Posted 2.12. 2015 by Cekindo / Last update on 7.12. 2018
It is compulsory that any PT PMA in Indonesia has to pay taxes and report the company’s financial status regularly. Many of Indonesian taxes that should be paid by PT PMA are similar to what stakeholders should pay in different countries. Among them are monthly and annually withholding taxes, monthly and annually income taxes, Value Added Tax (VAT), Luxury Goods Sales Tax (LGST)—if any, along with the company investment plan. Those taxes should be paid in the local tax office, where the company office is located.
When a PT PMA has a domicile in the Indonesian territory, it will be treated as Indonesian tax resident, so that the company has the obligation as a resident taxpayer. The taxation regulation in Indonesia incorporates both a self-assessment system and a withholding tax system.
To know more about the Tax Law and regulations, Indonesian government has issued:
In order to fulfill the obligation to pay the tax, PT PMA can choose one among these two options:
All the reports and tax document should be sent to the local tax office, where your main head office is located (your registered address).
Some taxes should be paid in a monthly basis and some others are required to be filed annually. To give you broader pictures on Indonesian taxation schedules, we give you a brief overview illustrated below.
The company’s taxes that should be reported monthly include Corporate Income Tax, Employee Withholding Tax, Other Withholding Taxes, as well as VAT and LGST. These taxes are usually paid before the 10th day of the following month for the withholding taxes and before the 15th of the following month for the Corporate Income Tax. The first three taxes must be filed or reported before the 20th of the following month, whereas especially for VAT and LGST, they have to be reported at the end of the following month.
On the other hand, taxes that should be paid annually include Corporate Income Tax, Individual Income Tax, and Land and Building Tax (for both the office and the factory or warehouse—if any). The deadline for the first two is before filing the tax return, and the deadline for the last one is 6 months after receiving a tax notification letter from the tax office.
All taxes should be paid regionally.
Being late in paying the company taxes and individual taxes in Indonesia may result in financial penalty. The tax payer should pay an interest of 2% per month for late payment. Considering the big amount of extra money you have to spend for the fine, it is always recommended to follow the deadline strictly. Don’t be late, even for one business day, or it will be calculated as one full month penalty.
It is not an obligation for all companies to hold a financial audit by public accountant. The regional tax office will not put any interest on your company if you always provide complete data or documents during your tax reporting period. It is also important to make sure that you never miss any deadlines and follow all the rule and regulations applied by the Indonesian taxation laws.
To deal with some disputes on tax-related issues, we can give you several practical recommendations as follow: