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Your Unrivalled Guide to Accounting and Tax Compliance in Semarang

Posted 8.11. 2018 by Cekindo / Last update on 12.11. 2018

Your Unrivalled Guide to Accounting and Tax Compliance in Semarang Review by tenissa.tjahjono on 8. 11. 2018 Company Registration in Indonesia, Market Research in Indonesia, Work Permit in Indonesia, Product Registration in Indonesia, Local Partner Selection in Indonesia, Trade Mission in Indonesia, Company Formation in Indonesia, Company Establishment in Indonesia, Company Set Up in Indonesia, Payroll Outsourcing in Indonesia, Tax Reporting in Indonesia, Medical Product Registration in Indonesia, Medical Device Registration in Indonesia, Cosmetic Registration in Indonesia, Food Supplement Registration in Indonesia.
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For many companies in Semarang, especially smaller and medium businesses, the tax issues and accounting are a large source of unnecessary frustration.

While the individual tax is complex enough, the filing and reporting burden of corporate income tax is even higher. Similar to many countries with self-assessed taxation system, in addition to the state taxes requirements, there are local taxes that businesses in Indonesia need to be aware of.

State taxes include:

  • income taxes for corporates
  • individual
  • withholding
  • VAT (Value-added tax)
  • customs tax
  • stamp duty

 

For local taxes, they are taxes related to property, vehicle, leisure activities, etc.

As a tenacious entrepreneur who is starting or running a business in Semarang, you are bound by the laws of taxation, and knowing how the system works is mandatory.

In this article, Cekindo will guide you in the importance of tax and accounting compliance, as well as why it is vital to outsource these tasks.  We have also prepared a tax compliance calendar for 2019 that helps you to comply with taxation and accounting deadlines in Indonesia. Download it for free.

Tax Compliance and Accounting

Tax compliance is the degree to which a taxable corporate or person complies with tax issues. So what does it take for individuals and companies to be tax compliant?

The tax issues that you need to take into account are:

  • Obtaining appropriate tax registrations
  • Tax accounting
  • Preparation and filing of periodic returns
  • Tax health check of a company’s tax position
  • Pay taxes or wait for refunds

 

All return filings and tax preparation shall be done in a required format and timely manner before the deadlines.

Personal Income Tax in Semarang

The individual income tax is applicable for different sources of income. These can be from employment, sale or transfer of property, rentals, or any types of passive incomes. Indonesians, foreign residents and foreign non-residents in Semarang will need to pay individual income tax, but the conditions vary.

It’s very crucial that you know the differences between these individual income taxes as it might affect the tax rate greatly.

Foreign Residents

For taxation, a foreign resident is defined as an alien staying in Indonesia for at least 183 days in a year.

Indonesians

These are locals and those who were born in Indonesia. They are obliged to pay taxes, even when they are working overseas unless they decide to leave Indonesia permanently.

Non-Residents

Non-residents are foreigners who do not meet the requirements to become tax residents even though they have capital income in Semarang. Non-resident’s income tax is only based on the earnings generated in Indonesia.

Tax Rates for Tax Residents

These progressive tax rates apply to both local and foreign tax residents whose income is:

  • No more than IDR 50 million: 5%
  • IDR 50 – 250 million: 15%
  • IDR 250 – 500 million: 25%
  • over IDR 500 million: 30%

Tax Rates for Non-residents and Withholding Tax

If you are a non-resident taxpayer in Semarang, you are responsible for a final withholding tax of 20% on your gross income.

Corporate Income Tax in Semarang

The corporate income tax is paid by every incorporated business whose source of income is in Semarang and in Indonesia. Its rates vary depending on the amount of gross turn over in a year.

A lower corporate tax rate is possible only when corporate meets certain conditions. These are based on the location where businesses establish their companies and can be categorised into a resident company and non-resident company.

Corporate Tax Rates and Tax Benefits

Benefits that resident companies can enjoy include income tax relief when businesses are conducted in particular geographic areas or high priority sectors. They are also eligible for tax reduction in net income up to 30% of the invested amount. This reduction amount is distributed at 5% during the 6-year production.

It is worth noting that small businesses would have the best benefits. If their gross turnover is less than  IDR 50 billion a year, they will be able to obtain a 50% discount for maximum of 4.8 billion gross turnover.

Based on the latest changes from July 2018, the standard corporate tax rates apply as below:

  • No more than IDR 4.8 billion: 1% of gross income
  • IDR 4.8 billion – IDR 50 billion: 12.5 –  25% of taxable income
  • IDR 50 billion and above: 25% of taxable income

 

Depending on the sectors, special tax rates apply as well:

  • Mining 30% – 45%
  • Oil and gas – 30 – 45%
  • Geothermal – 34%
  • Building design, consultancy and supervision (legal and tax consultancy is excluded) – 4 %
  • Foreign drilling – 3.75%
  • International shipping and airlines – 2.64%
  • Construction – 2%

Health and Social Security Insurance (BPJS)

BPJS is the acronym for Badan Penyelenggara Jaminan Sosial. This is a government insurance body that administers Indonesian health insurance. It seeks to improve the health situation for citizens and make healthcare possible for middle-class.

Formally employed workers pay a premium of 1% of their salary and their employer will pay another 4% – a total of 5%. Informal employees, investors and self-employed will need to pay a fixed premium monthly between IDR 25,500 and IDR 58,500.

Tax and Health Insurance Obligations in Semarang

Below are tables for different types of taxes and their deadlines for payment and reporting. It is important to understand that if these deadlines fall on national holidays or Saturday, the tax payment, report or filing can proceed on the next business day.

You might also want to check our Tax and Accounting Compliance Calendar.

Monthly Tax Obligations

Some tax obligations that you need to know as an employer or an employee in Semarang:

Tax Description Deadline for Payment Deadline for Tax Reporting
Income Tax [Article 21, 22, 23, 4(2)] On the 10th of the succeeding month On the 20th of the succeeding month
Income Tax (Article 25) On the 15th of the succeeding month Reported concurrently during payment
Income Tax (PP no. 23 year 2018) On the 15th of the succeeding month Reported concurrently during payment
Value-add Tax (VAT) Before the deadline of tax return filing End of the succeeding month

Annual Tax Obligations:

Other than monthly tax obligations, there are annual tax obligations that you have to pay attention as well.

Tax Description Deadline for Payment Deadline for Tax Reporting
Personal Income Tax End of the 3rd month after the year end (before tax return filing) End of the 3rd month after the year end
Corporate Income  Tax End of the 4th month after the year end (before tax return filing) End of the 4th month after the year end

Health and Social Security Insurance

BPJS Insurance Type Deadline of Payment
Health Insurance (Kesehatan) On the 10th of the succeeding month
Social Security Insurance (Ketenagakerjaan) On the 15th of the succeeding month

Tax Compliance and Accounting Outsourcing in Semarang

Tax compliance and accounting outsourcing are becoming extremely common everywhere in the world including Semarang. In order to focus on their core business activities and to be cost-effective, companies transfer of all or partial financial and accounting functions to a third-party service provider.

The benefits of tax compliance and accounting outsourcing are countless. One of which is allowing companies to be worry-free while trying their best to comply with federal and local tax laws with tight deadlines.

Cekindo provides high-quality tax compliance and accounting services to companies in this complex and ever-changing economic environment in Semarang. Contact us today to get to know more.






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