How to Claim Music Royalties in Indonesia

1. Quick Summary

Music royalties in Indonesia operate under a compulsory collective licensing model run via Lembaga Manajemen Kolektif (LMK / CMOs). Commercial users — cafés, hotels, radio, TV, karaoke, streaming — must pay royalties to LMKN, which redistributes them through licensed CMOs to composers, lyricists, performers, and producers whose works are registered in the National Music Data Centre (SILM).

2. Map of Players

3. Rights & Royalty Streams

Note: songwriters (composer + lyricist) and master owners (producer/label) are two separate royalty pots. The same work can generate two parallel revenue streams.

4. The 7-Step Royalty Flow

1. Step 1 — Record the work at DJKI

   Legally optional (copyright arises automatically), but strongly recommended as formal proof. Register at hakcipta.dgip.go.id. Fees roughly IDR 200,000–600,000 per work.

2. Step 2 — Establish writer splits

   Create a written split sheet: writer names, role (music/lyrics), percentages, IPI/CAE numbers. Without splits, cross-border claims will stall.

3. Step 3 — Join a licensed CMO

   Pick one author CMO (e.g., WAMI or KCI) for performing/mechanical collection. For neighbouring rights, join an LMK Hak Terkait (RAI, ARDI, SELMI, SMI). You may switch CMO at year-end (GR 56/2021 art. 13).

4. Step 4 — Register the work in SILM

   The National Music Data Centre is the single source of truth for distribution. Register via your CMO or directly. Mandatory data: title, ISWC, ISRC, writers + splits, performer, producer, release year.

5. Step 5 — Users pay royalties

   Commercial users pay LMKN at the official tariffs. GR 56/2021 mandates a single window through LMKN to avoid duplicate billing.

6. Step 6 — Distribution LMKN → CMO → member

   LMKN's operating cost is capped at 20% (Law 28/2014 art. 90). The remainder flows to licensed CMOs based on usage logs (cue sheets, broadcast monitoring, platform reports). The CMO adds its own admin fee (typically 10–25%) and distributes to rights holders at least once per year (GR 56/2021).

7. Step 7 — Audit & reclaim

   You may request distribution statements and file correction claims for missing royalties. CMOs must publish audited annual financials.

5. SILM — The Distribution Backbone

SILM is the single national information system for works, ownership, and royalty transactions, established under GR 56/2021. If a work is not in SILM, it cannot share in distributions. Registration is therefore the most critical step.

6. LMKN Royalty Tariffs (Reference)

Tariffs are set by LMKN via Ministerial Decree. Indicative bases (check current values at lmkn.id):

Official rates: see the "Tarif" section at lmkn.id.

7. Distribution & Reporting

• LMKN operating cost ≤ 20% of collected royalties (Law 28/2014 art. 90).
• Timely distribution — at least once a year; many CMOs target quarterly.
• Audited annual reports by a licensed public accounting firm.
• Member audit right — you may demand distribution detail for your works.

8. Cross-Border Claims

Indonesian artists collecting abroad

Indonesia is a Berne & WIPO Copyright Treaty member, so Indonesian works are protected in 180+ countries. Collection paths:

• Indonesian CMOs (WAMI/KCI) hold reciprocal agreements with foreign CMOs (ASCAP, BMI, PRS, GEMA, JASRAC, KOMCA, etc.).
• Royalties collected by foreign CMOs flow back to your Indonesian CMO and then to you.
• For active, faster collection, use a publishing administrator with direct foreign-CMO access.

Foreign artists collecting in Indonesia

Foreign rights holders may either:

• Rely on the reciprocal route via their home CMO ↔ Indonesian CMO (often slow with metadata mismatches); or
• Appoint a local/regional publishing administrator (e.g., LMKN) to register works directly in SILM and with Indonesian CMOs for faster, more accurate matching.

9. Tax on Royalties

For Indonesian-resident rights holders (WPDN)

• Income Tax Article 23 (PPh 23) — 15% withholding on gross royalty paid by the CMO/LMKN. Withholding slip (bukti potong) is creditable in your annual return.
• Without a tax ID (NPWP), the withholding becomes 30% (200% of normal).
• The 0.5% MSME final tax (GR 55/2022) does not apply to royalties — royalties always fall under Art. 23.
• VAT — copyright services are VAT-able. If your annual turnover exceeds IDR 4.8 billion you must register as PKP and charge 11% VAT (12% scheduled per Law 7/2021 HPP).

For foreign rights holders (WPLN)

• Income Tax Article 26 (PPh 26) — 20% withholding on gross royalty paid abroad.
• Tax treaties (DTAs) can reduce this to 10–15%. Examples: US 10%, Netherlands 10%, UK 15%, Japan 10%, Australia 15%, Singapore 15%, Korea 15%, Germany 15%.
• To claim the treaty rate, the foreign holder must file a Certificate of Domicile (Form DGT-1 / DGT-2) valid at the time of payment. Without it, the default 20% applies.
• The Indonesian withholding slip can be used for foreign tax credit in the home jurisdiction subject to local rules.

10. Disputes

• LMKN mediation — first stop for disputes between rights holders and users.
• Commercial Court (Pengadilan Niaga) — civil copyright actions (Law 28/2014 art. 95).
• BANI — Indonesian arbitration where the contract has an arbitration clause.
• Criminal sanctions — Law 28/2014 art. 113 covers commercial-purpose copyright infringement (imprisonment & fines).

11. Practical Checklist for New Rights Holders

12. FAQ