Dividend
Learn what dividends are, how they’re taxed in Indonesia and how PT owners can pay them.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- A dividend is a share of a company’s profit paid to its shareholders, usually in cash but sometimes as extra shares or other assets.
- In Indonesia, resident individuals pay a final tax on dividends unless they reinvest them in Indonesia, while domestic dividends received by resident companies are tax-exempt.
- Key dates on the Indonesia Stock Exchange (IDX), including the cum date and ex date, decide which shareholders receive a dividend and when it’s paid.
- Dividends pay you income while you keep your shares, and capital gains come from selling shares for more than you paid.
What is a dividend
A dividend is a payment a company makes to its shareholders from its profits. When a company earns more than it needs to run and grow, its shareholders can agree to share some of that profit among themselves.
As a small business owner, you might receive dividends from shares you hold in listed companies. You might also pay them to shareholders in your own limited liability company (perseroan terbatas, or PT).
Picture a café run as a PT with three shareholders. After a good year, they can vote to pay part of the profit to themselves, split in proportion to the shares each one holds. Knowing how this works helps you read your financial statements and plan both business and personal finances.
Types of dividends
Companies can share profits with shareholders in several forms. The form a company chooses depends on its financial position and plans.
- Cash dividends are money paid for each share you own
- Stock dividends are extra shares issued to you instead of cash
- Property dividends are non-cash assets, such as goods or shares in a subsidiary
- Special dividends are one-off payments, often made after a strong year or an asset sale
- Interim dividends are paid before the company’s financial year ends
- Final dividends are paid from the full year’s profit after shareholders approve them
For Indonesian tax purposes, bonus shares and profits paid out as shares count as dividends, so the same tax rules apply as for cash dividends.
Why companies pay dividends
Companies pay dividends to reward shareholders and signal financial stability. A consistent dividend history can attract investors who are looking for reliable income from their investments.
Indonesian data supports that signal. A Universitas Indonesia study of non-financial companies listed on the Indonesia Stock Exchange (IDX) over 2002–2016 linked higher dividend payouts to higher future earnings growth.
Implications of issuing dividends
For your own PT, every dividend is a choice between paying profit out and keeping it in the business. Weigh these effects before shareholders vote.
- Dividends reduce your retained earnings, leaving less to reinvest or cover unexpected costs
- Dividends lower the money available for day-to-day cash flow
- Regular dividends set shareholder expectations that you’ll want to keep meeting
- A steady dividend record can make it easier to raise capital from investors later
How dividends are taxed in Indonesia
How a dividend is taxed in Indonesia depends on who receives it. Your PT first pays 22% corporate income tax on its taxable profit, and dividends paid from what’s left are taxed separately.
Resident individuals
As a resident individual, you pay a 10% final income tax (PPh final) on dividends, or nothing if you reinvest them in Indonesia. To keep a dividend tax-free, you need to:
- invest it in Indonesia by the end of the third month after the tax year you received it (March for calendar-year taxpayers)
- hold that investment for at least three tax years
- move the money only into another qualifying investment during that period
- report the investment to the Directorate General of Taxes (DJP)
For any amount you don’t reinvest, you pay the 10% final tax yourself by the 15th of the following month.
Resident companies
If your PT holds shares in another Indonesian company, the dividends it receives are tax-exempt, with no reinvestment condition to meet.
Non-resident shareholders
Shareholders based outside Indonesia pay 20% Article 26 income tax (PPh Pasal 26) on the gross dividend. A lower tax treaty rate can apply when the shareholder provides a valid certificate of domicile.
Dividend rules for Indonesian companies (PT)
Your articles of association and Law No. 40 of 2007 on Limited Liability Companies (UU PT) set the rules for paying dividends from your PT. Under Articles 70 and 71 of the law:
- the general meeting of shareholders (GMS, or RUPS in Indonesian) decides how net profit is used
- your PT can only pay dividends when its retained earnings are positive
- each year, part of net profit goes into a reserve until it reaches at least 20% of issued and paid-up capital
- net profit left after the reserve is paid out as dividends unless the GMS decides otherwise
Retained earnings sit in the equity section of your balance sheet, so check that figure before proposing a dividend.
