.
PATRIALIS AKBAR

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2010 NUMBER 161

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 ELUCIDATION OF
REGULATION OF THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
NUMBER 94 OF 2010
ON
THE CALCULATION OF TAXABLE INCOME AND SETTLEMENT OF INCOME TAX IN THE CURRENT YEAR

I. GENERAL
With the promulgation of Law Number 36 of 2008 on the Fourth Amendment to Law Number 7 of 1983 on
Income Tax, there are material changes related to the calculation of Taxable Income and the settlement of
Income Tax in the current year. Therefore, it is necessary to make adjustments to the provisions on the
calculation of Taxable Income and the settlement of Income Tax in the current year.
This Regulation of the Government, as the replacement of Regulation of the Government Number 138 of
2000 on the Calculation of Taxable Income and Settlement of Income Tax in the Current Year, regulates
the provisions relating to the Calculation of Taxable Income and Settlement of Income Tax in the Current
Year.
Under this Regulation of the Government, transitional provisions for the implementation of the Law on
Income Tax which comes into force on 1 January 2009 are also regulated.

II. ARTICLE BY ARTICLE

Article 1
Self-explanatory.

Article 2
The granting of bonus stocks to stockholders conducted without any deposit is included in the definition of
distribution of profits or dividends. Likewise, the granting of bonus stocks deriving from the capitalization of stock
premiums. The stock premium comes from the paid-up capital of the stockholders that is above the nominal
value of the stock they have acquired.
Therefore, if the bonus stocks in question are granted to stockholders which make the total nominal value of all
shares including the obtained bonus stocks greater than the amount of their paid-up capital, the granting of
bonus stocks originating from the capitalization of said stock premiums shall be included in the definition of
distribution of profits or dividends. However, if said bonus stocks are granted to stockholders so that said
granting does not make the total value of all stocks (including bonus stocks) obtained or owned by them be
greater than the amount of paid-up capital, the granting of bonus stocks derived from the capitalization of said
stock premiums will not be included in the definition of distribution of profits or dividends.

Article 3
Self-explanatory.

Article 4
Paragraph (1)

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 Example:
PT A (not yet Go Public) which has an authorized capital of IDR4,500,000,000.00 (consisting of 4,500,000
stocks) and has been fully paid up perform an expansion which source of funding is obtained by
increasing its stock capital by selling new stocks amounting to 500,000 stocks (nominal value of
IDR1,000,00/stock) with a selling value of IDR750,000,000.00 (500,000 stocks x IDR1,500.00), thus there
a difference above the nominal value amounting to IDR250,000,000.00 (500,000 stocks x IDR500.00)
which is recorded as stock premiums by PT A.
The relevant stock premiums are not Income Tax object for PT A.
Paragraph (2)
Example:
As referred to in paragraph (1), however, the sale value of the 500,000 new stocks amounted to
IDRp400,000,000.00. The excess difference between the nominal value and the market value of the
stocks amounting to IDR100,000,000.00 (500,000 stocks x (-Rp200.00)) is recorded as a stock discount
by PT A.
The stock discount are not deduction of the income of PT A.

Article 5
Self-explanatory.

Article 6
Self-explanatory.

Article 7
Paragraph (1)
Characteristics of Bank Indonesia in relation to Bank Indonesia surplus shall include, among others,
foreign exchange differences, allowances (penyisihan) for assets, and depreciation of fixed assets.
Paragraph (2)
Self-explanatory.

Article 8
Paragraph (1)
"related parties" are Taxpayers who grant and Taxpayers who receive aids or, donations, including zakah
or religious donations which are obligatory in nature for adherents of recognized religions in Indonesia,
and/or grants assets.
Paragraph (2)
Routine transactions between the two parties are in the form of purchases, sales, or the provision of other
rewards in any name and form.
Paragraph (3)
Example of relationship in relation to work:

