Article 31E for Hotels: Corporate Tax Relief Explained

Article 31E for Hotels: Calculating Corporate Income Tax Relief for Hospitality Businesses

Main topic: Testing Article 31E eligibility and reconciling gross turnover with taxable income.

Full background: Business Tax Administration in Bali: Records and Controls.

Continue according to your needs: Coretax Corporate Tax Returns for Hotels and Villas in Bali and PPh 29 for Hotels and Villas: Calculating and Preparing Payment.

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A hotel operated by a corporate taxpayer does not always pay corporate income tax at an effective rate of 22% on all its taxable income. For resident corporate taxpayers with qualifying gross turnover, Article 31E of the Income Tax Law provides a rate reduction.

However, this relief is often misunderstood. The effective 11% rate is not multiplied directly by hotel turnover. Article 31E applies to taxable income, or Penghasilan Kena Pajak (PKP), attributable to the portion of gross turnover qualifying for the relief.

Article 31E for Hotels: Who Can Use the Relief?

Article 31E of the Income Tax Law provides resident corporate taxpayers with gross turnover of up to IDR 50 billion a 50% reduction in the corporate income tax rate on taxable income attributable to the portion of gross turnover up to IDR 4.8 billion.

The general corporate income tax rate has been 22% since the 2022 tax year. A 50% reduction produces an effective rate of 11% for the portion of taxable income qualifying for Article 31E relief.

The Gross Turnover Limit of IDR 50 Billion

For an initial hotel eligibility review, group annual turnover as follows:

Annual Gross Turnover	Initial Rate Review
Up to IDR 4.8 billion	If the hotel is under the general corporate income tax regime and meets Article 31E requirements, all relevant taxable income can qualify for the effective 11% rate.
Above IDR 4.8 billion and up to IDR 50 billion	A proportion of taxable income qualifies for the effective 11% rate; the remainder is taxed at 22%.
Above IDR 50 billion	Article 31E relief is unavailable. The general corporate income tax rate forms the starting point, subject to any other relief that actually applies.

A June 2026 explanation published on DJP’s website describes these corporate turnover bands. The statutory provisions and applicable tax regime remain the basis for the calculation.

The 11% Rate Is Not Calculated Directly on Turnover

The mistake to avoid is using this formula:

11% × hotel turnover.

That is not how Article 31E works.

Under the general corporate income tax regime, the company first determines net fiscal income and taxable income from its accounts and fiscal reconciliation. The rates are then applied to taxable income according to the portion eligible for relief.

In other words, distinguish these three figures:

gross turnover;
accounting or commercial profit; and
taxable income after fiscal reconciliation.

How Is Article 31E Calculated for a Hotel?

The calculation depends on annual gross turnover.

Turnover Up to IDR 4.8 Billion

DJP’s explanation of corporate income tax rates illustrates that where a corporation’s gross turnover does not exceed IDR 4.8 billion, all taxable income attributable to that turnover can qualify for a rate equal to 50% of the general corporate rate. With a 22% general rate, the effective rate is 11%.

For example, a hotel PT already under the general regime has:

gross turnover: IDR 4,000,000,000; and
taxable income: IDR 600,000,000.

The simplified illustration is:

Income tax payable = 11% × IDR 600,000,000 = IDR 66,000,000.

This example does not yet account for tax credits or other components affecting the annual return’s underpayment or overpayment position.

Turnover Above IDR 4.8 Billion and Up to IDR 50 Billion

Where gross turnover exceeds IDR 4.8 billion but does not exceed IDR 50 billion, relief applies only to taxable income proportionately attributable to the gross turnover portion up to IDR 4.8 billion.

The calculation can be expressed as:

Taxable income qualifying for relief = IDR 4.8 billion ÷ total gross turnover × total taxable income.

The remaining taxable income is subject to the general 22% rate.

Example: Hotel Turnover of IDR 12 Billion and Taxable Income of IDR 2 Billion

Assume PT Hotel Bali has:

gross turnover: IDR 12,000,000,000; and
taxable income: IDR 2,000,000,000.

The taxable income qualifying for relief is:

IDR 4.8 billion ÷ IDR 12 billion × IDR 2 billion = IDR 800,000,000.

Income tax on the qualifying portion is:

11% × IDR 800,000,000 = IDR 88,000,000.

