New Income Tax Rates for Income Derived from Bond Interest
Government Regulation No. 100 of 2013 (“Amendment”) was recently issued, to amendment Government Regulation No. 16 of 2009 on Income Tax on Bond Interest (“2009 Regulation”). The Amendment has been in force since 31 December 2013 and is relevant to banks (Indonesian and foreign bank branch offices) and all mutual fund companies investing in bonds. Banks are now required to pay 25% income tax on all income derived from bond interest, previously banks were excluded from having to pay income tax derived from bond interest. The new income tax rate for mutual fund companies investing in bonds will now be: (i) 5% starting from 2014 until 2020; and (ii) 10% starting 2020 and thereafter. Previously, under the 2009 Regulation, the applicable tax rates were: a. 0% from 2009 until 2010; b. 5% from 2011 to 2013; and c. 15% from 2014 and thereafter. Please contact us to find out more about the above regulation.