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 1. Mr. B is a director of PT X and Mr. C is an employee of PT X. In this case, there is a direct
employment relationship between PT X and Mr. B and/or Mr. C. If Mr. B and/or Mr. C receive aid or
donation from PT X or vice versa, then said aid or donation is an object of Income Tax for the
recipient because PT X and Mr. B and/or Mr. C have a direct work relationship.
2. Mr. A works as an outside insurance official of the insurance company PT X. Although Mr. A does
not have the status of an employee of PT X, PT X and Mr. A are considered to have an indirect
employment relationship. If Mr. A receives aid or donation from PT X or vice versa, then said aid or
donation is an object of Income Tax for the receiving party because PT X and Mr. A have an indirect
work relationship.
Paragraph (4)
Letter a
Self-explanatory.
Letter b
Example:
1. Direct control of management:
Mr. A and Mr. B are the directors of PT X, while Mr. C is the commissioner of X. Moreover, Mr.
C is also a director of PT Y, and Mr. B is a commissioner of PT Y.
Mr. B Junior is the director of PT AA, while Mr. E is the commissioner of PT AA. Mr. B Junior
is the son of Mr. B who is the director of PT X and commissioner of PT Y.
In the example above, PT X and PT Y have a direct management control relationship, as Mr.
B is not only a director at PT X but also a commissioner at PT Y. Moreover, Mr. C in addition
to working as a commissioner in PT X also works as a director in PT Y. If PT X receives aid or
donation from PT Y (or vice versa) then said aid or donation is a tax object for the receiving
party.
Likewise, PT Y and PT AA have a direct management control relationship, because there is a
familial relationship between Mr. B (father) who works as a commissioner at PT Y and Mr. B
Junior (son) who works as a director at PT AA.
If PT AA receives aid or donation from PT Y (or vice versa), then said aid or donation is a tax
object for the receiving party.
If Mr. B. Jr (son) receives assistance or donations or grant assets from Mr. B (father) then
said aid or donations or grant assets are exempted from Income Tax as referred to in Article 4
paragraph (3) letter a of the Law on Income Tax because the management control
relationship is between PT Y and PT AA, not between Mr. B (father) and Mr. B Junior (son).
Thus, management control relationships only occur between entities whose management is
the same or has a familial relationship. Meanwhile, between the management of said entity
there are no control relationship.
2. Indirect control of management:
Mr. O is the director of PT AB, and Mr. P is the commissioner of PT AB. Mr. O and Mr. P
clearly have the authority to determine policies and/or make decisions in order to carry out
the activities of PT X, for example, are authorized to sign contracts with third parties, sign
checks, and so forth even though the name of Mr. O and/or Mr. management are not listed in
the management structure set out in the deed of establishment and deed of amendment of
PT X.

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 In the example above, PT AB and PT X have an indirect management control relationship. If
PT X receives aid or donation from PT AB or vice versa, then said aid or donation is a tax
object for the receiving party.

Article 9
Paragraph (1)
Self-explanatory.
Paragraph (2)
Example:
PT A is engaged in the field of apartment rental. In accordance with the contract, the monthly rent for an
apartment is USD1,000 and invoices are issued on the 1st of every month.
On 1 September 2010 PT A issued an invoice amounting to USD1,000 to the tenant. On that date, the
prevailing exchange rate is IDR9,000.00 per 1 USD. On 1 September 2010, PT A acknowledge the
income from the apartment rental amounting to IDR9,000,000.00 (USD1,000 x Rp9,000.00).
On 15 September 2010 the tenant paid the rent of the apartment. On that date, the prevailing exchange
rate is IDR8,700.00 per 1 USD, thus the rent paid is IDR8,700,000.00 (USD1,000 x IDR8,700.00).
For the time difference between the invoice issuance date and the payment date, a foreign exchange loss
for PT A arises in the amount of IDR300,000.00 ((IDR9,000.00 - IDR8,700.00) x USD1,000)).
The foreign exchange loss is not acknowledged as costs for PT A because it comes from apartment
rentals which have been subject to Income Tax that is final.
Paragraph (3)
Example:
PT A, which operates in the field of apartment rental, in September 2010 obtained a loan amounting to
USD10,000,000 which was used in the amount of USD9,000,000 to build the apartment, and
USD1,000,000 to purchase transportation equipment which will be used for the transportation service
business.
Any foreign exchange gain or loss resulting from a loan amounting to USD1,000,000 may be
acknowledged as income or cost due to:
a. not directly related to the business of PT A in the field of apartment rental whose income is subject
to Income Tax that is final; and
b. constitute expenses to obtain, collect, and maintain other income in the form of transportation
service business for which the income is subject to Income Tax at the tariff as referred to in Article
17 of the Law on Income Tax.

Article 10
Self-explanatory.

