balivillacareA PT PMA's income tax on a villa: which rate, and why not 10%
Key takeaways
- A villa let night by night is lodging. PP No. 34 Tahun 2017 Pasal 2(3) takes lodging out of the 10% final tax on rent, and the regional tax law names villas as hotel services.
- So a PT PMA's villa income is business income: 22% of taxable profit, with half the rate on the first IDR 4.8 billion for a company turning over up to IDR 50 billion.
- Or, if eligible, 0.5% of gross turnover as final tax under PP 55/2022 — for at most three tax years for a PT.
- The 10% final rate applies where the PT receives rent — for instance by leasing the villa to an operator.
- The PT also withholds 2% from the manager's fee, and pays VAT on it if the manager is registered.
Most guides give a villa company's income tax as a flat 10% of gross rent. The regulation that sets that 10% excludes the one thing a nightly-let villa does. What a PT PMA actually owes depends on how long it has been registered, how much it turns over, and whether it rents out a house or runs lodging.
Seven terms on a villa company's tax file
The words that decide which rate applies.
| Term | What it is | What it means for a PT PMA |
|---|---|---|
| PPh Badan | Corporate income tax. | 22% of taxable profit. |
| Pasal 31E | The small-company rate cut. | Half the rate on profit from the first IDR 4.8bn of turnover. |
| PP 55/2022 | The 0.5% turnover tax. | Optional, for at most 3 tax years for a PT. |
| Peredaran bruto | Gross turnover. | The base of the 0.5%, before any cost. |
| PPh final on rent | 10% on letting land or buildings. | Not for nightly lodging: PP 34/2017 Pasal 2(3). |
| Jasa perhotelan | Hotel services, for the regional tax. | Villas are named (UU 1/2022 Pasal 53). |
| PPh 23 | Withholding on service fees. | The PT withholds 2% from the manager's fee. |
Why the 10% final tax on rent does not apply
PP No. 34 Tahun 2017 charges a final 10% on income from letting land and buildings. Its Pasal 2(3): that income does not include “penghasilan yang diterima atau diperoleh dari jasa pelayanan penginapan beserta akomodasinya” — income from lodging services along with their accommodation. The elucidation's examples are rooms, student dormitories, workers' hostels and boarding houses.
The regulation does not name villas. UU No. 1 Tahun 2022 Pasal 53(1) does, listing vila among the providers of hotel services — accommodation — alongside hotels, hostels and pondok wisata. A PT PMA licensed for villa accommodation and letting it by the night is supplying lodging. That is our reading of the two texts together.
The two rates that do apply
Corporate income tax, 22% of profit
A resident company pays 22% of its taxable income from tax year 2022 (UU PPh Pasal 17(1)(b), as amended by UU No. 7 Tahun 2021). Taxable income is revenue less deductible costs — the management fee, staff, utilities, maintenance, depreciation.
Pasal 31E halves the rate on the part of taxable income that comes from the first IDR 4.8 billion of turnover, for a company with gross turnover up to IDR 50 billion. For most single-villa companies, that covers all of it.
The 0.5% turnover tax under PP 55/2022
PP No. 55 Tahun 2022 lets resident taxpayers with gross turnover up to IDR 4.8 billion a year pay a final 0.5% of gross turnover instead (Pasal 56-57). Limited companies are covered by name; foreign-owned ones are not excluded by name. Excluded are companies with certain tax facilities and permanent establishments, and a company that elects normal rates cannot return (Pasal 57(2)-(4)).
For a PT the 0.5% runs for at most 3 tax years (Pasal 59(1)(c)), counted from the year it registered. A PT PMA set up years ago may already be past it.