Interim dividends
An interim dividend lets shareholders share in profit before the financial year closes. Article 72 of UU PT sets these conditions for paying one:
- your articles of association permit interim dividends
- net assets stay at or above issued and paid-up capital plus the mandatory reserve
- the payment leaves your PT able to meet its obligations to creditors
- the board of directors decides, with approval from the board of commissioners
- shareholders must return the dividend if your PT makes a loss for the year
Key dividend dates
On the IDX, a series of dividend dates sets out who is entitled to a payout and when the money arrives. The dates run in this order.
- The company announces the dividend per share and the payment schedule
- The cum date is the last day you can buy shares and still receive the dividend
- The ex date is the next exchange day, when shares start trading without the dividend right
- The recording date follows, when the company confirms which shareholders are entitled
- The payment date comes later, when entitled shareholders receive the dividend
How dividends are calculated
Your dividend depends on the dividend per share the company declares and how many shares you own. Follow these steps to work it out from the company’s profit.
- Start with the company’s net profit for the year
- Multiply net profit by the payout ratio to get the total dividend
- Divide the total dividend by the number of shares on issue to get the dividend per share
- Multiply the dividend per share by the number of shares you own
The last step gives you the basic formula: dividend received = dividend per share × number of shares owned.
The payout ratio in the second step is the share of net profit a company pays out as dividends: total dividends ÷ net profit × 100. Investors also compare dividends using dividend yield, which is the annual dividend per share ÷ share price × 100. For example, a Rp100 dividend on a Rp2.500 share gives a 4% yield.
Dividend calculation example
Here’s how those steps work for PT Waldo Manufacturing, a fictional company. The numbers show how profit flows through to a single shareholder.
PT Waldo Manufacturing makes a net profit of Rp2.000.000.000 for the year. Its GMS agrees to pay out 40% as dividends, giving a total dividend of Rp800.000.000.
The company has 500.000 shares on issue, so the dividend per share is Rp800.000.000 ÷ 500.000 = Rp1.600.
If you own 10.000 shares, your dividend is Rp1.600 × 10.000 = Rp16.000.000.
As a resident individual, you can reinvest the full Rp16.000.000 on time and keep it tax-free. Otherwise, you self-pay the 10% final tax of Rp1.600.000 and keep Rp14.400.000.
Dividends vs capital gains
Dividends and capital gains are two ways to earn a return from shares. They suit different financial goals and risk profiles.
Dividends give you income while you keep your shares, so you get paid without selling anything. That suits investors who want steady cash from their portfolio.
A capital gain is the profit you make when you sell shares for more than you paid. In Indonesia, selling shares on the IDX incurs a 0.1% final tax on the gross sale value, whether or not you make a gain.
Many investors use both approaches. A dividend-paying company can also deliver capital gains if its share price rises over time.
Track dividends and profits with Xero
Paying a dividend from your PT is easier to plan when you can see your profit and retained earnings at a glance. With Xero, you can run up-to-date financial reports before your GMS meets, so you know what the business can afford to pay out.
Your bookkeeping stays organised in one place, and you can share it with your accountant in real time. Explore Xero’s plans and get one month free.
FAQs on dividends
Here are answers to common questions small business owners ask about dividends.
Are dividends an expense for a PT?
Dividends are a distribution of profit to shareholders, so they reduce retained earnings in equity. They stay off the profit and loss statement.
Is a dividend the same as a salary for a PT owner?
A salary pays you for the work you do and is recorded as a business expense. A dividend pays you as a shareholder, out of profit the PT has already earned.
How is a declared dividend recorded before it’s paid?
Once the GMS approves a dividend, record the unpaid amount as a liability, often called dividends payable. The liability clears when you pay shareholders on the payment date.
What’s a good dividend payout ratio?
The right ratio depends on your growth plans and cash needs. A PT that’s expanding may keep most of its profit, while a stable business with steady cash may pay out more.
Do all companies pay dividends?
Many growing companies keep their profits to fund expansion instead of paying dividends. Established companies with steady profits are more likely to pay them regularly.
Related terms
Learn more about dividends
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.