A. Legal Basis
The legal sources underlying these tax guidelines are as follows:
(i)	Law Number 7 of 1983 concerning Income Taxes as amended by Law Number 6 of 2023 (Income Tax Law);
(ii)	Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 (Banking Law);
(iii)	Government of the Republic of Indonesia Regulation Number 91 of 2021 concerning Income Tax on Income in the Form of Bond Interests Received or Accrued by Resident Taxpayers and Permanent Establishments (Gov. Reg. 91/2021);
(iv)	Minister of Finance Regulation of the Republic of Indonesia Number 07/PMK.011/2012 concerning the Amendment to Minister of Finance Regulation Number 85/PMK.03/2011 concerning Procedures for the Withholding, Remittance and Filing of Income Taxes on Bond Interests (MoF Reg. 85/2011 as amended by MoF Reg. 07/2012); and
(v)	Director General of Taxes Regulation Number PER-02/PJ/2019 concerning Procedures for the Filing, Receipt and Management of Tax Returns (PER-02/PJ/2019).

B. Background
Gov. Reg. No. 91/2021 is a government regulation stipulating income tax (PPh) on income in the form of bond interests received or accrued by resident taxpayers (WPDN) and permanent establishments (PEs). The provisions stipulated under Gov. Reg. No. 91/2021 only apply to resident taxpayers and PEs.
Gov. Reg. No. 91/2021 has been enacted based on several considerations. First, to align the policy of reducing Income Tax rates on bond interest income received or accrued by non-resident taxpayers (WPLN), establishing an equal Income Tax burden between bond investors as well as further encouraging the development and deepening of the bond market.
Second, to implement the provisions under Article 4 paragraph (2) of the Income Tax Law that stipulate the Income Tax Treatment of income in the form of bond interests received or accrued by resident taxpayers and PEs.

C. Definitions
Bonds refer to bonds, government bonds and regional bonds with a maturity of more than 12 (twelve) months issued by the government and non-government, including sharia bonds.
On the other hand, bond interests refer to the consideration received or accrued by bondholders in the form of interest, ujrah/fees, profit sharing, margin, other similar income and/or discounts.
Pursuant to Article 1 Number 1 of the Banking Law, banking is anything related to banks, comprising the institutions, business as well as procedures and processes in the realization of such business.
Pursuant to Article 1 Number 2 of the Banking Law, a bank is a business entity mobilising funds from the public in the form of deposits and channeling them to the public in the forms of credit and/or other forms to improve the living standards of the common people.

D. Tax Treatment
D.1	Income Tax Treatment
	D.1.1	Income Tax Objects
		Pursuant to Article 4 paragraph (2) of the Income Tax Law, income in the form of bond interests received or accrued by bank taxpayers established in Indonesia and branches of foreign banks in Indonesia are Income Tax objects subject to Income Tax based on statutory rates pursuant to the Income Tax Law.
	D.1.2	Income Tax Calculation
		Income in the form of bond interests received and/or accrued by bank taxpayers in Indonesia and branches of foreign banks in Indonesia is subject to Income Tax based on statutory rates pursuant to the Income Tax Law.
		Income Tax based on statutory rates pursuant to the Income Tax Law is the calculation of Income Tax by calculating taxable income pursuant to the provisions under the Income Tax Law. The calculation applies the Income Tax rate for resident corporate taxpayers and PEs as stipulated in the Income Tax Law of 22%.
	D.1.3	Filing of the Annual Income Tax Return
		Income Tax object in the form of bond interests received and/or accrued by bank taxpayers established in Indonesia and branches of foreign banks in Indonesia in one tax year is filed using the Annual Income Tax Return.
		Tax Returns may be filed through:
		(i)	e-Filing;
		(ii)	directly;
		(iii)	post with proof of postage; or
		(iv)	a forwarder or courier service company with proof of postage.
		The filing deadline for the Annual Income Tax Return for corporate taxpayers is no later than 4 (four) months after the end of the tax year.
	D.1.4	Sample Case
		On 1 July 2021, PT AAA issued interest-bearing bonds as follows:
		(i)	par value of IDR12,000,000.00 per bond
		(ii)	the term of the bonds is 5 years (due on 1 July 2027)
		(iii)	fixed interest is 16% per year, interest is due every 30 June and 31 December
		PT Bank Sejahtera (the investor, resident corporate taxpayer and established in Indonesia) purchased 10 bonds.
		Based on the above case, the following is the Income Tax treatment:
		(i)	When providing or paying bond interests, PT AAA does not withhold final Income Tax on bond interest income received and/or accrued by PT Bank Sejahtera;
		(ii)	PT Bank Sejahtera calculates Income Tax on the bond interest income from PT AAA as income subject to Income Tax based on statutory rates pursuant to the Income Tax Law; and
		(iii)	PT Bank Sejahtera files bond interest income from PT AAA on the Annual Income Tax Return according to the tax year the bond interest is received or accrued.

E. Ketentuan Khusus
Currently, there are no specific provisions related to bond interests received and/or accrued by bank taxpayers established in Indonesia and branches of foreign banks in Indonesia.

Payments of Bond Interests to Bank Taxpayers in Indonesia and Branches of Foreign Banks in Indonesia