Taxable income not qualifying for relief is:

IDR 2,000,000,000 − IDR 800,000,000 = IDR 1,200,000,000.

Income tax on that portion is:

22% × IDR 1,200,000,000 = IDR 264,000,000.

Total income tax payable before tax credits and other components is:

IDR 88,000,000 + IDR 264,000,000 = IDR 352,000,000.

This example illustrates Article 31E’s proportional mechanism.

What Happens If Hotel Turnover Exceeds IDR 50 Billion?

Article 31E sets a maximum gross turnover of IDR 50 billion for eligibility.

A corporation above that threshold does not receive Article 31E’s effective 11% rate. The general 22% corporate income tax rate applies, subject to any other relief for which the particular taxpayer qualifies.

A hotel approaching the IDR 50 billion threshold should therefore avoid waiting until the final stage of preparing its annual return to identify the applicable rate. Finance needs to accumulate and review gross turnover throughout the year.

Article 31E and 0.5% Final Income Tax After Government Regulation 20 of 2026

Article 31E differs from the 0.5% final income tax scheme for qualifying small businesses.

Final income tax uses gross turnover as its calculation base. Article 31E is a rate concession within the corporate income tax mechanism, which applies rates to taxable income.

Government Regulation 20 of 2026 amends Government Regulation 55 of 2022 on income tax arrangements and changes the scope of taxpayers eligible for the final income tax scheme based on specified gross turnover.

Determine the Tax Regime Before Calculating the Relief

For the 2026 tax year, do not assume that every corporation with turnover below IDR 4.8 billion automatically continues to use 0.5% final income tax or automatically applies Article 31E.

First check:

the legal form of the business;
its registration date and status;
Government Regulation 20 of 2026 and relevant transitional provisions;
whether the company’s income remains within a particular final tax scheme; and
whether the company is already under the general corporate income tax mechanism.

Only after establishing the regime should Article 31E be calculated, where relevant.

Hotel Gross Turnover Is Different from Net OTA Settlements

A hotel’s revenue characteristics are more complex than those of a business with a single sales channel.

Transaction sources can include:

direct bookings;
online travel agents;
corporate accounts;
travel agents;
restaurants and outlets;
spa or additional services;
events; and
other company income.

A net OTA settlement should not automatically be used as gross turnover simply because it is the amount received in the bank account. An OTA may deduct commissions, fees, refunds or adjustments before payment.

Finance should establish this trail:

PMS/reservations → gross bookings → refunds/adjustments → OTA settlements → bank → general ledger → profit and loss statement → fiscal reconciliation.

The OTA reconciliation guide for hotels and villas can help trace transactions from booking to the general ledger.

Article 31E Is Different from Hotel PBJT

Article 31E is a corporate income tax concession within national taxation.

PBJT on hotel services is a local tax obligation on transactions meeting the applicable local tax requirements. The two should not be mixed merely because they arise from the same hotel operations.

The Usman Tax guide to Coretax corporate annual returns for hotels and villas also explains that the corporate income tax return administered by DJP and hotel PBJT administered by local government are separate tax processes.

How Is Article 31E Reported in Coretax?

The official Coretax corporate annual return guidance includes the option Facility Rate under Article 31E paragraph (1) of the Income Tax Law, calculated as 50% × the 22% corporate income tax rate. The associated calculation is reported in Attachment 8: Calculation of the Income Tax Rate Reduction Facility for Resident Corporate Taxpayers under Article 31E paragraph (1).

Prepare the Fiscal Reconciliation Before Opening the Return

Before selecting the rate in Coretax, hotel finance should ensure that:

the profit and loss statement and balance sheet are final;
revenue has been reconciled to PMS, OTA, POS and bank records;
final and non-final income have been recorded correctly;
commercial expenses have been reviewed for tax purposes;
any available fiscal loss carryforwards have been checked;
taxable income is traceable;
total gross turnover for the Article 31E eligibility review has been checked; and
withholding certificates and tax credit records are available.

Coretax is the reporting stage. The system does not replace the need to determine gross turnover and taxable income from correct accounting records.

