When doing business in Indonesia, tax obligations become unavoidable. One of the tax obligations to fulfill is an annual tax return and your employment status can impact your tax obligations. This article contains everything you need to know about filing the annual tax return in Indonesia as a freelancer.
All taxpayers in Indonesia, including individuals and businesses, that receive income in the taxable year, must file their annual tax returns with the tax authority DGT in Indonesia.
To file an annual tax return in Indonesia, you or your company will have to obtain a tax ID known as NPWP (Nomor Pokok Wajib Pajak).
1. Get ready for withholding tax slips
The first step is to get a withholding tax slip 1721 A1/A2 from your client’s company. For private employees, a withholding tax slip is A1.
2. Visit the DGT website
Then, fill out the SPT online on the DGT website. Make sure you have a DJP account and have already activated the Electronic Filing Identification Number (EFIN). Visit the DGT website and key in your taxpayer identification number and password to log in.
3. Select e-filing
After you have logged in, click on ‘Report’ to file your tax return. Upon the SPT submission, choose ‘e-filing’.
4. Answer all questions
Click on ‘Create SPT’ on the right. Then, you need to follow the instructions and answer all questions correctly.
You don’t have to worry about which Form 1770 to use as the system will select the correct form for you based on your answers.
Indonesian freelancers with an income of more than IDR 60 million/year will require Form 1770 S, and those with an income of no more than IDR 60 million/year will need Form 1770 SS.
Once the form is selected and filled out, choose ‘Tax Return Year 2019’. Then, choose ‘Normal’ as your tax return status and click on ‘Next Step’.
5. Calculate tax
You will then see the information regarding the Name of Withholder and Tax Collector, as well as the amount of the withholding tax.
6. Fill out the assets column
Fill out the assets column truthfully so that your SPT reporting will be processed successfully. Choose ‘Yes’ if you have any assets such as land, accounts receivable, and/or savings, and fill out their amounts correctly.
You need to ensure you fill out all information including the descriptions, to avoid having to re-fill the form all over again. Furthermore, you will have to fill out any debts you have except credit card debts.
7. Provide a spouse’s tax information
You need to fill in your spouse or dependent information if you are married. Then, a total non-taxable nominal income (PTKP) will appear. For freelancers who are not married, choose ‘Not Married’ and answer some questions.
8. Calculate income tax (PPh)
At this step, you can see your net income value, taxable income, and withholding income tax. Your tax return will appear to be zero if you do not have extra income other than that tax-deducted income you have.
9. Submit your tax return
Verify your submission through a code sent by the DGT website to your email. Submit your tax return and you are done.
Tax compliance in Indonesia has now become a lot more complex today due to the ever-changing economic environment.
We employ our skills to cater to the needs of business owners and thus making filing annual tax returns in Indonesia much easier.
Our locally-based experts can bring a wealth of knowledge to our clients from their deep experience of helping expats with tax filings and advisory.
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