Article 11
Paragraph (1)
“development cost” are all expenses relating to industrial plants, including the purchase of seeds,

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 maintenance, and rearing of plants until they are sold.
Paragraph (2)
“cost of raising” are all expenses related to livestock including the purchase of seeds, maintenance, and
rearing of livestock until they are sold.

Article 12
Paragraph (1)
Self-explanatory.
Paragraph (2)
"interest at a reasonable rate" is the applicable interest rate determined in accordance with the principle of
fairness and best practice if the transaction is conducted between parties who do not have a special
relationship as referred to in Article 18 paragraph (4) of the Law on Income Tax.

Article 13
Letter a
Costs relating to income which is subject to a separate tax, either income which is subject to the
withholding, collection or payment of Income Tax that is final as referred to in Article 4 paragraph (2) or
income which is subject to tax based on the Net Income Calculation Norm as referred to in Article 14 of
the Law on Income Tax and Special Calculation Norm as referred to in Article 15 of the Law on Income
Tax, have been calculated in tax tariff or calculation norm applicable for said income. Therefore, said costs
may no longer be deducted from other gross incomes for which the imposition of tax is based on the tariffs
as referred to in Article 17 of the Law on Income Tax.
Letter b
Self-explanatory.

Article 14
Representative offices of foreign countries and certain international organizations as non-Tax Subjects are not
obliged to withhold Income Tax as referred to in Article 21 paragraph (2) of the Law on Income Tax. Therefore,
domestic individuals who receive or obtain income, in the form of salaries and other rewards in relation to work in
the relevant agencies, in which the amount exceeds the threshold of Non-Taxable Income (Penghasilan Tidak
Kena Pajak/PTKP) are obliged to calculate, pay and report the relevant payable Income Tax themselves.

Article 15
Paragraph (1)
Self-explanatory.
Paragraph (2)
Self-explanatory.
Paragraph (3)
The time when Article-23 Income Tax under the Law on Income Tax becomes payable at the time of

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 payment, made available for payment (e.g., dividends) and due date (e.g., interest and rent), the time
determined in a contract or agreement or invoice (e.g. royalty, compensation for technical services or
management services or other services).
"made available for payment" means:
a. for a company that does not go public, is the time it is recorded as a dividend payable to be paid,
i.e. when the distribution of dividends is announced or determined in the Annual General Meeting of
Stockholders (Rapat Umum Pemegang Saham/RUPS).
Likewise, if the company in question distributes an interim dividend during the current year, then
Article-23 Income Tax under the Law on Income Tax is payable at the time of its announcement or
determination at the Meeting of the Board of Directors or stockholders in accordance with the
Articles of Association of the company concerned.
b. for companies that go public, is on the date of determination of the ownership of stockholders who
are entitled to dividends (recording date).
In other words, the withholding of Income Tax on dividends as regulated in Article 23 of the Law on
Income Tax may only be undertaken after the stockholders who are entitled to "receive or obtain"
the dividends is known, even though said dividends have not yet been received in cash.
"when the payment is due" is the time of obligation to make payments based on agreements, both
written and unwritten in contracts or agreements or invoices.
Paragraph (4)
The time when Article-26 Income Tax under Article 26 of the Law on Income Tax becomes payable is at
the time of payment, made available for payment (e.g., dividends) and due date (e.g., interest and rent),
the time determined in a contract or agreement or invoice (e.g. royalty, compensation for technical
services or management services or other services).
"made available for payment" means:
a. for a company that does not go public, is the time it is recorded as a dividend payable to be paid,
i.e. when the distribution of dividends is announced or determined in the Annual General Meeting of
Stockholders (RUPS).
Likewise, if the company in question distributes an interim dividend during the current year, then
Article-26 Income Tax under the Law on Income Tax is payable at the time of its announcement or
determination at the Meeting of the Board of Directors or stockholders in accordance with the
Articles of Association of the company concerned.
b. for companies that go public, is on the date of determination of the ownership of stockholders who
are entitled to dividends (recording date).
In other words, the withholding of Income Tax on dividends as regulated in Article 26 of the Law on
Income Tax may only be undertaken after the stockholders who are entitled to "receive or obtain"
the dividends is known, even though said dividends have not yet been received in cash.
"when the payment is due" is the time of obligation to make payments based on agreements, both
written and unwritten in contracts or agreements or invoices.

