Annual Tax Reporting in Indonesia: What You Should Know As An Expat
4 min readEvery citizen who is a taxpayer must pay taxes. This applies not only to individuals but also to companies. Companies are required to pay taxes and report through the Annual Corporate Tax Return.
Understanding your tax obligations as a business owner in Indonesia is crucial. The Annual Corporate Tax Return, as the name suggests, must be reported every year. This is a non-negotiable obligation, and failure to comply can result in significant fines or even the revocation of your business license. It’s essential to grasp the intricacies of business tax to avoid such consequences.
This issue can be quite confusing if you’re a foreigner working in Indonesia. You may have to think about your taxable income. Is it deducted from net salary or gross salary? Then, if there is an overpayment, can you get a refund?
Legal Basis for Tax Reporting in Indonesia
The definition of a due date is the deadline for payment or receipt of something or reporting with the stipulated Law No. 28 of 2007 concerning General Provisions and Tax Procedures, which is the third amendment to KUP Law No.6 of 1983.
Further tax payment and remittance rules have a due date again regulated in PMK No. 80 Year 2010 concerning Amendments to PMK No. 184/PMK.03/2007 concerning:
Determination of Due Date for Tax Payment and Remittance, Determination of Tax Payment Place, Procedures for Payment, Remittance, and Reporting of Taxes, as well as Procedures for Installment and Postponement of Tax Payment.
What is an Annual Tax Return?
An annual Tax Return is a letter taxpayers use to report the calculation or payment of taxes, tax objects, non-tax objects, assets, and liabilities.
Annual tax reporting is regulated in Law Number 16 Year 2009 on General Provisions and Tax Procedures. In this regulation, taxpayers are obliged to report the annual tax return. The obligation to pay and report the Annual Tax Return is an obligation that taxpayers must accept every year.
The Annual Tax Return is a one-year tax report on taxpayers’ income. If you do not report it, taxpayers can be subject to administrative sanctions in the form of fines.
Each taxpayer is obliged to fill in the tax return in Indonesian using Latin letters, Arabic numerals, and Rupiah currency units, sign it, and submit it to the registered Tax Office.
If the report is filled in and signed by another person, it must be attached with a power of attorney. Meanwhile, for Corporate Taxpayers, the SPT must be signed by the management or board of directors.
Referring to Article 3 of Law Number 28 Year 2007, the Annual Tax Reporting in Indonesia has the following functions:
1. Taxpayer’s tool related to Income Tax (PPh or Pajak Penghasilan)
SPT is a means for taxpayers to report and account for calculating the actual amount of tax payable. In addition, the tax return is also a means for taxpayers to report on several matters, namely:
- Payment of tax settlement carried out by itself or through withholding or other collection in one year or part of the tax year.
- Income that is tax object or not tax object.
- Assets and liabilities.
- Payment of withholding or collection of taxes of individuals and other entities within the tax period by the provisions of the Tax Law.
2. Taxable Entrepreneur (PKP or Pengusaha Kena Pajak)
PKP is an individual or entity whose business activities or work produce goods, import goods, export goods, conduct trading business, and utilize intangible goods.
For them, the Annual Tax Return is a means to report and account for calculating the amount of Value Added Tax (VAT) and Luxury Goods Sales Tax (STLG) actually owed.
In addition, the Annual Tax Return also reports the crediting of input tax against output tax and tax payment for PKP or through other parties in one tax period in accordance with the law.
3. Tax Withholding or Collection
SPT is also a means to report and account for taxes withheld or collected and deposited.
Withholding and collection are two different terms. Withholding can mean cutting or reducing payments relating to the amount received. Tax withholding is usually done by the party providing the income.
Online Annual Tax Reporting
The reporting period for the Annual Tax Return for the current tax year will be open until 31 March (Individual Income Tax) or 30 April (Corporate Tax). In addition, online tax return reporting can be done through e-Filling or e-Form services.
Tax return reporting can be done online. What is the procedure?
- Make sure you have an EFIN (digital identity number)
- Taxpayers log in to the djponline.pajak.go.id website
- After successfully logging in, choose your filing status on the right side of the website’s page
- Select filing status: normal or correction
- Press Annual Tax Return 1770 S or 1770 SS
- Fill in the available fields according to the existing withholding slip.
- Click save and go to the next step.
- Fill in the tax obligation status for the husband and wife. Several columns must be filled in.
- Enter the last page for approval of the reported annual tax return.
- Click agree and go to the next step.
- Finally, taxpayers will receive proof of the annual tax reporting via e-mail.
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