Sep

14

Tax Credits on Overseas Income of Domestic Taxpayers in Indonesia

In the current era of globalization, international trade activities are a source of state income for the country. One of the essential aspects that needs to be considered by business actors in the field of international trade is taxation. In accordance with Law No.36 of 2008 jo. Law No.7 of 2021 ("Tax Law") of regulation in Indonesia, income tax is any additional economic capability received or obtained by the taxpayer, both from Indonesia and/or overseas, which adds up to increase the wealth of the taxpayer concerned by any name and in any form. Thus, for all forms of international trade that benefit the taxpayer, income tax is levied. Under the law in Indonesia, this type of tax is regulated in Article 24 of the Income Tax Law.

The concept of this income tax is that the tax paid or payable overseas received or earned by a domestic taxpayer may be credited against the tax payable under this law in the same tax year, which means the tax that has been paid in a year can be deducted from income tax when calculating the amount of tax payable for one tax year. The amount of the tax credit is the amount of income tax paid or payable overseas, but may not exceed the calculation of the tax owed, further regulated in the Income Tax Law.

Further regulated in the Minister of Finance Regulation No. 192/PMK.03/2018 ("MoFR 192/2018"), in calculating the taxable income, domestic taxpayers must combine income received or obtained from overseas sources abroad with income received or obtained from domestic income sources in Indonesia. The amount of income received or earned from overseas sources of income is determined as follows:

  1. Income, including income from branches or representatives of domestic taxpayers abroad, is considered net income;
  2. Income originating from overseas trusts is net income or a share of net income earned by the domestic taxpayer; and
  3. Other income is equal to net income.

If you have inquiries related to taxation law, Schinder Law Firm is one of many corporate law firms in Indonesia that is proficient in this field, with many experienced and professional civil lawyers and tax law attorneys in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfrim.com for further consultation.

Author: Dewi Susanti

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.