Article 16
Example:
In October 2009 PT A provided a loan to PT B amounting to IDR1,000,000,000.00 with an interest rate of 10%
(ten percent) per year. Interest payments are due on 1 April and 1 October.

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 On 1 April 2010, PT B paid interest amounting to IDR50,000,000.00 to PT A. For this loan interest, PT A has
acknowledged as 2009 income amounting to IDR25,000,000.00 (interest during October to December 2009). In
accordance with the provisions, PT B withholds Article-23 Income Tax under the Law on Income Tax upon the
due date of payment on 1 April 2010 amounting to IDR7,500,000.00 (15% x IDR50,000,000.00).
The withholding of Article-23 Income Tax under the Law on Income Tax may be credited by PT A in 2010.

Article 17
In essence, the time for the acknowledgement of income and costs shall be carried out in an adherent (taat
asas) manner in accordance with the principle of accounting on the matching of costs against revenues.
However, in certain circumstances due to Government policies, the Director-General of Tax may set a different
time for the acknowledgment of income and costs.
"in certain cases" among others are:
a. the time of acknowledgment of bank income in the form of interest on non-performing loans in order to
support the acceleration of the banking restructuring process in accordance with Government policies; or
b. the acknowledgement of income and costs for Taxpayers due to changes in the Statement of Financial
Accounting Standards.

Article 18
Self-explanatory.

Article 19
Income received or obtained by Taxpayers, for example, who is engaged in the field of construction service, shall
be subject to Income Tax that is final with a separate Regulation of the Government. In the event that it is not
regulated by a separate Regulation of the Government which states that the relevant income is subject to
Income Tax that is final, then said income is subject to Income Tax based on the tariff as referred to in Article 17
of the Law on Income Tax.

Article 20
Example:
Mr. A, a tax subject who has fulfilled both subjective and objective requirements but who does not yet have a
Taxpayer Identification Number (Nomor Pokok Wajib Pajak/NPWP), has an income of IDR20,000,000.00 in
relation to his consulting services in 2009. As Mr. A does not yet have an NPWP, then such income shall be
deducted with Article-21 Income Tax under the Law on Income Tax by the employer at a tariff that is 20% (twenty
percent) higher than the tariff applied to Taxpayers who are able to show NPWP, so that Article-21 Income Tax
under the Law on Income Tax withheld is IDR1,200,000.00 (5% x 120% x IDR20,000,000.00).
In 2011, Mr. A registered himself in order to obtain an NPWP and submits an individual Taxpayer Annual Income
Tax Returns for the 2009 and 2010 Tax Years. For the tax credit amounting to IDR1,200,000.00 withheld in 2009,
Mr. A may only credited it in the individual Taxpayer Annual Income Tax Returns for the 2009 Tax Year.

Article 21
Paragraph (1)

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 Self-explanatory.
Paragraph (2)
Example:
A Construction Service Company whose income is solely subject to Income Tax that is final imports goods
used for construction service activities. Upon the importation of said goods, the construction service
company may apply for an exemption from the withholding and/or collection of Article-22 Income Tax
under the Law on Income Tax.
Paragraph (3)
Self-explanatory.

Article 22
Example:
Commercial net incomes of a permanent establishment in Indonesia in 2009 amounted to IDR16,000,000,000.00
and positive fiscal adjustments amounted to IDR1,500,000,000.00. The remaining losses from the previous year
which can still be compensated in 2009 amounted to IDR7,500,000,000.00.
The calculation of Article-17 and Article-26 paragraph (4) Income Tax shall be as follows:

Description Article-17 PPh Article-26 (4) PPh

Commercial Net Income 16,000,000,000.00

Positive Fiscal Adjustment 1,500,000,000.00

Fiscal Net Income 17,500,000,000.00

Loss Compensation 7,500,000,000.00

Taxable Income 10,000,000,000.00

28% of Payable Corporate PPh 2,800,000,000.00

PKP after tax deduction 7,200,000,000.00

Article-26 (4) PPh = 20% 1,440,000,000.00

In calculating Article-26 paragraph (4) PPh, the loss compensation amounting to IDR7,500,000,000.00 must not
be calculated as a deduction of the Taxable Income after tax deduction (IDR7,200,000,000).

