Complete Guide to Tax and Accounting in Semarang

Complete Guide to Tax and Accounting in Semarang

InCorp Editorial Team

Table of Content

Outsourcing personnel for tax and accounting in Semarang can be very useful to your business. Tax issues and accounting are a large source of unnecessary frustration for many small and medium-sized companies in Semarang.

Why You Need Tax and Accounting Consultants in Semarang

While individual tax is complex enough, corporate income tax’s filing and reporting burden is even higher. Similar to many countries with a 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 tax, VAT (Value-added tax), customs tax, and stamp duty.
  • Local taxes are taxes related to property, vehicles, leisure activities, etc.

As a tenacious entrepreneur 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, InCorp Indonesia will guide you on the importance of tax and accounting compliance in Semarang and why it is vital to outsource the tasks of tax and accounting in Semarang.

Tax Compliance and Accounting in Semarang

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:

  1. Obtaining appropriate tax registrations
  2. Tax accounting
  3. Preparation and filing of periodic returns
  4. Tax health check of a company’s tax position
  5. 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.

Read more: Taxation in Indonesia

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 passive income. Indonesians, foreign residents, and non-residents in Semarang must 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 a year.
  • Indonesians: These are locals and those who were born in Indonesia. They are obliged to pay taxes, even 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 despite having capital income in Semarang. Non-resident 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%

Read more: 5 Frequent Taxation Mistakes in Indonesia to Avoid

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 Indonesia. Its rates vary depending on the amount of gross turnover in a year.

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

Corporate Tax Rates and Tax Benefits

Resident companies can enjoy benefits, including 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 can obtain a 50% discount for a 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 the 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 must pay a fixed monthly premium 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 Saturdays, the tax payment, report, or filing can proceed on the next business day.

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)] 10th of the succeeding month 20th of the succeeding month
Income Tax (Article 25) 15th of the succeeding month Reported concurrently during payment
Income Tax (PP no. 23 year 2018) 15th of the succeeding month Reported concurrently during payment
Value-add Tax (VAT) Before the deadline for 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 to as well.

Tax Description Deadline for Payment Deadline for Tax Reporting
Personal Income Tax End of the 3rd month after the year-end End of the 3rd month after the year-end
Corporate Income Tax End of the 4th month after the year-end End of the 4th month after the year-end

Health and Social Security Insurance (BPJS)

BPJS Insurance Type Deadline of Payment
Health Insurance 10th of the succeeding month
Social Security Insurance 15th of the succeeding month

Tax Compliance and Accounting Outsourcing in Semarang

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

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

InCorp Indonesia provides high-quality tax compliance and accounting services in Semarang’s complex and ever-changing economic environment. Contact us today by filling out the form below to learn more.

Mauliddia Antari Nusa

Branch Manager - Semarang Office at InCorp Indonesia

Lidya provides market entry consultations for FDI in Indonesia with various perspectives in fields such as garment and textile manufacturing, furniture, farming, and engineering. In addition, Lidya has extensive experience advising expats' stay permits in Indonesia.

Get in touch with us

Lead Form

Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequently Asked Questions