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.
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:
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
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
When to File:end of the next month
When to Pay: before the deadline of the VAT return
When to File:20th of the following month
When to Pay: 10th of the following month
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.
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.
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.
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