Article 23
Paragraph (1)
In accordance with the provisions of Article 3 paragraph (3) of Law on General Provisions and Procedures
of Tax, the deadline for the submission of Annual Income Tax Returns for corporate Taxpayers is 4 (four)
months at the latest after the end of the Tax Year. Thus the settlement of payable Income Tax must be
made before the deadline for the submission of said Annual Tax Return.
Paragraph (2)

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 Self-explanatory.

Article 24
Paragraph (1)
"Certificate of Resident" is a certificate issued and/or validated by a competent authority or an appointed
official based on the Double Tax Avoidance Treaty.
Paragraph (2)
Self-explanatory.

Article 25
Paragraph (1)
Exchange of information, mutual agreement procedures, and assistance in the collection of taxes are part
of the agreement in the Double Tax Avoidance Treaty.
Paragraph (2)
Self-explanatory.

Article 26
Self-explanatory.

Article 27
Paragraph (1)
Separate bookkeeping is a record-keeping process which is conducted on a regular basis by segregating
the records of each transaction, income and costs between business activities which are subject to
Income Tax with tariffs as referred to in Article 17 of the Law on Income Tax and business activities which
are subject to Income Tax that is final or on revenue of gross incomes which are tax objects and which are
non-tax objects, as well as income and costs from businesses which do not obtain tax facilities and which
obtain tax facilities as regulated in Article 31A of Law on Income Tax.
Example of letter c:
PT A is engaged in the fish canning industry domiciled in Jakarta and has assets in the form of
warehouses and processing machines in Papua in order to develop the company's activities and
production.
In accordance with Regulation of the Government Number 1 of 2007 on Income Tax Facilities for
Investment in Certain Business Sectors and/or in Certain Regions as amended by Regulation of the
Government Number 62 of 2008, the fish and other aquatic biota canning industry in the Papua region
may be granted Income Tax facilities.
One of the form of the Income Tax facility in question is accelerated depreciation and amortization.
In this case, separate recordings should be made for depreciation costs over business-related assets
which obtain tax facilities (in Papua) and which do not obtain taxation facilities (in Jakarta).
Paragraph (2)

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 Joint costs are expenses or costs that are directly related to activities to obtain, collect and maintain
income and simultaneously directly related to activities to obtain, collect and maintain other income.
Joint costs which become the basis for the allocation of charging in order to calculate the amount of
Taxable Income are joint costs after fiscal adjustments/corrections have been made in accordance with
Law Number 7 of 1983 on Income Tax as amended most recently by Law Number 36 of 2008 and its
implementing regulations.
Example:
PT A is engaged in a business sector whose income is subject to Income Tax that is final. In a given tax
year, PT A obtains gross income which consists of:

a. income from business that has been subject to

Income Tax that is final …... IDR300,000,000.00

b. other gross income subject to Income Tax that is

not final ………… IDR200,000,000.00

Total gross income IDR500,000,000.00

If the joint costs which cannot be separated after fiscal adjustment is made amounted to
IDR250,000,000.00 (two hundred and fifty million rupiah), then the deductible cost for obtaining, collecting
and maintaining income is 2/5 x IDR250,000,000.00 = IDR100,000,000.00.

Article 28
Paragraph (1)
Example:
A Taxpayer with a book year from 1 July 2009 to 20 June 2009 (the 2009 book year) changes its book
year that has been approved by the Director-General of Tax into 1 October 2009 to 30 September 2010
(the 2010 book year). In this case, the income received or obtained since 1 July 2010 until 30 September
2010 must reported in a separate Annual Income Tax Return for 2010.
Paragraph (2)
The remaining fiscal loss in the part of the book year that is not included in the new book year may be
compensated with income starting from the next Tax Year up to 5 (five) years in a row.
Example:
The book year of PT X is from October until September. PT X plans to change the book year into January
until December starting from the 2010 Tax Year. PT X have fiscal losses originating from the 2007 Tax
Year.
The remaining fiscal loss for the 2007 Tax Year (October 2006 until September 2007) may be
compensated with income starting from the Next Tax Year up to 5 (five) years in a row, starting from the
2008 until 2011 Tax Year as follows:

Tax Year I : 2008 (October 2007 until September 2008)

Tax Year II : 2009 (October 2008 until September 2009)

Tax Year III : Part of 2009 Tax Year (October 2009 until December 2009)

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