Tax in Indonesia

Setting up a business in Indonesia is a popular choice for many entrepreneurs, however ensuring you fulfil your financial and Tax in Indonesia obligations is the next challenge facing most new business owners.

In this article, we answer your most frequently asked questions regarding taxes and help explain everything you need to know about the tax in Indonesia !

Once you have set up your new business, what are the tax in Indonesia obligations you should adhere to?

You have to register as a taxpayer and you will get a tax ID number / tax registration number (NPWP), tax relief certificate (SKT), and taxable VAT entity confirmation number (SPPKP) – which is additional, if your business has a gross revenue more than 4.8 billion IDR in a year.

Once you have a NPWP and SKT, you are obliged to calculate, pay, and file the report to the Tax in Indonesia authority.

How often do you need to report your taxes?

In Indonesia you are required to report your taxes both monthly and yearly.

Monthly: WHT art 21/26, WHT art 23/26, WHT art 4(2), WHT art 15, and VAT

Yearly: Corporate Income Tax Return (CITR) and Individual WHT art 21/26

When do I have to file my annual tax report?

CITR: Should be filed by the latest 30th April the following year

Individual WHT art 21/26: Should be filed by the latest 31st March the following year

How much does tax should I pay?

Each WHT has a different tariff of Tax.

For example:

WHT art 23 for services: 2% from tax (imposition) base (if have NPWP), or 4% from tax (imposition) base (if don’t have NPWP).

VAT: 10% from tax (imposition) base.

WHT art 4(2) for rental building: 10% from tax (imposition) base.

WHT art 21 for employee / taxpayer that received an income, the progressive tariff are:

5% for yearly income tax up to 50 million IDR

15% for yearly income tax in between 50 million IDR – 250 million IDR

25% for yearly income tax in between 250 million IDR – 500 million IDR

30% for yearly income tax more than 500 million IDR

If I make over payments throughout the year, am I entitled to a tax return?

Yes, but there are terms and conditions that you need to fulfil if you request a tax return from the Indonesia Tax Authority.

Is the tax rate the same throughout Indonesia?

Yes

If I am being paid in an account outside of Indonesia, should I report the revenue in Indonesia?

When you are the Taxpayer in Indonesia, then you are obliged to report all of your income.

If my business does not make any profit or does not receive any payments, do I still need to file tax reporting?

Yes, even if your business does not make any profit. Obviously, you do not need to pay any tax because your financial statement will show that you are in loss position, but you still obliged to file the report with ZERO Tax.

When you are employ workers, what should you do?

You are obliged to calculate the tax, deduct their salary (or maybe your company will bear the tax), pay the tax, and file the report of WHT 21/26.

What is withholding tax and who pays it?

A withholding tax, or a retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient.

How does VAT work and should I be VAT registered?

VAT liabilities are settled with an input-output mechanism (input tax from your purchases and output tax from your sales). If your output tax is more than the input tax, then you need to pay the difference.

If your output tax is less than the input tax, then you have a VAT deposit which can be compensated the next month or can be refunded (please note that if you propose for the Tax refund, you will be audited by Indonesia Tax Authority).

When your business has a gross revenue of more than 4.8 billion IDR in a year and your Tax office has conducted a survey and determined that your company should be a VAT enterprise(s) / taxable enterprise(s), and your company has fulfilled the requirements. then you should become registered as a VAT enterprise(s) / taxable enterprise(s)…..

If you do not adhere to the rules, what are the potential consequences?

If you do not file your taxes accordingly, you will being charged an interest penalty for late payment and an administrative penalty for late report filing.

How much does tax reporting cost?

To actually report the tax, there is no physical cost as it can be done using e-filing or by submitting documents directly to the tax office. The only real cost is time and expertise.

Different tax consultants will charge different prices to report your tax based upon your financial activities, frequency as well as amounts.

At pt.Almaha for public services our monthly prices start from 2.5 Million IDR, which is extremely competitive.

What are the benefits of using pt.Almaha for public services to prepare my taxes rather than doing it myself?

You will receive an accurate Tax calculation, Tax reporting will be punctual, we will keep you updated on current and Tax regulations, and you will get the best advice and insight about practice Tax in Indonesia.

If I have more questions, who can I ask?

Do you have any questions, feel free to contact pt.Almaha for public services We specialize in helping people from all over the world with their company incorporation, tax and accounting needs. You can call our office +62216540177 or email us at pt.almahaindo@gmail.com or visit our office in Jakarta.