Opex vs capex: operating expenditure vs capital expenditure

Published Wednesday 30 September 2026

Table of contents

• What is opex?
• What is capex?
• Key differences between opex and capex
• How to categorise expenses as opex or capex
• Opex vs capex vs COGS
• Tax treatment of opex and capex in Indonesia
• Budgeting for opex and capex
• Benefits and drawbacks of opex and capex
• Track opex and capex with Xero
• FAQs on opex vs capex
• Related terms
• Learn more about opex vs capex

Key takeaways

• Opex covers the everyday costs of running your business, while capex buys assets that keep working for you for more than 1 year.
• Opex reduces profit in the year you spend it, but capex sits on your balance sheet and becomes an expense gradually through depreciation.
• Indonesian tax rules require you to depreciate most business assets over 4, 8, 16 or 20 years, whatever the purchase price.
• If you pay the 0.5% final tax on turnover, your opex and capex split won’t change your tax bill. It still shapes your accounts and decisions.

What is opex?

Operating expenditure (opex) is the money you spend to keep your business running day to day. When you compare opex vs capex, opex is the short-term side: costs you use up within the year.

Opex excludes the cost of goods sold (COGS), which covers the direct costs of making or buying what you sell. Opex appears as an expense on your profit and loss statement and in the operating activities section of your cash flow statement.

Think of opex as the fuel that keeps your business moving. Your monthly electricity bill is opex: once the month is over, you’ve used it up and you pay again.

Common opex examples

Most small businesses pay a similar set of running costs every month or year. These are the typical ones:

• Staff wages and salaries
• Rent for your office, shop or warehouse
• Electricity, water and internet bills
• Business insurance premiums
• Marketing and advertising
• Software subscriptions
• Accounting and legal fees

What is capex?

Capital expenditure (capex) is money you spend buying, upgrading or extending assets that benefit your business for more than 1 year. You record the asset on your balance sheet instead of expensing the full cost at once.

You then spread the cost over the asset’s useful life through depreciation, known locally as penyusutan. Capex payments appear in the investing activities section of your cash flow statement.

If opex is the fuel, capex is the vehicle. Buying a Rp350 million delivery van is capex because it’ll carry your stock for several years.

Types of capex

Capex usually falls into two groups. The difference is whether you’re keeping what you have or adding something new.

• Maintenance capex, which replaces or upgrades existing assets to keep your current operations going
• Growth capex, which adds new assets so you can expand, such as a second outlet or an extra production line

Common capex examples

Capex covers anything your business will use across several years. Common examples include:

• Vehicles such as vans, trucks and motorbikes
• Machinery and production equipment
• IT hardware such as computers, laptops and servers
• Office furniture and shop fit-outs
• Land and buildings
• Software you buy outright

Key differences between opex and capex

The main difference is timing: opex pays for what you use up within a year, while capex buys assets that last longer. That timing shapes how each cost affects your profit and where it appears in your reports.

Time horizon

Opex delivers value in the current period, so you pay it again and again. Rent and wages come back every month.

Capex delivers value over several years. A Rp60 million espresso machine for your café might keep making coffee for many years after you buy it.

Impact on profit

Opex reduces your profit in full in the period you spend it. If you spend Rp50 million on marketing this year, your profit falls by Rp50 million this year.

Capex reduces profit gradually. A Rp80 million machine depreciated evenly over 8 years cuts profit by Rp10 million a year. That matches the cost to the years the machine earns for you.

Flexibility and planning

Opex is usually easier to adjust. You can pause a marketing campaign or cancel a subscription at short notice as your needs change.

Capex needs more planning because you commit a large sum upfront. Once you’ve bought a machine, your money stays tied up in it until the asset pays for itself or you sell it.

How they appear on financial statements

Opex and capex land in different parts of your financial statements. Opex shows as an expense on your profit and loss statement, while capex shows as an asset on your balance sheet.

Each year, depreciation moves part of the asset’s cost to your profit and loss. The running total builds up as accumulated depreciation, and the asset’s book value falls by the same amount.

