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.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.