If you wish that your salary is not withheld by the Directorate General of Taxes in Indonesia or to ensure the smooth process of other business activities, chances are you need to have a Tax Clearance Certificate.
We’ve asked our team of tax specialists at Cekindo to compile the necessary information you need to know about tax clearance certificate in Indonesia. This article explains what tax clearance is, its eligibility and requirements and the application procedure.
What is Tax Clearance?
A tax clearance certificate (Surat Keterangan Fiskal – SKF) in Indonesia is a letter or certificate issued by the Directorate General of Taxes of Indonesia that applies to both individuals and corporations. It is a written confirmation that proves that an individual’s or a company’s tax affairs are in order and don’t owe any outstanding income tax.
Upon having obtained your tax clearance certificate, any of your money withheld will be released to you, provided that you have settled any outstanding taxes. The money released can be profits, salary, compensation, overtime payment, etc.
When do You Need a Tax Clearance Certificate?
According to the Circular No.SE-04-PJ/2019 (or Circular 4/2019) on Implementation Guidelines for the Granting of Tax Clearance Certificate, in order to obtain certain services and to ensure the performance of particular activities by agencies, ministries or other parties, a tax clearance certificate is required.
These activities include, but are not limited to, the following:
- Utilizing book value for transferring assets in the events relevant to business acquisitions, mergers, or consolidations
- Imposing 0.5 % income tax for transferring real estate to Collective Investment Contracts (Kontrak Investasi Kolektif) or Special Purpose Companies
- Reimbursing value-added tax and luxury-goods sales tax to Special Working Units for Upstream-Oil and Gas activities through K3S contracts
- Deducting corporate income tax in Special Economic Zones
- Purchasing goods and services
- Tax holidays
- Foreign exchange activities (non-bank)
- Non-fiscal facilities (industry or industrial zone companies)
Eligible Parties for Tax Clearance
Requirements for Tax Clearance Certificate
All taxpayers must sign and submit a written application. The application may also be submitted by the following third parties:
- Corporate taxpayers’ employees
- Other parties that are not mentioned (evidenced by appointment letters)
Taxpayers whose applications are submitted to local tax offices that are different from where they are registered must meet the following requirements:
- Submit a copy of the deed of establishment
- Submit other supporting documents, i.e. annual income tax returns, etc.
- Should have submitted the annual income tax returns for the past two years and value-added tax returns for the past three tax periods
- Should not have any tax debt (debt payment installments and approval for tax payment delay are not allowed as well)
- Must not currently be investigated for any tax crimes
Application Procedure for Tax Clearance in Indonesia
As of February 4 2019, the Directorate General of Taxes in Indonesia has enforced the new guideline PER-03/PJ/2019 with regards to obtaining a tax clearance certificate SKF in the country. This new regulation has revoked the previous PER-32/PJ/2014.
Taxpayers (individuals or corporate) who request tax clearance certificates or letters must submit their electronic applications through the Directorate General of Taxes’ website; or submit their written applications directly to the tax offices or taxation counseling and consultation offices.
Upon fulfilling the application requirements (as mentioned earlier), a tax clearance certificate will be issued within 3 working days – much shorter as compared to the previous 15 working days.
The validity of a tax clearance certificate is 1 month, starting from the date of issuance. Its validity can be verified through the website of Directorate General of Taxes in Indonesia or tax offices.
Cekindo Can Help
Having a team of tax specialists, Cekindo is happy to answer your questions related to taxes in Indonesia. We also offer tax and accounting outsourcing services that can support your business growth in the country. Get in touch with us today by filling in the form below. Or, visit our offices in Jakarta, Bali and Semarang.