The tax process in Indonesia can seem quite challenging, even for the most seasoned of Entrepreneurs. There are many different types and the processes can seem overwhelming. Therefore, it is important you are well informed and partner with a reliable agency, that can assist you promptly and professionally.
In this article, we answer your most common questions regarding tax and help explain everything you need to know regarding the tax process in Indonesia!
Once you have set up your new business, what are the tax 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 Indonesia Tax 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 should I 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.
VAT: 10% from tax (imposition) base
WHT art 23 for services: 2% from tax (imposition) base (if have NPWP), or 4% from tax (imposition) base (if don’t have NPWP)
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?
If I am being paid in an account outside of Indonesia, should I report the revenue in Indonesia?
If 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.
If you 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).
If 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 Tax-Indo our monthly prices start from 2.5 Million IDR, which is extremely competitive.
What are the benefits of using Tax-Indo 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 Taxation practice within Indonesia.
If I have any more questions, who can I ask?
If you have more questions, then feel free to contact Tax-Indo! We are specialists in helping people from all over the world with their Company Establishment, Tax and Accountancy needs. You can call our office +62 21 300 297 27 or email us at firstname.lastname@example.org