Capital gains in Indonesia typically arise from the disposal of various assets, including but not limited to real estate properties, stocks, bonds, and other financial instruments. There are no specific distinctions between short-term and long-term capital gains in Indonesia for tax purposes.
Taxable capital gains are calculated as the difference between the selling price and the acquisition cost of the asset. Expenses directly related to the sale transaction, such as brokerage fees, legal fees, and transfer taxes, may be deducted from the selling price to determine the taxable gain. Additionally, any improvements or enhancements made to the asset during ownership may also be considered in adjusting the acquisition cost.
Applicable Tax Rates
- Capital gains in Indonesia are generally subject to the standard corporate income tax rate, which is currently set at 25%.
- Gains on listed shares are taxed at 0/1%, considered a final tax.
- Gains on disposal of buildings or land are taxed at 2.5%.
- Gains from the sale of Indonesian assets by foreigners are taxed at 5% of gross proceeds.
There are no specific conditions or thresholds that influence the applicable tax rate for capital gains. However, individuals or entities may be eligible for certain tax incentives or exemptions based on the nature of the asset and the duration of ownership.
Applicable Law: The taxation of capital gains in Indonesia is governed by Law No. 36 of 2008 on Income Tax ("Undang-Undang Nomor 36 Tahun 2008 tentang Pajak Penghasilan").
Articles of the Law:
- Article 4(1)(b) of Law No. 36/2008 defines capital gains as one of the categories of income subject to taxation.
- Article 17 outlines the general provisions for calculating taxable income, including capital gains.
- Article 4(2)(c) specifies that capital gains derived from the sale of shares in Indonesian companies are subject to corporate income tax.