In Indonesia, Statement of Financial Accounting Standards (PSAK) 216 on property, plant and equipment covers how you account for fixed assets. It was PSAK 16 until the standards were renumbered from 1 January 2024. Smaller businesses may use SAK EMKM, the simplified standard for micro, small and medium entities, or SAK EP for private entities.

How to categorise expenses as opex or capex

The simplest way to categorise a cost is to ask how long it’ll benefit your business. Under Minister of Finance Regulation PMK 72/2023, tangible assets with a useful life of more than 1 year must be depreciated, whatever they cost.

Ask these questions about each purchase:

• Will it benefit your business for more than 1 year?
• Is it an asset you own and control, such as equipment or a building?
• Does it add to, improve or extend the life of an asset you already have?
• Is it used up in the normal course of trading, like stationery or fuel?

A yes to any of the first three questions points to capex. A yes to the last one points to opex.

Common grey areas

Some costs sit on the line between the two categories. Here’s how to handle four of the trickiest.

Repairs and improvements look similar but are treated differently. Routine repairs that keep an asset working as before, such as servicing a van, are opex. Work that adds to, improves or alters an asset and benefits you for more than 1 year, such as a new shopfront, is capex.

Laptops are capex because they last several years. A Rp15 million laptop goes on your balance sheet and is depreciated, however cheap it seems next to a van.

Salaries are opex, even when your team spends time on a big project. If staff help install or build an asset, ask your accountant whether part of that cost belongs in the asset’s value.

Software depends on how you pay for it. Monthly or annual subscriptions are opex, while software you buy outright is usually capex.

Opex vs capex vs COGS

COGS is a third category that sits next to opex and capex. It covers the direct costs of producing or buying the goods you sell, such as raw materials.

A batik maker, for example, records fabric and dye as COGS, workshop rent as opex and a new printing machine as capex. COGS comes off revenue first to give gross profit, and opex and tax then come off gross profit to leave net profit.

Tax treatment of opex and capex in Indonesia

How you categorise spending decides when you can claim it against your taxable income. Opex is generally deductible in the year you incur it, while capex is claimed gradually through depreciation. Indonesia’s tax year follows the calendar year unless you use a different accounting year.

Deducting opex

Under Pasal 6 of the Income Tax Law (UU PPh), taxable income is gross income minus the costs of earning, collecting and maintaining that income. This is often called the 3M test, from the Indonesian words mendapatkan, menagih and memelihara.

Most opex, such as rent and staff wages, passes this test and counts as a tax deduction in the year you spend it. If you pay Rp120 million in rent during 2026, you can claim the full amount against your 2026 taxable income.

Depreciating capex

Capex is claimed over time instead. PMK 72/2023 sorts non-building assets into four groups, each with a fixed useful life and a choice of straight-line or declining-balance rates:

• Group 1 over 4 years, at 25% straight-line or 50% declining balance
• Group 2 over 8 years, at 12.5% straight-line or 25% declining balance
• Group 3 over 16 years, at 6.25% straight-line or 12.5% declining balance
• Group 4 over 20 years, at 5% straight-line or 10% declining balance

Buildings follow separate rules and use the straight-line method only. Permanent buildings are depreciated over 20 years at 5% a year, and non-permanent buildings over 10 years at 10%.

Laptops and computers sit in Group 1. Using straight-line depreciation, a Rp15 million laptop gives you a Rp3.75 million deduction each year for 4 years.

Indonesia doesn’t offer an instant asset write-off, so these schedules apply whatever the purchase price. The only item you can expense at once is general-purpose application software, such as off-the-shelf office programs.

When the 0.5% final tax applies

Some small businesses pay a 0.5% final tax on turnover instead of income tax on profit. Because the tax is worked out from turnover, your opex and capex split doesn’t change the amount you pay.

Government Regulation PP 20/2026 narrowed eligibility from 22 April 2026. The 0.5% rate now applies to individuals, single-founder perseroan perorangan and, for a limited time, cooperatives with turnover up to Rp4.8 billion a year. Individuals also pay no tax on their first Rp500 million of turnover each year.

Newly registered limited liability companies (PT), limited partnerships (CV) and firma follow the normal rules. They pay 22% corporate income tax on profit, with a 50% Pasal 31E discount for businesses with turnover up to Rp50 billion.

