Tax obligations are one of the most important aspects when you’re establishing a business, including in Indonesia. First, you should register as a taxpayer so you’ll get a Tax ID 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/year. Having a Tax ID Number and relief certificate means you are obliged to pay and file a tax report to the Indonesian authority.
Tax Report Period
Indonesian Tax Regulation required both monthly and yearly tax reports.
The monthly reports are: WHT art 21/26, WHT art 23/26, WHT art 4(2), WHT art 15, and VAT
While the Yearly Reports are: Corporate Income Tax Return (CITR) and Individual WHT art 21/26
How much Tax should you pay?
Your Tax obligation depends on your WHT, for example;
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
What Should You Prepare For When Employing Workers?
When you are about to hire workers, you are obliged to calculate the tax through their salary, pay the tax, and file the WHT 21/26 report.
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, and the tax will be deducted from the income.
What is VAT?
Value-Added Tax (Pajak Pertambahan Nilai or PPN) is usually imposed on the sale of goods or services that occurs on consumption by the individual, corporate, and government taxpayers. However, entities or individuals of these products and services do not need to pay directly to the state, but the obligation to pay falls on the withholding tax.
This Value Added Tax (PPN) is imposed and paid directly by the Taxable Entrepreneur(PKP), but the charge is given to the end consumer. Every PKP is required to charge, deposit, and report VAT payable. If you want to count your VAT / PPN, the value used as the Tax Imposition Base (DPP) consists of;
- Selling Price: Selling Price is the value in the form of money, that includes all costs due to the delivery of Taxable Goods requested by the seller
- Replacement: This is a value in the form of money, including all costs, which should be requested by entrepreneurs due to the delivery of Taxable Services, the export of Taxable Services, or the trading of Intangible Taxable Goods.
- Import Value: Import Value is the money used as the basis for calculating Import Duty plus levies based on the provisions in the statutory regulations concerning customs and excise for the import of Taxable Goods.
- Export Value: Export value is the money or cost demanded by the exporter.
- Other Value: This is the value which is regulated by the Minister of Finance in the form of money, stipulated as Tax Imposition Base.
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