Updated 24 October 2026. This guide provides general information; the correct treatment depends on your company, the recipient’s tax residence and the transaction.
Your Lombok business is earning money, and you want to receive some of it personally. Perhaps you manage a restaurant, own shares in a villa company, or previously lent money to a tourism business.
The first question is straightforward: what is the company paying you for?
Salary rewards work. Dividends distribute profits. Reimbursements settle business expenses. Loan repayments return money genuinely borrowed. Each has different documentation, accounting and tax consequences.
Understanding those differences makes profit repatriation from Indonesia easier to manage—and helps prevent legitimate payments becoming unexplained shareholder withdrawals.
Company money is separate from your personal money
Owning a PT PMA does not make every rupiah in its bank account available for personal spending.
A villa company’s bank balance might include guest deposits, shareholder funding and money needed for contractors or taxes. A restaurant’s daily takings still need to cover suppliers, wages and operating costs.
Before making a payment to yourself, establish:
- The legal reason for the payment.
- The supporting documents and approvals.
- The accounting entry.
- Any withholding or personal tax obligations.
- Whether the business can afford the payment.
Avoid using “owner’s drawings” as a catch-all category. A limited company needs a defensible explanation for transfers to its shareholders.
Compare the main payment options
| Payment | What it represents | Company accounting and tax | Main documents and approvals | Recipient tax or withholding |
|---|---|---|---|---|
| Salary | Payment for genuine employment | Employment expense; deductibility depends on applicable rules | Employment terms, payroll and authorised remuneration | Generally Article 21 for resident individuals; Article 26 may apply to nonresidents |
| Director fees | Remuneration for the director’s role | Remuneration expense, subject to reasonableness and deductibility rules | Appointment, remuneration approval and payment records | Treatment depends on residence, payment arrangement and treaty |
| Dividends | Distribution of shareholder profits | Reduces retained earnings; not a deductible operating expense | Accounts, profit assessment and appropriate corporate resolution | Nonresident dividends generally attract Article 26; resident rules differ |
| Reimbursements | Repayment of genuine company expenses advanced personally | Settles a payable; underlying cost is recorded separately | Receipts, business purpose, claim and approval | Genuine reimbursement differs from remuneration; classification matters |
| Shareholder-loan repayments | Return of an actual outstanding debt | Reduces the loan liability; principal is not an expense | Loan agreement, original funding evidence and repayment ledger | Genuine principal is distinct from taxable interest |
The table is a starting point. Calling a transfer “reimbursement” or “director fee” does not determine its treatment if the underlying facts tell a different story.
Salary versus dividends: payment for work or ownership?
Salary pays for an actual role
A shareholder who genuinely works for the company may receive remuneration for that work.
For example, a foreign shareholder managing a restaurant in Senggigi might oversee purchasing, recruitment and daily operations. Document the role, compensation and payment schedule.
For Indonesian tax-resident individuals, employment withholding generally falls under Article 21. PMK 168/2023 governs the relevant withholding framework; payroll calculations depend on the recipient’s category and circumstances. Nonresident employment income may instead fall under Article 26, subject to treaty provisions.
Do not assume the salary is tax-free because it reaches an overseas account. Also have advisers confirm that the person’s immigration and work arrangements permit the actual activities performed.
Dividends reward share ownership
Dividends do not require the shareholder to work in the business. They require a lawful profit distribution.
A passive investor in a Lombok villa company may receive dividends without receiving a salary. An active shareholder may receive both, provided each payment has its own justification.
Salary can potentially reduce taxable business profit when properly deductible. Dividends distribute profits and are not deductible remuneration. However, businesses subject to final taxation cannot assume additional salary expenses will reduce tax calculated on gross income.
Choose remuneration around genuine responsibilities, commercial reasonableness and cash flow—not simply whichever label appears to produce less tax.
Director remuneration needs proper approval
A director salary in Indonesia should reflect the person’s actual corporate responsibilities.
Under Article 96 of the Company Law, shareholders determine directors’ salary and allowances through the general meeting, known as the RUPS. That authority may be delegated to the board of commissioners.
Keep the remuneration decision with the director’s appointment records. Specify whether compensation includes a monthly amount, bonus, allowances or benefits.
For a consulting PT PMA, this might mean a documented monthly payment to the director responsible for managing staff and client delivery.
An overseas director requires additional care. Treaty provisions concerning directors’ fees can differ from ordinary employment provisions. Working outside Indonesia does not automatically eliminate Indonesian taxing rights.
Avoid paying a director through an invented consulting invoice merely to bypass the remuneration process.
When can a PT PMA distribute dividends?
Establish distributable profits first
Articles 70–71 of the Company Law require positive retained earnings and a reserve allocation until the statutory reserve reaches at least 20% of issued and paid-up capital. RUPS determines the use of profits. The 20% figure is a reserve target, not an automatic annual deduction of 20% of profit.
Previous losses matter. This year’s profit may still leave accumulated earnings negative. Conversely, retained earnings can include undistributed profits from earlier years. The Company Law’s explanation specifically addresses these situations.
