Permanent Establishment (PE / BUT)
A Permanent Establishment (PE / BUT) is the form of business used by non-resident individuals or foreign entities to conduct business activities in Indonesia. Governed by Article 2 paragraph (5) of the Income Tax Law. Examples include: representative offices, management offices, foreign company branches, workshops, warehouses, and dependent agents. A BUT is treated as a domestic corporate taxpayer, subject to PPh Badan on Indonesia-source income.
This article is for education, not tax advice.
Example
Japanese company XYZ opens a representative office in Jakarta for contract negotiations for more than 183 days. This office is classified as a BUT and must pay PPh Badan on Indonesia-source income.
Source: Article 2 paragraph (5) UU PPh No. 36/2008
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