All You Need to Know About Income Tax on Bond Interest

As of April 17, 2025, the Ministry of Finance reported that the outstanding value of government bonds (Surat Berharga Negara/SBN) has surged to IDR 8,019 trillion—an increase of IDR 289 trillion from December 2024, when the figure stood at IDR 7,730 trillion (Kemenkeu, 2025).

Notably, SBN has been dominating the nation’s debt profile over the past two decades, accounting for over 88% of total government debt in 2023 (DPR RI, 2025). The long-term growth in debt levels is illustrated in the following chart:

Government Debt Levels 2010 - 2023

Source: Indonesian House of Representatives, 2025

This reliance on bond financing has triggered a parallel rise in interest payments, as seen in the state budget data published by the Ministry of Finance. The data shows a growing interest-to-revenue ratio over the years:

Interest-to-Revenue Ratio

Source: Indonesian House of Representatives, 2025

While interest costs dipped briefly in 2010 and 2021, payments have climbed steadily overall, peaking sharply during the pandemic in 2020 (DPR RI, 2025). This trend underscores the importance of understanding the tax rules governing interest on bonds.

The taxation of bond interest is governed by the income tax law (Undang-Undang Pajak Penghasilan/PPh Law). According to Article 4 Section 1 Point F of PPh Law, as amended by Law of the Republic of Indonesia Number 7 of 2021 concerning Harmonization of Tax Regulations, any form of income earned domestically or abroad, including interest, premiums, discounts, or compensation related to debt repayment guarantees, is considered taxable income.

Additionally, Article 4 Section 2 Point A of PPh Law classifies interest income from deposits, savings, bonds (including SBN), and cooperative savings as subject to final income tax.

This is further regulated by Government Regulation (Peraturan Pemerintah/PP) Number 16 of 2009 concerning Income Tax on Bond Interest, as amended by PP Number 91 of 2021 concerning Income Tax on Bond Interest Received or Earned by Resident Taxpayers and Permanent Establishments (PEs).

Under this framework, interest income from bonds received or earned by resident taxpayers and PEs is subject to a final income tax of 10%. Previously, the tax was 15% for residents and PEs, and 20% for non-resident taxpayers except PEs.

*The default rate under Article 26 is 20% unless reduced by a tax treaty.

There are three ways to calculate taxable income from bonds. First, the tax base for coupon bonds is the gross interest, prorated based on how long the bond was held. Second, the tax base for discounted coupon bonds is the difference between the selling price/nominal value and acquisition cost (excluding accrued interest). Third, the tax base for zero-coupon bonds is levied on the discount spread (nominal value minus purchase price).

However, certain entities are exempt from final income tax on bond interest. These include pension funds approved by the Ministry of Finance and Indonesian banks or foreign bank branches operating locally.

According to this provision, responsibility for withholding income tax on bond interest falls to several parties. First, the issuers or custodians acting as payment agents. Second, intermediaries such as securities firms, dealers, banks, pension funds, or mutual funds for both interest and discounts. Third, custodians or sub-registries recording ownership transfers.

Nevertheless, for bonds settled via the Bank Indonesia Scripless Securities Settlement System, taxpayers self-report and pay dues directly.
This article reflects tax regulations on bond interest. If you need case-specific advice, Ideatax is ready to assist you.

Read more Article: Stock Exchange Transaction Tax

Legal References:

• Law of the Republic of Indonesia Number 7 of 1983 concerning Income Tax as amended by Law of the Republic of Indonesia Number 7 of 2021 concerning Harmonization of Tax Regulations
• PP Number 16 of 2009 concerning Income Tax on Bond Interest, as amended by PP Number 91 of 2021 concerning Income Tax on Bond Interest Received or Earned by Resident Taxpayers and Permanent Establishments (PEs).

References

• DPR RI. (2025). Kumpulan Analisis Siklus Pembahasan Nota Keuangan dan RAPBN 2024 Mitra Komisi XI. Jakarta: DPR RI.
• Kemenkeu. (2025, Mei 05). Posisi Outstanding Surat Berharga Negara. Retrieved from Direktorat Jenderal Pengelolaan Pembiayaan dan Risiko: https://www.djppr.kemenkeu.go.id/posisisbn