Retained earnings are an accounting balance, not a separate pot of cash. They may already be represented by buildings, equipment or receivables.
Follow a documented distribution process
A practical workflow for PT PMA dividends is:
- Finalise reliable accounts, including taxes and outstanding liabilities.
- Confirm distributable earnings and required reserves.
- Check the articles, shareholder rights and financing restrictions.
- Obtain the appropriate profit-distribution resolution.
- Calculate each shareholder’s entitlement and applicable tax.
- Record the dividend payable, process payment and retain the evidence.
Have your accountant and corporate adviser review the proposed distribution before announcing a payment date.
Interim dividends have additional conditions
Interim dividends require permission in the articles, sufficient net assets, protection of creditors and operations, and a directors’ decision approved by commissioners. They must be returned if the company subsequently records a year-end loss; directors and commissioners can face liability if recovery fails.
Monthly transfers should therefore not be casually described as “advance dividends.”
Reimbursements: return genuine business spending
Suppose you personally purchase replacement equipment for the company’s dive operation while its payment card is unavailable.
A reimbursement file should contain:
- The supplier invoice and payment evidence.
- An explanation of the business purpose.
- An expense claim and authorised approval.
- The accounting record showing what the company owes you.
The company records the underlying asset or expense and settles the payable. It should not record the same cost again when reimbursing you.
Personal holidays, family groceries and private household bills do not become business reimbursements because the company transfers the money.
Mixed expenses need a reasonable allocation. Flat allowances, markups and payments lacking supporting evidence may require a different tax treatment.
Other legitimate payments and distributions
A shareholder may also receive payment for genuinely supplied goods, rented assets or services. These require real contracts, commercial pricing, evidence of performance and the correct tax treatment.
Related-party payments deserve particular scrutiny. A “management fee” with no identifiable service is a weak explanation for moving profits overseas.
Capital reductions, share buybacks and liquidation distributions are separate corporate transactions. They can involve creditor protections, formal approvals and their own tax consequences. Obtain transaction-specific advice instead of treating them as substitutes for ordinary dividends.
How to transfer legitimate payments overseas
For owners wanting to repatriate profits from Indonesia, prepare the payment file before instructing the bank.
A useful checklist includes:
- Company identification and authorised signatories.
- Recipient name, account number and bank routing details.
- Dividend resolution, remuneration records or loan documents.
- Relevant accounts and payment calculations.
- Withholding calculation, treaty evidence and tax records as applicable.
- Clear transaction purpose and currency instructions.
Bank Mandiri’s remittance guidance requires complete beneficiary information and provides for additional supporting documents. Requirements vary with the transaction and banking channel, so obtain the company bank’s current checklist.
Foreign exchange is a separate consideration
Buying foreign currency and transferring it overseas are related but distinct transactions.
Under BI’s PADG 15/2026, cash purchases of foreign currency against rupiah above USD10,000 equivalent per month per market participant require an underlying transaction. This is a documentation threshold, not a general ban on larger lawful remittances.
Confirm the exchange rate, conversion spread, correspondent-bank fees and expected net receipt. Keep bank confirmations and reconcile exchange differences in the accounts.
Do not split payments to evade documentation requirements.
Common mistakes that create avoidable problems
The riskiest approach to taking money out of a PT PMA is deciding the explanation after making the transfer.
Watch for:
- Treating company revenue as personal income.
- Paying private expenses from the company account.
- Withdrawing cash without receipts or approval.
- Declaring dividends before establishing distributable profits.
- Calling withdrawals loan repayments without an actual debt.
- Assuming overseas payment removes Indonesian tax.
- Applying treaty relief without valid supporting evidence.
For a seasonal Lombok business, forecast payroll, tax, maintenance and low-season expenses before distributing cash. A profitable year does not guarantee the company can comfortably fund a large immediate payment.
FAQ
Can I receive both salary and dividends?
Yes, where salary reflects genuine work and dividends meet the separate profit-distribution requirements. Document and account for them separately.
Can dividends go directly to my overseas bank account?
Generally, legitimate dividends can be remitted overseas after addressing corporate approval, tax and bank-documentation requirements. Confirm the proposed route with the company bank.
Is loan principal taxable like a dividend?
Genuine repayment of outstanding principal is different from income. Interest and other associated payments require separate tax analysis.
Can I take money now and classify it later?
Avoid doing so. Establish the payment’s purpose, approval and tax treatment first. If unexplained withdrawals already exist, have your accountant review and correct them without inventing supporting transactions.
Sources / Further Reading
- PMK 168/2023 — Employment income withholding framework
- Company Law (Law 40/2007) — Director remuneration, reserves and dividends (Articles 96 and 70–72)
- Company Law explanatory provisions — Retained earnings and profit distributions
- DJP — Article 26 withholding tax on nonresident income
- PMK 112/2025 — Tax treaty application procedures
- DJP — Domestic dividend exemption and investment requirements
- Bank Mandiri — Foreign currency transfer terms and supporting documents
- Bank Indonesia PADG 15/2026 — Underlying transaction requirements for foreign currency purchases