Home Blog An Overview on Indonesia’s Tax Reporting and Planning Finance | Tax Reporting An Overview on Indonesia’s Tax Reporting and Planning InCorp Editorial Team 21 November 2017 4 minutes reading time Table of Contents Indonesia Tax Reporting Concessions Penalties Let Cekindo Handle Your Taxation Work Taxation is always a complex process especially Indonesia Tax reporting where many laws and regulations govern it. Take, for example, how to calculate the income tax for both corporate entities and individuals such as employees. Under the taxation laws, the length of the residency matters. You are considered a resident of the country if your business has a domicile here or you’ve stayed here for more than 183 days within a 12-month period. You are also a resident if you have a work permit or have the intention to reside in Indonesia. How do these points affect your tax? If you’re a PT PMA company with a domicile here, your tax will be based on your worldwide income. Otherwise, it could be only on the gross revenue generated in the country. Besides knowing the regulations on how to determine your tax, you also need to remember when to file your tax returns. Indonesia Tax Reporting Individuals and companies that generate income in the country should pay taxes and file the correct returns. Note that for companies, they are required to report the tax monthly even with the business having no activity or transactions, where the concept of zero tax reporting is applied. In Indonesia, two systems run concurrent. Employers will withhold taxes of their workers (regardless whether they’re local or foreign), while employees have to file their own as well. The question is when to do the Indonesia tax reporting. Note that there’s a difference on when to file and pay your taxes. Use the following as your guide: 1. Individual Income Tax When to File:20th of the following month (monthly), end of the fourth month after the end of the tax year (annual) When to Pay: 15th of the following month 2. Corporate Income Tax When to File:20th of the following month (monthly), end of the third month after the end of the tax year (annual) When to Pay: 15th of the following month 3. VAT and LGST (Luxury Goods Sales Tax) When to File:end of the next month When to Pay: before the deadline of the VAT return 4. Withholding Taxes (Including Employees) When to File:20th of the following month When to Pay: 10th of the following month Concessions With all these dates to remember and the possibility you don’t have enough money to cover for the taxes, it’s possible you cannot pay them on time. The government, fortunately, can give you some concessions. For example, you can underpay, but you need to settle the remaining balance before you submit your annual tax return. If you fail to submit your annual tax return on the deadline, you can request for a 2-month extension with the Directorate of General Taxation. Penalties Taxes are one of the ways to keep any economy alive, and as such, penalties can be harsh for those who violate the rules from underpayment to late reporting and tax evasion. These sanctions can be in terms of surcharges or imprisonment. Let Cekindo Handle Your Taxation Work Indonesia tax reporting and planning is just one of the long lists of responsibilities you need to do to be compliant with the government’s rules. You also have to maintain financial records like accounting books for a period of 10 years, as well as get your tax identification number called NPWP. Moreover, you need to have your books audited and even subject yourself to a tax audit. All figures, meanwhile, should be expressed in rupiah while written records must be in Bahasa Indonesia. The quickest, easiest, and most comfortable way to manage your taxation system is by letting experts take care of it for you, so you are able to run your core business operations. Our company offerscomplete takeover of your taxation, accounting, and auditing. We also handle the paperwork and evenpayroll processing. Just tell us what you need and we’re here to give you the options. Make your Indonesia tax reporting easy with Cekindo. Fill in the form below. Read Full Bio Verified by Dessy Amelia Senior Tax Manager at InCorp Indonesia Dessy has over eight years of experience in tax services, leading InCorp Indonesia's tax team in compliance and strategic solutions. She holds a bachelor's degree in Fiscal (Tax) Administration from Universitas Indonesia and is pursuing a master's degree in Tax Policy and Administration at the same university. She is also a certified tax consultant (USKP C), and a member of the Indonesian Tax Consultants Association (IKPI). Frequently Asked Questions Is there any foreign exchange control or limitation in Indonesia? Foreign currency transfers to and from Indonesia are not subject to exchange controls, allowing investors to freely move funds. However, these transactions must be reported to Bank Indonesia. Moreover, there are reporting obligations concerning offshore assets and liabilities to ensure transparency in financial activities. What taxes are involved? For employment, the company is subject to: Employee income tax article 21 VAT on both the service invoice and the salary invoice 2% recovery tax on salary invoice Should I submit tax reports if my company has been established but has no business activities? Yes, submitting monthly and annual tax reports is mandatory even if your company does not have any business activities, thus owing zero taxes. How is pricing determined for your finance, accounting, and tax services? To provide you with accurate pricing information for our finance, accounting, and tax services, we consider the complexities of your inquiries and the dynamic nature of regulations in Indonesia. As a result, the pricing for the services may vary accordingly. For pricing details, please talk to our experts. Get in touch with us. 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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. More on Finance How Global Mobility Services Facilitate Employee Relocation Read more Guide to Annual Reports: Format, Content, and How to Create One Read more Guide on Filing Corporate Annual Tax Return (SPT) in Indonesia Read more