Paying a vendor or invoicing a client? Pick the payment type to see the PPh 23, PPh 26 or PPh 4(2) to withhold, the PPN on top, and the net cash that actually changes hands.
Indonesia collects much of its income tax by making the payer withhold it. Each type of payment has its own "article" (pasal) of the Income Tax Law:
| Article | Applies to | Rate |
|---|---|---|
| PPh 21 | Salaries and payments to individuals for work | TER / Pasal 17 |
| PPh 22 | Imports and certain purchases by government or specific industries | 0.25% – 10% |
| PPh 23 | Services, rent of assets, royalties, interest and prizes paid to residents | 2% or 15% |
| PPh 26 | Most payments to non-residents | 20% (treaty may reduce) |
| PPh 4(2) | Final taxes: rent of land/buildings, construction, property sales, deposit interest, UMKM | 0.5% – 25% |
A payer must withhold PPh 23 if it is a company, a government body, or an individual appointed as withholding agent. The base is the gross amount before PPN. Payments for goods are not subject to PPh 23, and where an invoice separates materials from services, only the service portion is. A vendor using the UMKM 0.5% scheme can give the payer its certificate so that 0.5% is withheld instead.
If the vendor has no NPWP, the PPh 23 rate is 100% higher — 4% instead of 2%. Since 2024 an Indonesian citizen's NIK works as their NPWP.
The payer deposits the withheld tax by the 15th of the following month and issues an e-Bukti Potong through Coretax, which the vendor uses as a tax credit (for PPh 23) or proof of final tax (for PPh 4(2)).
Construction rates depend on the contractor's qualification and the type of work (planning and supervision use 3.5%–6%). Treaty relief needs a valid DGT form. Confirm with DJP or a consultant.