TaxSavvyID

Dividend from a PT to its shareholders

PT kami bagi dividen ke pemegang saham. Ada potongan pajak?

The situation

Dividends to resident companies can be exempt if conditions are met. Dividends to resident individuals are exempt if reinvested in Indonesia; otherwise 10 percent final applies. Dividends to non-residents bear 20 percent PPh 26 unless a treaty reduces it.

The law

  • Art 23, Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: Withholding of 15 percent on dividends, interest, royalties and prizes and 2 percent on rent (not land and buildings) and listed services; 100 percent higher without an NPWP
  • Art 4(2), Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: Certain income bears final tax: land and building rent, construction services, MSME turnover and others set by government regulation
  • Art 26, Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: Withholding of 20 percent on dividends, interest, royalties, service fees and other income paid to non-residents, subject to tax treaties

What it means for you

Check the shareholder type before paying. For individuals, the reinvestment option needs reporting. For a foreign parent, get the DGT form for the treaty rate. Example: IDR 1 billion dividend to a foreign parent at 20 percent gives IDR 200 million, or the treaty rate with the form.

What to do

  1. List shareholders and their status.
  2. Apply the right rule per shareholder.
  3. Get DGT forms for foreign shareholders.
  4. Withhold and issue slips.

Paying dividends without board and GMS approval also breaks company law.

We can do this for youMonthly withholding on vendors and non-residents: PPh 23, PPh 4(2) final and PPh 26 with unified slips: IDR 1.500.000

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