General Taxes in Indonesia

Information on the different taxes for Indonesian residents: property taxes, VAT, road tax and stamp duty. Find out who has to pay, and how to go about paying these taxes...

In Bahasa Indonesian, the word for 'tax' is pajak.

Local Taxes

There are two levels of local government which levy and collect taxes:

  1. Districts (kabupaten)
  2. Provinces (propinsi)

Central government raises 93 percent of taxes in Indonesia. These revenues are primarily derived from income tax, value added and luxury taxes, as well as from oil and gas.

The remaining seven percent is raised by provinces (five percent) and districts (two percent). Local government revenues came mainly from fiscal transfers from Jakarta: grants and revenue sharing from natural resources, shared property tax, and uses fees.

Provincial tax revenues are derived mainly from car taxes.

District governments (kabupatens) are authorised to levy the following six taxes:

  1. Advertisement tax: 25 percent on annual value of advertising
  2. Base mineral extraction tax: 20 percent on market value of extraction
  3. Entertainment tax: imposed as a percentage of ticket price - maximum 35 percent
  4. Hotel and restaurant tax: 10 percent
  5. Street lighting tax: tax on electricity consumption - 10 percent maximum
  6. Water tax: maximum levy of 20 percent on a complicated base involving water usage

Some taxes levied by the central government are administered and collected locally, for example the Land and Building Tax. Local governments receive 90 percent of property tax collections, and central government receives ten percent.

Local governments receive 70 to 80 percent of taxes from natural resources that were mined in their provinces and then sold by the state. This scheme has created a gap between provinces that are rich in resources and those that are resource-poor.

Local governments are responsible for delivering services, and as they are looking for new sources of revenue, including new taxes, it is likely that local taxes will increase in Indonesia.