Indonesian Government to Reduce Taxes on Book Authors’ Royalties

Creative Economy Minister Teuku Riefky Harsya announced that the draft regulation has received preliminary approval from President Prabowo Subianto and is currently in the harmonization process. The proposal has also involved significant public participation prior to this stage.

If implemented, the final income tax on royalty income for book authors would drop to 1.5 percent from the current 15 percent. Under this scheme, publishers would be responsible for withholding the tax, thus fulfilling authors’ tax obligations directly from their royalties.

Authors will report their royalty income in annual tax returns without recalculating it under progressive tax rates. However, this incentive will only be available to authors whose works have an official International Standard Book Number (ISBN).

The government aims for this tax reduction to enhance tax certainty, improve the welfare of authors, and stimulate productivity and growth within the publishing sector. This tax incentive is a component of the second phase of the government’s economic stimulus package, which has a budget of Rp26.34 trillion.