That discount applies to taxable income from the first Rp4.8 billion of turnover. Under these rules, the opex and capex split directly affects your tax bill, so check your situation with an accountant or tax adviser.

Budgeting for opex and capex

Separating opex and capex in your budget helps you plan cash for regular bills and bigger purchases. Each one needs a different approach.

Budgeting for opex

Start with your regular overheads, such as rent and wages, then add costs that change month to month. Look at last year’s figures to spot seasonal swings, such as busier months around Lebaran.

Compare actual spending with your budget each month. Small overspends add up quickly when they repeat every period.

Budgeting for capex

List the assets you’ll need to buy or replace over the next few years, with expected costs and timing. Then build them into a cash flow forecast so the money is ready when each purchase falls due.

Weigh each purchase against the return it should bring. A new oven that doubles your bakery’s output may pay for itself quickly, while a nice-to-have upgrade can wait.

Considering capex-to-opex strategies

Leasing or subscribing lets you spread payments instead of paying a large sum upfront. That keeps more cash free for daily needs.

In your accounts, PSAK 116 on leases (formerly PSAK 73) means most leases still create a right-of-use asset on your balance sheet. Short-term leases of 12 months or less and leases of low-value assets can be expensed as you pay them.

For tax, withholding and depreciation rules depend on the type of lease and the asset. Ask your accountant how a specific lease should be treated before you sign.

Benefits and drawbacks of opex and capex

Both types of spending come with trade-offs. Knowing them helps you choose between buying and leasing.

Opex works well when you want to stay flexible. Its main benefits are:

• Lower upfront cost, which keeps cash free for daily needs
• A full deduction in the year you spend it, if you’re taxed on profit

The trade-off is paying for something you don’t keep. Its main drawbacks are:

• Ongoing payments that add up over time
• Nothing to show on your balance sheet at the end

Capex suits equipment you’ll rely on for years. Its main benefits are:

• Ownership of an asset that adds value to your balance sheet
• Often a lower total cost for equipment you’ll use for a long time

Buying outright asks more of your cash up front. Its main drawbacks are:

• A large payment that ties up cash
• Tax deductions spread over 4–20 years

Track opex and capex with Xero

Getting opex and capex right gives you accurate profit figures and fewer surprises at tax time. Good records also make budgeting for your next big purchase much easier.

Bank feeds bring your everyday expenses into Xero so you can code them quickly, and fixed asset tracking calculates depreciation for you. Real-time reports show how both types of spending affect your profit and cash flow. Start today and get one month free to keep your spending organised with less manual admin.

FAQs on opex vs capex

Here are quick answers to common questions about opex vs capex.

Is depreciation opex or capex?

Depreciation is how capex becomes an expense over time, and it involves no new cash payment. If a permanent building will last beyond 20 years, you can depreciate it over its actual life by notifying the tax office.

Are salaries opex or capex?

Salaries are opex and are generally deductible because they help you earn income. Wages for staff who make your products may sit in COGS instead, which affects your gross profit.

Is a laptop opex or capex in Indonesia?

A laptop is capex and falls into tax Group 1. Using the 50% declining-balance rate, a Rp15 million laptop gives a Rp7.5 million deduction in year 1 and Rp3.75 million in year 2.

Is software opex or capex?

Subscriptions, including cloud accounting software, are opex because you pay for access. For tax, the cost of upgrading general-purpose software is also expensed in the year, while other software you own outright is amortised.

Can you convert capex to opex?

Often, yes, by leasing or subscribing instead of buying.

Are operating expenses tax-deductible in Indonesia?

Yes, most are, as long as they relate to earning, collecting or maintaining your business income. Companies with a calendar tax year claim them in the annual corporate tax return (SPT Tahunan Badan), due by 30 April.

Related terms

• Capital expenditure
• Fixed assets
• Assets
• Amortisation
• Cash flow
• Working capital

Learn more about opex vs capex

• Cost of sales
• Cost of goods sold guide
• Double-entry bookkeeping
• Writing a business plan
• Financial reports in Xero