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The same turnover, three ways
An illustration of the arithmetic, not any company's figures: a PT PMA whose villa turns over IDR 2,000,000,000 in a year.
| Tax | Rule | |
|---|---|---|
| 10% final on rent — the figure usually quoted | IDR 200,000,000 | Does not apply to lodging, PP 34/2017 Pasal 2(3) |
| 0.5% of turnover, within PP 55's three years | IDR 10,000,000 | PP 55/2022, Pasal 56 and 59 |
| 22% of profit, with Pasal 31E | 11% of taxable profit on this turnover | UU PPh Pasal 17(1)(b), 31E |
Because Pasal 31E halves the 22% on profit from the first IDR 4.8 billion of turnover, a company of this size pays an effective 11% of its taxable profit. On IDR 600 million of profit that is IDR 66 million; on a loss, nothing. The 10% final rate would have been IDR 200 million whatever the costs.
Choosing between 0.5% and 22%
The two work in opposite directions. The 0.5% is charged on turnover, so it is owed in a year the villa loses money; the 22% is charged on profit, so a loss year owes nothing and depreciation and the management fee reduce it. A villa company with thin margins can pay more under the turnover tax than under the profit tax. The choice is one-way: a company that notifies the tax office that it is choosing normal rates cannot come back to PP 55 in later years (Pasal 57(3)-(4)). And the three years run from registration whether or not the company used them.
Where 10% and 2% still come in
Rent received
If the PT leases the villa to an operator and receives rent, that is letting a building, and the 10% final tax applies to the gross rent. A company tenant withholds it (PP 34/2017, Pasal 3). Leasing a villa to an operator.
Rent paid
If the PT pays rent — a land lease, for example — it withholds 10% from the landlord as a corporate tenant. Leasehold and the tax on the rent.
What the PT withholds from its manager
A resident company withholds 2% of the gross fee for management services (Pasal 23) and pays VAT on the fee if the manager is VAT-registered. Tax on the management fee.
What this page does not cover
- Dividends to the foreign shareholder. Treaty-dependent; not read.
- Monthly installments and filing deadlines. Not read here.
- Whether a given PT is inside PP 55's three years. Depends on its registration.
- Whether a PT PMA may hold the villa license at all. A separate question.
Common questions
What income tax does a PT PMA pay on villa rental income?
Nightly villa income is lodging, which PP No. 34 Tahun 2017 Pasal 2(3) keeps out of the 10% final tax on rent. It is business income: 22% of taxable profit (UU PPh Pasal 17, as amended by UU 7/2021), with half the rate on the profit from the first IDR 4.8 billion of turnover for a company turning over up to IDR 50 billion (Pasal 31E) — or 0.5% of turnover under PP 55/2022 if eligible.
Can a PT PMA use the 0.5% small business tax?
PP No. 55 Tahun 2022 covers limited companies with gross turnover up to IDR 4.8 billion a year and does not exclude foreign-owned ones by name; it excludes companies with certain tax facilities and permanent establishments. For a PT the 0.5% runs for at most 3 tax years from registration, and a company that elects normal rates cannot go back.
Is the 10% final tax on rent wrong for a villa company?
For nightly letting, the regulation that sets it says it does not include income from lodging services. It is right for rent — for example a PT that leases its villa to an operator and receives a fixed rent.
Is the 22% on revenue or on profit?
On taxable profit: revenue less deductible costs, including the management fee, staff, utilities and depreciation. That is the difference from a final tax, which is charged on gross.
Does the PT also withhold tax on the management fee?
Yes. A resident company withholds 2% of the gross fee for management services under Pasal 23, and pays VAT on the fee if the manager is VAT-registered.
Sources cited on this page
- PP No. 34 Tahun 2017 — Pasal 2(3) and elucidation, lodging excluded
- UU No. 1 Tahun 2022 — Pasal 53, villas as hotel services
- PP No. 55 Tahun 2022 — Pasal 56-60, 0.5% of turnover
- UU No. 7 Tahun 2021 (HPP) — Pasal 17 income tax rates
- UU No. 36 Tahun 2008 — Pasal 31E
Every figure above was read from the source it is attributed to on 20 September 2026. How we check this.