Tax Registration for Tax Compliance in Indonesia: Your Guide

Tax compliance is an important matter all over the world including individuals and companies that do business in Indonesia.

Every business in Indonesia must register for tax, pay and report it.

As taxes contribute largely to Indonesia’s country income, the tax amount imposed will have a considerable impact on both local and foreign businesses.

There are different types of taxes in Indonesia: personal income tax, and corporate income tax, which consists of withholding tax for sales and purchase transactions, value-added tax, and others.

Each business classification has its specific tax requirements as well. And the business activity, location, and other elements may affect the requirements and tax rates.

All individuals and businesses are obligated to comply with all tax laws and regulations in Indonesia.

This article discusses tax registration for tax compliance in Indonesia.

Important Tax Authorities in Indonesia

A government agency known as the Direktorat Jenderal Pajak (DJP), or the Directorate General of Taxes, is the one responsible for taxation policies and technical matters in Indonesia.

This agency is under the Indonesian Ministry of Finance and it comprises several sub-departments:

• Tax Accountant Office (Jawatan Akuntan Pajak)
• Tax Office (Jawatan Pajak)
• Agricultural Tax Office (Jawatan Pajak Hasil Bumi)
• Bureau of Auction (Jawatan Lelang)

How to Register for Tax as a Company in Indonesia

When you register your company as taxpayer in Indonesia to the Directorate General of Tax, you will obtain the tax identification number or Nomor Pokok Wajib Pajak (NPWP) from the authority.

You need to provide the following documents for your tax registration in Indonesia:

• Application form
• A copy of applicant’s passport
• A copy of applicant’s work permit or related visa

Important Information on Corporate Income Tax in Indonesia

Corporate tax is a tax imposed on business entities. In general, corporate tax has a 22% tax rate for most companies (becoming 20% by 2022). Some companies with gross income not exceeding 4.8 billion in a year are subjected to a final income tax with the rate 0,5% of gross income.

For public companies that meet certain conditions, such as a minimum listing requirement of 40%, are eligible for a 5% tax cut.

In accordance with the 1945 Indonesian Constitution, tax compliance in Indonesia is compulsory for all locals and foreigners who are recognized as taxpayers in Indonesia.

In other words, taxpayers are those who have stayed in Indonesia for a total of 183 days cumulatively within a tax year.

Curious about how much you have to pay for your corporate income tax in Indonesia? Calculate with our free calculator!

Sanctions and Penalties in Indonesia

• Late tax payment: 2% monthly surcharge with a maximum of 24 months
• Late tax reporting and Underpayment: IDR 100,000 – IDR 1,000,000 fine depending on the type of tax
• Rejected tax objection: 50-100% of the amount of underpayment
• Incomplete, late issuance, non-conforming issuance or non-issuance of VAT invoice: 2% surcharge
• Incorrect of tax returns submission or non-submission: 3-12 months imprisonment or 200% fine of the underpaid tax
• Embezzlement, fraud, and improper bookkeeping of export and import activities: a maximum of 6-year imprisonment or a surcharge of 200-600% of the actual payments

How Cekindo can Assist

Cekindo offers premium tax and accounting services for your tax compliance in Indonesia.

Our approach weighs the tax impact on every aspect of your company’s financial situation and outlook.

The team of experts at Cekindo has the knowledge and expertise to take care of your tax or accounting issues at all levels of complexity.

We will also work with you to understand your business and personal objectives to make sure that our assistance aligns with your interests.

You will enjoy amazing benefits such as lowering your tax liability, maximising your tax benefits, and most importantly, ensuring tax compliance in Indonesia.

If you require tax and accounting services in Indonesia, choose Cekindo. Get in touch and see how we can help you today. Fill in the form below.