Similarly, a foreign company that has a permanent establishment in Indonesia – and carries out business activities through this local entity – falls under the Indonesian tax regime. If the foreign company does not have a permanent establishment in Indonesia but does generate income through business activities in Indonesia, then it needs to settle its tax liabilities through withholding of the tax by the Indonesian party paying the income. Small Enterprises obtain a 50 percent tax discount, imposed proportionally on taxable income of the part of gross turnover (up to IDR 4.8 billion). In July 2018, Government issued a regulation that set a 0.5% of revenue for income tax tariff on individual and corporate taxpayers with an annual gross turnover below IDR 4.8 billion (approximately USD $320,000).
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