The rate of withholding tax with respect to interest income from deposits or savings in Indonesian banks has been reduced—provided that: (1) the source of the funds is from exports (referred to as “Devisa Hasil Ekspor”); and (2) the funds are placed with banks established or domiciled in Indonesia (including branch offices of foreign banks).
For the past 15 years, the rate of withholding income tax on interest on deposits or savings in Indonesian banks had been 20% regardless of the source of the funds.
New guidance issued in late December 2015 provides for new withholding tax rates. The new withholding tax rates range from 10% down to 0% for qualifying deposit amounts in U.S. dollars, and from 7.5% to 0% for qualifying deposit amounts in Indonesian rupiah (the longer the period of deposit, the lower the withholding tax rate). For all other deposits, the 20% rate of withholding tax continues to apply.
Read a February 2016 report prepared by the KPMG member firm in Indonesia: Reduced final withholding income tax on interest income from deposits, savings, and BI certificate discounts if funds come from exports (Devisa Hasil Ekspor)
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