Indonesian Listed Companies to Pay Lowest Tax Rate in Southeast Asia

  • Some of Indonesia’s listed companies will enjoy a lower income tax rate of 19% in 2020 and 2021, with a further 3% cut starting in 2022 that would make the rate lower than Singapore’s corporate income tax rate, the Finance Ministry said last week.
  • The government has already lowered the income tax for companies to 22% in May 20 as part of its stimulus package to ease the impact of the Covid-19 pandemic to Indonesia’s economy.
  • Further cuts for listed companies, would improve the competitiveness of Indonesian companies, that until recently still pay one of the highest corporate income tax rate in Asia.
  • The cut introduced by the government would allow some listed companies to pay tax at a 16% rate, lower than 17% rate in Singapore which currently offers the lowest corporate income tax rate in Southeast Asia.
  • The government said only listed companies with more than 40% free float — the proportion of the companies shares that the public can trade in the stock exchange — can enjoy the tax cut.
  • Also, those companies have to ensure that at least 300 separate parties own the companies shares — with ownership not exceeding 5% each and not affiliated to each other nor the companies in question.

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