How Does Article 23 Sponsorship Income Tax Work in Bali
Sponsorship can feel like “free money” for Bali events, creators and NGOs, but the tax office sees it as service income. In 2026, most corporate sponsors must cut Article 23 tax before paying you.
If you ignore this, you risk under-withholding, messy annual returns, or cash you can’t justify during an audit. Many Bali-based recipients only discover Article 23 when a sponsor suddenly withholds 4% because there is no NPWP.
Handled well, sponsorship stays win-win. You get funding and visibility, the sponsor gets promotion, and Article 23 sponsorship income is reported cleanly. This guide turns complex rules into simple steps you can apply today.
We draw on current practice and official explanations, including detailed sponsorship tax rules in Indonesia, but translate them into plain English for Bali entrepreneurs.
Whether you run a kids’ festival, a sports club, a co-working launch or an influencer brand, the logic is the same. Any “return” to the sponsor—logos, shout-outs, posts, banners—usually means taxable service income.
By the end, you’ll know when Article 23 applies, how much should be withheld, what documents you must collect, and how to avoid paying more tax than necessary on your sponsorship deals.
Table of Contents
- Why Article 23 Sponsorship Income Matters in Bali 2026
- Legal Basis and How Article 23 Sponsorship Income Is Classified
- Who Withholds Article 23 Sponsorship Income and at What Rate
- Real Story — Article 23 Sponsorship Income for a Bali Creator
- Calculating Article 23 Sponsorship Income and NPWP Impact
- Contracting and Invoicing for Article 23 Sponsorship Income
- Managing Cash Flow and Audits on Article 23 Sponsorship Income
- Checklist to Stay Compliant on Article 23 Sponsorship Income
- FAQ’s About Article 23 Sponsorship Income in Indonesia
Why Article 23 Sponsorship Income Matters in Bali 2026
In 2026, Article 23 sponsorship income is everywhere in Bali: branded sportswear, festival banners, sponsored kids’ events and influencer posts. Each of these deals can trigger withholding tax you cannot ignore.
For many small businesses and creators, sponsorship is now a core revenue stream. If you treat it casually, you risk mismatched invoices, missing bukti potong and unexpected extra tax when you file your annual return.
Understanding how Article 23 works helps you price deals correctly. You can set fees that still make sense after withholding, negotiate NPWP issues up front, and prove to sponsors that you are a low-risk, professional partner.
In Indonesian law, Article 23 sponsorship income is typically classified as “jasa lainnya” when you provide exposure or promotion. Think logos on posters, shout-outs on stage or tagged social media posts.
Because the tax office sees this as advertising-type service, the 2% Article 23 rate applies on the gross sponsorship fee, excluding VAT. The classification is the same whether you are an event organizer, club, NGO or individual professional.
Only in limited cases will sponsorship fall under another regime, such as sectoral final tax. In practice, if there is clear marketing value for the sponsor, treat it as Article 23 and structure your paperwork accordingly.
In most Bali deals, Article 23 sponsorship income is paid by a company acting as withholding agent. That could be a hotel, bank, brand, clinic or villa business that sponsors your event or content.
They must withhold 2% of the gross fee if you have an NPWP. If you don’t, the rate is increased by 100%, so 4% will be cut. This applies whether you are a PT, foundation or individual professional receiving the income.
Where the sponsor is an individual who is not a designated withholding agent, there may be no Article 23 cut at source. Even so, you must still report the sponsorship in your annual return and pay any resulting income tax.
In 2026, Article 23 sponsorship income surprised Maya, a Canggu-based content creator. A local bank agreed to pay IDR 20 million to sponsor her parenting seminar, with logo placement and social posts included.
On payment day, only IDR 19.6 million arrived. The bank had cut 2% PPh 23 because Maya had already registered an NPWP. At first she feared she had “lost” tax money she would owe again later.
Her accountant explained the IDR 400,000 was a credit she could use in her annual return. Because she kept the bukti potong, Maya could offset that withholding, reducing her final income tax and avoiding double payment.
For 2026 deals, Article 23 sponsorship income is still calculated on the gross fee before VAT. If a sponsor pays IDR 50 million plus VAT, the 2% withholding applies to the IDR 50 million figure only.
With NPWP, the cut is 2% × IDR 50 million = IDR 1 million. Without NPWP, it jumps to 4%, so the sponsor would withhold IDR 2 million instead. That higher cut is a strong reason to register early.
The withheld amount is not an extra tax, but a prepayment. It becomes a tax credit you can offset against your annual income tax, provided you keep the official bukti potong and record the income correctly.
Good contracts make Article 23 sponsorship income much safer. Your sponsorship agreement should describe the promotional services, the gross fee, VAT if any, and who bears each tax.
A clean clause might say that the sponsor withholds Article 23 as required by law and provides the bukti potong. That way there is no dispute later when the payment you receive is slightly less than the invoice amount.
Your invoice should mirror the contract, separating service fees, reimbursed costs and VAT. This helps the sponsor calculate the correct Article 23 base and protects you if the tax office later reviews the transaction.
For Bali-based entrepreneurs, Article 23 sponsorship income affects cash flow because you never receive the full billed amount. If you ignore this, you may over-commit on expenses for your event or campaign.
Plan budgets on the net-of-withholding number. For example, price sponsorship so that, after 2% PPh 23, you still cover venue, staff and promotion costs with a buffer. This is critical for one-off festivals and sports events.
During an audit, officers will compare your contracts, bank statements and reported Article 23 sponsorship income. When amounts and bukti potong align, reviews tend to be faster and less stressful.
In Bali 2026, Article 23 sponsorship income often overlaps with other business activities, so a simple compliance checklist is vital. Start by confirming every sponsor’s status: company, foundation or private individual.
Next, align your NPWP, invoice format and contract wording so each sponsorship line is clearly taxable as service income. Keep digital copies of all bukti potong and match them to bank receipts and events.
Finally, reconcile your total Article 23 sponsorship income at year-end with SPT data. If some sponsors did not withhold, you may still owe tax, but at least you know the exact gap and can plan payments.
Not always. Most promotional sponsorships are Article 23 sponsorship income, but some sectors use final tax, and pure reimbursements can be excluded if fully documented.
The standard rate is 2% of the gross service fee, excluding VAT, when the recipient has an NPWP. Without NPWP, the rate doubles to 4%, which can significantly reduce cash received.
Keep signed contracts, invoices, bank slips and bukti potong PPh 23. Many recipients also use withholding tax calculator examples to confirm that sponsor calculations are correct.
Influencers still treat it as business income. They report the gross sponsorship, claim the 2% or 4% Article 23 as a credit, and pay any remaining income tax based on their chosen regime and actual profits.
The income remains taxable. You should still report the full sponsorship amount and be ready for the tax office to question why no PPh 23 was cut, especially if similar sponsors normally withhold.
If they have a permanent establishment or local entity in Indonesia, they can act as withholding agents. Purely offshore sponsors without Indonesian presence usually cannot, so you handle the tax via your own annual filing.
If you prefer professional support, professional tax advisory in Bali can help review contracts and calculations.
