Tax Authority Explains Interest Free Loan Rules for Companies

The Tax Authority’s contact centre, Kring Pajak, responded on 4 December 2025 to social‑media questions about the tax treatment of interest‑free loans, especially for foundations. The inquiry was posted publicly on a social platform.

Interest‑free loans are governed by Article 12 paragraph (1) of Government Regulation No 94/2010, which applies only to loans between shareholders and limited liability companies (PT). There is no separate rule for foundations, so such loans are assessed under Article 18 of the Income Tax Law concerning related‑party transactions and the arm‑length principle.

When a loan does not satisfy the criteria in Regulation No 94/2010, the tax authority treats it as bearing market‑rate interest, leading to a negative fiscal adjustment and possible additional tax liability or penalties. Taxpayers should verify compliance to avoid sanctions.