Calculate Your Deposit Earnings, Check the Tax Implications

A deposit is one of the investment instruments that offers profits from the interest it provides. Recently, there have been reports that several domestic banks have increased the interest rates on U.S. dollar (USD) deposits.

According to the Financial Services Authority (OJK), a deposit is a type of savings that can only be withdrawn after a certain period, under specific conditions. Similar to a regular savings account, placing your funds in a deposit earns you a return in the form of interest.

The higher the interest or return offered, the more attractive deposits become as a place to park your funds. However, when calculating whether a deposit is profitable, you also need to consider various risks and costs involved.

One key cost of funds that investors need to pay attention to when choosing a deposit is the tax aspect arising from the interest. For tax purposes, deposit interest is considered income and is therefore subject to Income Tax Article 4 paragraph (2), which is final.

Income Tax Rates on Deposit Interest

The Income Tax (ITA) rates on deposit interest are generally differentiated based on several factors, including the purpose, term of the deposit, currency used, and the taxpayer’s status.

Under the Minister of Finance Regulation (PMK) Number 212/PMK.03/2018, ITA rates on deposit interest are set for two categories:

First, deposit interest received by domestic taxpayers, permanent establishments (PEs), and domestic taxpayers under a tax treaty (P3B).

Second, deposit interest derived from Export Proceeds (Devisa Hasil Ekspor/DHE). The ITA rate on DHE-based deposits is lower than non-DHE deposits. This is intended as an incentive to encourage more DHE funds to be deposited domestically.

Deposit Interest for Domestic and Foreign Taxpayers

The interest on deposits for domestic taxpayers and PEs, as well as foreign taxpayers under a tax treaty, is subject to a 20% ITA on the gross amount.

However, this ITA does not apply if a domestic taxpayer’s total annual income does not exceed the non-taxable income threshold (PTKP). This total income already includes interest from deposits.

Another exception is that the final ITA is not withheld on deposits with a principal of no more than IDR 7.5 million.

Deposit Interest from DHE

The Income Tax rate on deposit interest from DHE varies depending on the currency of the deposit: U.S. Dollars or Indonesian Rupiah.

1. Deposit Interest of DHE in U.S. Dollars
The Income Tax rates on DHE deposits in U.S. Dollars are divided into four categories based on the deposit period:

• 10% of the total gross amount for a one-month deposit.
• 7.5% of the total gross amount for a three-month deposit.
• 2.5% of the total gross amount for a six-month deposit.
• 0% of the total gross amount for deposits longer than six months.

2. Deposit Interest of DHE in IDR

The Income Tax rates on DHE deposits in Rupiah are lower than for U.S. Dollar deposits:

• 7.5% of the total gross amount for a one-month deposit.
• 5% of the total gross amount for a three-month deposit.
• 0% of the total gross amount for deposits of six months or longer.

However, if a DHE deposit is withdrawn before maturity, the taxpayer will be subject to the normal deposit Income Tax rate of 20% of the gross amount. The same applies if part or all of the deposit funds are not from DHE.

Withholding and Payment of Income Tax on Deposit Interest

Income Tax on deposit interest will be withheld and paid to the Directorate General of Taxes (DGT) by the bank that issued the deposit.

For the Income Tax on deposit interest that has been withheld, the bank is required to issue a withholding slip and submit it to the DGT no later than the 15th of the month following the end of the tax period.

If the bank does not withhold the tax, the taxpayer may pay the Income Tax on their deposit interest themselves, no later than the 15th of the following month after the tax period ends.

Referring to the Director General of Taxes Regulation Number PER-11/2025, banks may issue withholding slips for deposit interest using a unified withholding slip format. Such slips can take the form of a passbook, bank statement, securities account statement, trade confirmation, or other proof of securities transfer.

In addition, banks may use other documents treated as equivalent to a withholding slip, provided they include information such as:

• Name and Tax ID Number (NPWP) or National ID (NIK) of the deposit owner
• Unique transaction number related to the income being withheld
• Taxable Base
• Income Tax withheld

Administrative Obligations for Deposit Interest Tax

In addition to the tax rates and calculation methods, taxpayers also need to be aware of administrative tax obligations related to investments in deposit instruments.

Some key administrative matters in taxation include registering for a Taxpayer Identification Number (NPWP) and submitting Periodic Tax Returns (SPT Masa) and Annual Income Tax Returns (SPT Tahunan PPh).

The Periodic Tax Return for Income Tax Article 4 paragraph (2) must be submitted no later than the 20th of the following month after the tax period ends. Reporting of this final Income Tax return is the obligation of the withholding party, not the individual taxpayer.

Meanwhile, the Annual Income Tax Return must be submitted no later than three months after the end of the tax year for individual taxpayers, and four months after the end of the tax year for corporate taxpayers.

For deposit investments, two items can be reported in the annual return. First, the deposit itself is the taxpayer’s asset. Second, the deposit interest is income.

As an asset, the deposit can be reported in the taxpayer’s asset appendix at its year-end balance. As income, the deposit interest can be reported in the column “Income Subject to Final Tax and/or of a Final in Nature".(NZR/ASP/HFZ)