Taxation in Indonesia: New Procedure for Tax Return Reporting

If you are an employee or a business owner in Indonesia, it is almost certain that you are bound to tax responsibilities and are already paying taxes to the Indonesian government. Being aware of taxation in Indonesia is important.

Therefore, staying on top of taxes and the regular updates of tax laws is often compared to having another full-time job for everyone, especially for foreigners who are not familiar with the local tax legislation.

Whether you engage a tax professional like Cekindo or do your own taxation in Indonesia, you need to know what your tax obligations are. This is because your knowledge and choices on tax returns reporting can affect your business’ bottom line significantly.

This article elaborates major changes in taxation in Indonesia, particularly the recent tax return reporting along with the essentials you need to know about filing your 2018 tax returns in 2019.

Tax Return Reporting in Indonesia

Tax return reporting in Indonesia is done through a tax form to report your individual or corporate income to the tax authority The Directorate General of Taxes (DGT) every year.

Taxpayers are responsible for tax return reporting, and these taxpayers include both individuals and businesses that have received or generated income in the form of salaries, wages, revenues, interests, dividends, and profits of other sources.

A tax return can only be submitted when you register yourself or your company at the DGT to obtain a tax identification number (NPWP).

New Procedure for Tax Return Reporting in Indonesia

As part of the efforts from the Indonesian government to enhance the efficiency of tax return reporting in Indonesia, the Directorate General of Taxes has recently issued Regulation No.PER-02/PJ/2019 (Regulation 2/2019) on Procedures for the Submission, Admission and Processing of Tax Returns.

Regulation 2/2019 covers the new process for tax return reporting by addressing the following items:

• Tax returns in Indonesia
• Compulsory tax return submission through online system (known as e-Filing)
• Admission procedure of tax return
• Processing of tax return

Tax Returns in Indonesia

The newly enforced regulation has made filling out and submitting the tax returns in Indonesian language and rupiah currency compulsory.

Tax returns in Indonesia can now be categorised into periodic tax returns and annual income tax returns. The details of both types of tax returns are listed as follows:

Periodic Tax Returns

• Periodic income tax returns
• Periodic value-added tax returns
• Periodic value-added tax for value-added tax collectors

Annual Income Tax Returns

• Annual income tax for one fiscal year
• Annual income tax for part of a fiscal year

The following taxpayers must submit their periodic or annual tax returns documents in electronic form. Taxpayers who do not fall into the conditions below can do the submission in hardcopy format.

• Registered taxpayers at certain tax offices or taxpayers who have previously submitted their annual or periodic tax returns electronically.
• Taxpayers who use professional tax services for their annual income tax returns.
• Taxpayers with financial statements audited by public accountants
• Businesses that are taxable
• Value-added tax collector, with certain exceptions

Previously, there was no restriction for the compulsory electronic tax submission.

Compulsory Tax Returns Submission through e-Filing

Compulsory tax returns submission through e-Filing applies to taxpayers that meet the conditions discussed earlier. They can undertake the procedure through the following platforms or channels:

• The website of the Directorate General of Taxes of Indonesia
• The website of the electronic tax returns submission
• Prearranged digital voice channels
• Special data communication networks
• Other channels specified by the Directorate General of Taxes

Regulation 2/2019 also requires specific types of tax return to be done through e-Filing by particular taxpayers:

• Corporate annual tax returns by registered taxpayers
• Periodic tax returns for Article 21 and/or Article 26 by corporate taxpayers
• Periodic value-added tax returns by corporate taxpayers

Read also: 5 Frequent Taxation Mistakes in Indonesia to Avoid

How Cekindo Can Assist

If you are unsure about the latest regulations related to taxation in Indonesia, it is always best to get in touch with a tax consultant to guarantee your tax compliance. Cekindo has a team of professional and knowledgeable tax consultants that are more than happy to answer your questions. Talk to us today by filling in the form below. Or visit our offices in Jakarta, Bali and Semarang.