It is the time of the year again to file your annual tax return in Indonesia. Do not let the time run out and avoid a painful fine for its late filing.
Cekindo has prepared a list of Frequently Asked Questions (FAQs), for everything you need to know to file an annual tax return in Indonesia. These FAQs are particularly crucial for foreigners working or starting a business in Indonesia for the first time.
Many expats often equate Tax Law in Indonesia with regulations in their home country. It is actually more complicated than that when it comes to tax compliance. If you find tax return requirements in Indonesia confusing, and there is something you need clarification on, do get in touch with Cekindo. We are ready to help you out.
What is an annual tax return in Indonesia? Who should file it?
An annual tax return in Indonesia is the tax form or forms used to report your personal or corporate income and file taxes with the tax authority in Indonesia — The Directorate General of Taxes (DGT).
Annual tax return should be filed every year by taxpayers in Indonesia. Taxpayers include both individuals and businesses that have received income or a tax ID during the taxable year, through wages, salaries, dividends, interests, revenues, and other sources of profit.
What do you prepare to submit the tax return?
You will need to register yourself or your company at DGT with mandatory documents to obtain a tax ID (Nomor Pokok Wajib Pajak – NPWP).
Corporate taxation issues in Indonesia are often complex because the tax regulations in Indonesia get changed a lot. We have a professional legal team to help you with your company’s registration as a taxpayer. Once your company is registered at DGT through our services, we will be able to provide you with assistance for your tax liabilities and accounting.
What is the difference between individual and corporate tax return?
Both a local company and a foreign company which have a permanent establishment in Indonesia are subject to a standard corporate income tax of 25% and are able to file a corporate tax return yearly.
An individual who is on the payroll is liable to personal income tax. Tax rates for residents in Indonesia are between 5% and 30%, and non-residents are subject to a 20% withholding tax of income received in Indonesia.
What are the differences among individual tax return for full-time employees, sole proprietary business and individual with multiple incomes?
The forms used to submit for annual tax return are different. Form 1770 is for sole proprietors; Form 1770-S is for individuals with multiple incomes; and form 1770-SS is for full-time employees with annual gross income not exceeding IDR 60 million.
What is Net Income Tax Norm (Norma Penghitungan Penghasilan Neto/ NPPN)?
NPPN is a calculation norm that can be used by taxpayers for calculating their net income for one taxable year. It serves as the basis for income tax calculation.
What documents do I have to prepare for a corporate tax return?
You will need a monthly withholding tax report, an annual withholding tax report, a monthly income tax report, an annual income tax report, and an investment plan.
How important is Form 1721-A1 for employees?
A Form 1721-A1 is vital as it is granted by employers to employees, serving as a proof that employees’ incomes have already been withheld by them. This form is mandatory for employees while filing for their individual annual tax returns.
How to do my corporate tax return properly? Should I conduct accounting? Would recording be sufficient?
It gets a little more demanding for a corporate tax return as it depends a lot on periodic accounting and tax reporting — which is extremely crucial to Indonesian tax compliance.
Therefore, recording is hardly sufficient, and you should outsource your accounting to an external party for a proper filing of corporate tax return. Please contact Cekindo’s professional consultants and accountants here.
How does the corporate income tax work? Is my company entitled to simpler 1% tax?
Corporate income tax is calculated based on accounting principles modified by certain tax adjustments. Deductions are allowed for business expenditures.
Your company is entitled to simpler 1% tax only when it is a small company with annual revenue less than 4.8 billion rupiah.
When are the deadlines for both company and individual tax return?
The deadline for an individual tax return is on 31st March every year. For corporate, the tax return must be lodged within four months after the end of the calendar year or taxable year.
Can I request for more time to submit my tax return?
The corporate tax return deadline may be extended for two months by notifying DGT.
Where can I get the forms I need?
Forms can be requested at tax offices (KPPs) or downloaded online at DGT website. And if you engage Cekindo’s services for tax filing, necessary forms will be included.
Where do I send my tax return in Indonesia?
Your tax return shall be sent to the tax office (KPP) that you or your company registers as a taxpayer.
What if I don’t file my annual tax return? Is there any exception to not file an annual tax return?
If you fail to file your annual tax return on time, a 2% monthly interest will be charged on the tax payable. On top of that, you will be required to pay for an administrative sanction fee of IDR 100,000 for personal income tax return, or IDR 1,000,000 for corporate income tax return.
For individuals who stay less than 183 days in a year in Indonesia, you are not obligated to file income tax return in the country.
What are e-Filing and e-Billing?
E-Filling is the filling for tax return electronically. E-Billing is the electronic billing for tax payments. Both are done online at DGT website.
eFin can be obtained and activated at the KPP. For companies, the procedure must be done at the KPP where your company is registered.
What if I am about to leave Indonesia? Should I submit the tax return?
You will have to submit your tax return if you only leave Indonesia temporarily.
How do I submit an annual tax return for my business with a nominee arrangement?
With a nominee arrangement, your business is still liable for corporate taxes, and a nominee can submit a tax return on behalf of the business at the tax office. The dividend from the tax return will be fully received by the business owner. However, a withholding tax will be deducted.
A nominee arrangement for annual tax return submission can be done through services provided by Cekindo in the safest way.
Can I pay taxes on my nominee’s behalf? Or can my nominee pay taxes on my behalf?
Yes, considering the nominee is also one of the company’s shareholders.
If I don’t have a tax ID in Indonesia, how should I submit an annual tax return?
You can’t submit an annual tax return without a tax ID in Indonesia.
Should I submit the annual tax return, if I have a business in Indonesia and I don’t physically live here?
You should submit a corporate tax return, but not an individual tax return if you don’t live in Indonesia.
If You Need Help
Cekindo offers a variety of tax and accounting services to businesses of all types and sizes. We make sure your business fulfils all tax return compliance while you can focus on your business’s core activities. Contact us now.
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