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Income from Bonds Derived by Mutual Funds is to be Taxed
Since 2002, the income received or earned by a taxpayer in the form of interest on bonds or bond discount is subject to final income tax, except the income received by:
1. Banks established in Indonesia or a permanent establishment of a foreign bank
2. Pension fund, the establishment of which has been approved by the Minister of Finance
3. Mutual funds registered at or reported to the Bapepam and the Financial Institutions (Indonesia Capital Market and Financial Supervisory Agency).
Since 2009, the income earned or received by a mutual fund taxpayer in the form of bond interest or discount was exempt from income tax and took effect in January 2009. Taxand Indonesia explains the implications on tax payable as a result.
Government Regulation No. 16 of 2009 stipulates that the income in the form of bond interest received by a mutual fund taxpayer that is registered with the Bapepam and the Financial Institutions is subject to final tax. The income tax payable as set out in Minister of Finance Regulation effective May 2011, is as follows:
1. 0%, from 2009 until 2010
2. 5%, from 2011 until 2014
3. 15%, from 2014 onwards
Until 2010, the interest income on bonds received by a mutual fund is not subject to income tax. However, starting 1 January 2011, income in the form of bonds received by a mutual fund is subject to income tax at a rate of 5%. It will service well for taxpayers who are interested to invest in mutual fund companies to be aware of this.
Your Taxand contact for further queries is:
T. +62 21 8399 9919