PPh 23 Withholding Tax Indonesia
Complete guide to PPh 23 (Pajak Penghasilan Pasal 23) withholding tax for services, dividends, royalties, and interest payments in Indonesia. Learn rates, filing requirements, and compliance obligations for PT PMA.
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PPh 23 Tax Rates 2025
Different rates apply depending on the type of income and recipient NPWP status
Services (with NPWP)
- Technical services
- Management services
- Consulting services
- Construction services (certain types)
- Other taxable services
Services (without NPWP)
- Same as above but recipient has no NPWP
- Rate is doubled as penalty
- Strongly advise obtaining NPWP
Passive Income
- Dividends (for certain recipients)
- Interest (non-bank)
- Royalties
- Prizes and awards
- Technical fees from abroad
Services Subject to PPh 23
Common services where PPh 23 withholding applies
| Service Type | Examples | Rate |
|---|---|---|
| Technical Services | IT, engineering, installation, maintenance | 2% |
| Management Services | Business consulting, HR management | 2% |
| Consulting Services | Legal, tax, financial advisory | 2% |
| Accounting & Bookkeeping | Audit, financial statements preparation | 2% |
| Design Services | Architecture, interior, graphic design | 2% |
| Marketing & Advertising | Agency fees, campaign management | 2% |
| Cleaning & Catering | Office cleaning, event catering | 2% |
| Security Services | Guard services, security systems | 2% |
PPh 23 Filing Process
Step-by-step guide to withholding and reporting PPh 23
Withhold Tax at Payment
Deduct PPh 23 from payment to service provider at the applicable rate (2% or 15%).
Issue Withholding Slip
Provide Bukti Potong PPh 23 to the service provider as proof of tax withheld.
Deposit to Tax Office
Pay the withheld tax via e-Billing by the 10th of the following month.
File SPT Masa PPh 23
Submit monthly tax return (SPT Masa) via e-Filing by the 20th of the following month.
No NPWP = Higher Rate
If the service provider does not have an NPWP (tax identification number), the withholding rate is doubled. For services, this means 4% instead of 2%. Always verify vendor NPWP status before making payments to apply the correct rate.
Common PPh 23 Mistakes to Avoid
Ensure compliance by avoiding these common errors
Not withholding on all taxable services
Review all vendor payments monthly to ensure PPh 23 is applied correctly
Forgetting to issue Bukti Potong
Generate withholding slips immediately after each payment
Applying 2% rate when vendor has no NPWP
Always verify vendor NPWP before payment; apply 4% if no NPWP
Missing monthly filing deadlines
Set up calendar reminders for 10th (payment) and 20th (filing) of each month
Related Tax Guides
Learn more about Indonesian tax obligations
Frequently Asked Questions
Common questions about PPh 23 withholding tax
What is PPh 23 in Indonesia?
PPh 23 (Pajak Penghasilan Pasal 23) is a withholding tax on income from services, dividends, interest, royalties, and prizes paid to resident taxpayers. The payer is obligated to withhold and remit this tax to the government on behalf of the recipient.
What is the PPh 23 rate for services?
The standard PPh 23 rate for services is 2% of the gross payment amount when the recipient has an NPWP. If the recipient does not have an NPWP, the rate is doubled to 4%. For passive income like royalties and dividends, the rate is 15%.
Who must withhold PPh 23?
All Indonesian tax-resident entities (including PT PMA companies) must withhold PPh 23 when making payments for taxable services to domestic vendors. Individual employees making personal purchases are generally exempt.
When is PPh 23 due?
PPh 23 must be deposited to the tax office by the 10th of the month following the payment. The monthly tax return (SPT Masa PPh 23) must be filed by the 20th of the following month.
What services are subject to PPh 23?
Taxable services include technical services, management consulting, accounting, legal services, design, marketing, cleaning, catering, security, and many other professional services. Construction services may be subject to PPh 4(2) final tax instead.
What is a Bukti Potong PPh 23?
Bukti Potong PPh 23 is a withholding tax slip that must be issued to the service provider. It serves as proof that tax has been withheld and can be credited against the recipient's annual income tax liability.
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