In respect of the increase in household incomes, the funds collected by banks in the form of deposits, savings accounts, and Bank Indonesia Certificates have been growing, the Government of the Republic of Indonesia imposes final Article 4(2) Income Tax on deposit interest.
Tax Subject
Article 4(2) Income Tax is imposed on individuals, entities, institutions, or organizations that receive income in the form of deposit interest.
The following are not the above Article 4(2) Income Tax subject:
Indonesian tax residents whose entire income in 1 (one) Fiscal Year, including interest and discounts, does not exceed the Non-Taxable Income;
Indonesian Bank or Indonesian branch of a foreign bank; and
Pension Fund whose establishment has been validated by the Minister of Finance as long as the funds are obtained from sources of income as referred to in Article 29 Law Number 11 Year 1992 regarding Pension Funds based on Tax Exemption Letter issued by Directorate General of Taxes Information System or Tax Office where the Pension Fund is registered as a Taxpayer.
Tax Withholder
The tax withholder is the bank that pays interest on deposits.
Tax Object
Article 4(2) Income Tax is imposed on income in the form of deposit interest. Exempted from the imposition of Article 4(2) Income Tax is deposit interest whose principal amount of the deposit does not exceed IDR7,500,000 and is not a split amount.
Deposit is a deposit in any name and in any form, including time deposit, certificate of deposit, and on-call deposit either in Rupiah or in foreign currency placed at or issued by a bank as referred to in the provisions of laws and regulations concerning Banking.
Included in the definition of interest is interest received or derived from deposits placed overseas through a bank established or domiciled in Indonesia or an Indonesian branch of a foreign bank.
Tax Rate
Deposit interest is subject to Article 4(2) Income Tax with the following rates:
20% from the gross amount for local taxpayers and permanent establishment; and
20% from the gross amount or applicable tax treaty rate for foreign taxpayers.
Tax Base
The basis for imposition of Article 4(2) Income Tax on deposit interest is the gross amount of interest received or earned from the Deposit.
Due Date
Article 4(2) Income Tax on deposit interest is payable at the time the interest is received or earned.
Withholding Tax Procedure
Article 4(2) Income Tax on Deposit Interest is withheld by the bank on income in the form of interest received or obtained from deposits with final income tax deducted. Included as interest withheld by final income tax is interest received or earned from Deposits placed overseas through a bank established or domiciled in Indonesia or a branch of a foreign bank in Indonesia.
Tax Payment Procedure
The withholder of Article 4(2) Income Tax is required to pay the tax to the Post Office or a bank appointed by the Minister of Finance, no later than the 10th (tenth) of the following month after the month the tax withholding is made.
The payment is made using a Tax Payment Slip with the tax account code 411128 and the payment code 404.
If the tax payment due date coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.
Tax Filing Procedure
The withholder of Article 4(2) Income Tax must report the income tax withheld in the monthly Article 4(2) Final Income Tax return by no later than 20th (twenty) days after the tax period ends.
The filing of income tax for income providers is carried out using a Final Income Tax Return Article 4(2). Recipients of income are required to report receipts in the Annual Income Tax Return.
If the filing due date of the monthly Article 4(2) Final Income Tax return coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the filing can be made on the next working day.
Example of Article 4(2) Income Tax on Deposit Interest
Illustration 1
Ani keeps her money at Bank Matahari in the form of a time deposit of Rp100,000,000 with an interest rate of 12% per year. On the deposit interest earned by Ani, how is the income tax calculated? and how much deposit interest does Ani receive net each month?
Deposit Interest Per Year = 12% x IDR100,000,000
Deposit Interest Per Year = IDR12,000,000
Deposit Interest Per Month = IDR12,000,000 : 12 months
Deposit Interest Per Month = IDR1,000,000
Income Tax Article 4(2) on Deposit Interest Per Month = 20% x IDR1,000,000
Income Tax Article 4(2) on Deposit Interest Per Month = IDR200,000
So, the net deposit interest received by Ani per month = IDR1,000,000 - IDR200,000 is IDR800,000.
Illustration 2
Anton has a time deposit in Bank XYZ of IDR7,000,000 with an interest rate of 6% per year. On the deposit, Anton received interest every month of IDR35,000. How much tax must be paid on Anton's deposit interest?
The interest of IDR35,000 per month is not deducted from Income Tax Article 4(2) because the deposit value is less than IDR7,500,000.
Legal Basis
Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 7 Year 2021 regarding Harmonization of Tax Regulations
Government Regulation Number 131 Year 2000 regarding Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate as lastly amended by Government Regulation Number 123 Year 2015 regarding Amendment of Government Regulation Number 131 Year 2000 regarding Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate
Minister of Finance Regulation Number 212/PMK.03/2018 regarding Withholding Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate
Director General of Taxes Regulation Number PER-03/PJ/2020 regarding Procedure for Issuing of Withholding Income Tax Exemption Letter on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate Received or Obtained by Pension Fund whose Establishment Has Been Authorized by the Minister of Finance or Has Obtained a Permit from the Financial Services Authority
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