Before starting your own company in Lombok, you may want to know what foreign corporate tax in Lombok a company and individuals earning income from the company are liable to.
The following list are the most common foreign corporate tax in Lombok (and Indonesia) you have to be aware of.
- Land & Building Tax
- Construction Tax
- Corporate Income Tax
- Employee’s Income Tax
- Value Added Tax
- Luxury Goods Sales Tax
Foreign Corporate Tax in Lombok
Land & Building Taxes (5%)
Indonesian and foreign individual or corporate is liable to 5% VAT when buying and 5% income tax when selling. Normally, the tax is withheld by the Notary as the property transfer process will not start until the parties pay off all duties .
Tax on property is also imposed on annual basis. The amount of the tax is appraised by the tax office based on the building specs and estimated taxable land price. Therefore, the charge may vary from time to time depending on the increase of the property value.
Construction Tax (2.2 - 13%)
Project owner is liable to 2.2 % construction tax if he/she conducts the construction without a construction company.
In addition, In case the project owner conducts the construction using a construction company, the construction company is liable to 11% VAT and 2% income tax.
Corporate Income Tax (20% - 25 %)
Corporate income tax is one of the most important revenues for Indonesian government. A company is subject to 25 % income tax out of gross profit. The income tax is payable on the 15th of the following month, at the latest.
However, public companies listed in the Indonesia Stock Exchange, which at least 40 percent of its shares belong to public, is entitle to a 5 % tax cut.
Employee's Income Tax (10% - 30 %)
Employee’s salary is subject to progressive individual income tax and is withheld by the employer. It is, however, calculated based on annual income .
The following is the table of annual income in IDR and its tax rates:
Salary
Up to 50 million
Over 50 to 250 million
Over 250 to 500 million
Over IDR 500 million
Tax Rate
5%
15%
25%
30%
Value Added Tax (10% - 11%)
A trading company with over IDR 4,8 billion annual turnover is liable to 11% VAT. Meanwhile, hotel and tourism related business such as restaurant, function, SPA etc. is liable to 10% VAT even though the turnover is below IDR 4,8 billion.
Luxury Good Sales Tax ( 10% - 200%)
Luxury taxable goods, either manufactured in Indonesia or imported, is subject to tax upon transaction. The tax rate ranges from 10% to 200%.
However, to encourage the economic growth, government often gives various discounts on taxes, especially LGST. So it’s recommended to get yourself updated from time to time or consult your corporate tax consultant in Lombok.
Finally, below is the general list of what is categorized as luxury goods:
- Certain motor vehicle (except for ambulance, fire truck etc)
- Airplane, cruise ship (except for public transportation and tourism business)
- Luxurious house, apartment, and condominium, etc.
