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Understanding your tax obligations in Indonesia is critical in order to run a compliant and smooth business operations, whether you're operating as a PT PMA (foreign-owned limited liability company), PT (local limited liability company), or CV (limited partnership). Each business structure has specific tax filing requirements and deadlines that must be met to comply with Indonesian tax laws. This comprehensive checklist will help you to gather the necessary tax documents, ensuring your Indonesian business remains tax-compliant.
1) Tax Identification Numbers (NPWP and NPWPD)
The NPWP (Nomor Pokok Wajib Pajak) is Tax Identification Number issued by Directorate General of Taxes (DJP) under the Government of Indonesia. It serves as your primary tax identity, which is required to report your taxes; such as Income Tax (PPh), Value-Added Tax (VAT or PPN), and Luxury Goods Tax (PPnBM). Registering for an NPWP is essential both for businesses and individuals, to ensure compliance with Indonesian tax regulations and to prepare their tax obligations.
The NPWPD (Nomor Pokok Wajib Pajak Daerah) is Tax Identification Number issued by the Regional Revenue Office (Dispenda). NPWPD is required by individuals and business entities to report their local taxes; such as Hotel Tax, Restaurant Tax, Entertainment Tax, and Billboard Tax. Registering for an NPWPD is essential for businesses which are operating in specific industries (e.g. hotel and restaurant).
2) EFIN and DJP Online Account
EFIN (Electronic Filing Identification Number) is an identification number issued by DJP, which serves as an activation code allowing individuals and businesses to access and use the electronic tax services. Obtaining an EFIN is essential for seamless online tax filing, enabling taxpayers to submit returns, make payments, and manage their tax obligations efficiently through the digital tax system.
3) Sertifikat Elektronik (SE)
Sertifikat Elektronik is a digital document issued by the DJP that secures online tax transactions. It is essential for taxpayers, as it serves as a legally recognized electronic signature, ensuring the authenticity of data and upholding the integrity and confidentiality of information transmitted through DJP's electronic systems.
4) Your Staff and Other Providers' NPWP & KTP
One of the tax obligations for companies in Indonesia, both for local and foreign-owned (PMA), is to withhold tax on income received by employees and on payments made to third-party providers. This tax withholding requires the companies to identify and calculate the correct amount of tax to be withheld in accordance with the tax regulations.
To ensure proper withholding and reporting, companies have to request supporting documents from their employees and third-party providers, specifically their NPWP (Tax Identification Number). If the NPWP is not available, a KTP (Identity Card) must be used as the alternative.
5) Proper Bookkeeping for Financial Statements
Bookkeeping is the systematic process of recording company’s financial transactions. It involves tracking all financial activities, including income, expenses, and other financial activities. The primary goal of bookkeeping is to ensure that company’s financial records are accurate and organized, shaping the foundation to prepare financial statements.
Accurate and well-maintained financial statements offer significant benefits for both business management and tax reporting. From tax perspective, financial statements simplify the calculation of tax liabilities, ensure compliance with the tax regulations, and facilitate any queries and/or audits which you might receive from the tax office by providing thorough documentations of financial transactions.
You might also want to know: OSS Login for LKPM Reporting
In addition to tax reporting, companies must also submit Laporan Kegiatan Penanaman Modal (LKPM) every quarter. This requirement applies to both local and foreign investment (PMA) companies with authorized capital of 10 billion rupiah or more.
The main purpose of LKPM reporting is to ensure that investment activities are aligned with the approved plans and regulations, while also promoting transparency and accountability. By submitting LKPM reports timely, companies contribute to the monitoring and evaluation of the economic and environmental impacts of their investments, fulfilling administrative requirements that support investment growth and development in Indonesia.
LKPM reporting can now be done online through the OSS (Online Single Submission) website. To access the OSS, companies need a username and password, which are typically provided by the notary or agent whom are responsible during the company's incorporation process.
Should you need tax consultant services in Bali, don't hesitate to contact us :)
Right Now Consulting is tax consultant in Bali who is focusing to help individuals and businesses with their Accounting and Taxation matters. Right Now Consulting provides accounting / bookkeeping, tax consultant / taxation, and company formation / incorporation / setup services (CV / PT / PT PMA).