Mistakes to Avoid

Common mistakes include:

calculating 11% directly on hotel turnover;
assuming every company automatically uses the 22% rate;
assuming turnover below IDR 4.8 billion automatically means 0.5% final income tax;
using Article 31E without establishing the income tax regime after Government Regulation 20 of 2026;
applying 11% to all taxable income when turnover exceeds IDR 4.8 billion;
continuing to use Article 31E when gross turnover exceeds IDR 50 billion;
using net OTA settlements as gross turnover without reconciliation;
equating commercial profit with taxable income;
mixing hotel PBJT with corporate income tax; and
selecting the Coretax rate before completing the fiscal reconciliation.

Conclusion

Article 31E can reduce the corporate income tax rate for resident corporate taxpayers with gross turnover up to IDR 50 billion. With a 22% general corporate rate, the qualifying portion of taxable income is effectively taxed at 11%.

For a hotel with gross turnover up to IDR 4.8 billion that is under the general corporate income tax regime, all relevant taxable income can qualify. If turnover is above IDR 4.8 billion and up to IDR 50 billion, the 11% rate applies only to the taxable income portion proportionately attributable to IDR 4.8 billion of gross turnover; the remainder uses 22%.

Before calculating the relief, establish the applicable income tax regime, especially following Government Regulation 20 of 2026. Then complete the reconciliation of gross turnover, financial statements and taxable income before selecting the facility in the Coretax annual return.

Need to Calculate Article 31E for Your Hotel’s Annual Return?

If hotel gross turnover is around IDR 4.8 billion to IDR 50 billion, an error in determining the taxable income qualifying for relief can directly affect corporate income tax payable. Begin the review with the financial statements, revenue reconciliation and fiscal adjustments before entering figures into Coretax.

Usman Tax provides hotel tax reporting services and accounting services for hospitality businesses in Bali. A consultation can cover accounting records, gross turnover, fiscal reconciliation, Article 31E relief and annual return readiness based on the company’s actual circumstances.

Read Also: Business Tax Administration in Bali: Records and Controls

FAQ Article 31E for Hotels Calculating Corporate Income Tax Relief for Hospitality Businesses

What Is Article 31E Relief for Hotels?

Article 31E provides resident corporate taxpayers with gross turnover up to IDR 50 billion a 50% reduction in the corporate income tax rate on taxable income attributable to gross turnover up to IDR 4.8 billion.

Does Article 31E Currently Produce an 11% Rate?

With the general corporate income tax rate of 22%, a 50% reduction produces an effective 11% rate for the portion of taxable income qualifying for Article 31E. It is not 11% of turnover.

Does a Hotel with IDR 4 Billion Turnover Pay 11% of IDR 4 Billion?

No. If the hotel is under the general corporate income tax regime and meets Article 31E requirements, 11% applies to qualifying taxable income, rather than directly to its IDR 4 billion turnover.

What If Hotel Turnover Is IDR 10 Billion?

Because turnover exceeds IDR 4.8 billion but remains below IDR 50 billion, taxable income needs to be divided proportionately. The portion attributable to the IDR 4.8 billion turnover band receives the effective 11% rate; the remainder uses 22%.

Can a Hotel with Turnover Above IDR 50 Billion Still Use Article 31E?

No. Article 31E sets a maximum gross turnover of IDR 50 billion for this relief.

Is Article 31E the Same as 0.5% Final Income Tax for Small Businesses?

No. The 0.5% final tax uses gross turnover as its base, while Article 31E is a rate concession under the general corporate income tax mechanism applied to taxable income. Government Regulation 20 of 2026 also changes which taxpayers can use the specified final tax scheme.

Does a Hotel PT with Turnover Below IDR 4.8 Billion Automatically Use Article 31E?

Turnover alone is insufficient. First establish the applicable income tax regime from the legal form, tax status, Government Regulation 20 of 2026 and relevant transitional provisions.

Are Net OTA Settlements Used to Determine Article 31E Turnover Thresholds?

Do not automatically use net settlements. They may already be reduced by commissions, refunds or adjustments. Reconcile OTA transactions to the PMS, settlement reports, bank, general ledger and financial statements before determining the gross turnover figure used in the analysis.

Does Article 31E Also Reduce Hotel PBJT?

No. Article 31E is a national corporate income tax concession. PBJT on hotel services is a local tax with its own legal basis and administration. The distinction is also explained in the Usman Tax annual corporate return guide.

Where Is Article 31E Entered in the Coretax Annual Return?

The official DJP guidance includes the Article 31E facility rate option in the corporate income tax calculation. The facility calculation is reported in Attachment 8 of the corporate annual income tax return.