Indonesian Tax Law

In order to conduct business activities in Indonesia for more than a certain period of time, you are obliged to register and pay tax under the NPWP (Taxpayer Identification Number) as either an individual, a legal entity or a permanent establishment (PE = Permanent Establishment) in the country.

How to impose value-added tax (PPN) and income tax (PPH) on foreign companies that do not have a local subsidiary in Indonesia and make sales through e-commerce (Perdagangan Melalui Sistem Elektronik (PMSE) from Indonesian residents through an overseas server has been an issue for some time.

On March 23, Indonesia announced in the Minister of Finance Regulation No. 23 of 2020 (No. 23/MK.03/2020) a six-month income tax exemption for manufacturing industries such as automotive, electrical and electronic, metal, resin and sewing industries, as well as import convenience for export (KITE = KEMUDAHAN IMPORT TUJUAN EKSPOR) beneficiary companies, in order to compensate the government for the decline in revenue and cash flow of individuals and legal entities as a result of the new coronavirus, with the following

If the Japanese tax system is based on the theory born good by nature, which is based on the premise of correct filing, then it can be said that the Indonesian tax system is based on the theory born evil by nature, which is based on the premise of not returning as much as possible by preempting the source.

Last week at a customer's factory in Karawang, a six-month pregnant woman in the production control department was rubbing her big belly and whispering about taxes.

Most countries use Excessive progressive taxation, for example, in Indonesia, if you have 240 juta of taxable income, your income tax will be calculated at the rates of "5% on 50 juta" and "15% on the remaining 190 juta over 50 juta".

The taxable entity PKP (Pengusaha Kena Pajak) shall issue a Faktur Pajak in the case of the taxable entity PKP (Pengusaha Kena Pajak) to which the sales are made, and shall pay the tax by the 20th day of each month by filing a monthly return of Value Added Tax (SPT Masa PPN) with the amount of 10% PPN for the previous month's sales (OUT) less 10% PPN for the purchases (IN).

When a Japanese company enters Indonesia, it usually chooses a PMA (Penanaman Modal Asing), a foreign capital company with only Japanese directors, but many people who are independent and start business in Indonesia with their Indonesian wives and husbands as shareholders (Pemegang Saham) and directors (Director or Komisaris) choose a PMDN (Penanaman Modal Dalam Negeri), a local PT.

In Indonesia, small and medium sole proprietorship UMKM (Usaha Mikro, Kecil, dan Menengah) with an annual turnover of 4.8 Miliyar or less could opt for a separate tax (Final Tax) of 1% as Pro forma perpajakan standar, instead of a tax calculated based on the normal corporate income tax rate.

According to Direktorat Jenderal Bea dan Cukai (DJBC) Kementerian Keuangan (Kemenkeu), the Indonesian Ministry of Finance's Directorate of Revenue and Taxation, the duty-free limit for goods shopped outside of Indonesia and brought into the country will be increased to $500 or 6.75 juta from the previous $250 or 3.3 juta per person, effective January 28, 2018, a substantial easing measure given the dollar's recent appreciation of the rupiah against the dollar.

Indonesia's personal income tax, PPH21, is the same as Japan's personal income tax (PPH21), and the tax rate varies depending on your taxable income.

Indonesia tax rule from the point of view of accounting system When implementing accounting system in Indonesia, we need some knowledge about Indonesian tax rule. Personal income tax (PPH21) related to payroll system. VAT (PPN) related to issuing invoice to customer or receiving invoice from supplier . Withholding service income tax (PPH23) related A/P entry (Indonesia) or A/P settlement (Thailand). Custom dutty (Bea Masuk) and withholding import tax (PPH22) journalized from payment voucher. Others (PPH25, PPH24, PPH4(2), PPH26, PPH29) journalized from payment voucher Income tax Corporate income tax (PPH25) As long as Indonesia is under liberal economy, the main tax ...

In Indonesia as taxes on the taxable income to UMKM small business owners (Usaha Mikro, Kecil, dan Menengah) with annual sales of 4.8 Miliyar or less, it is not such income tax (PPh 25 bulanan) , but it takes 1% for the external standard tax (Pro forma perpajakan standar) like a business tax that tax to all business owners equaly, and because it is not a PKP taxable business owner (Pengusaha Kena Pajak = Taxable Entrepreneur) in terms of tax law, tax returns are also voluntary that becomes declaration (Voluntary Registration).

In Indonesia, entertainment expenses are set as SGA expenses under the name of Biaya Entertainment, but if it is "business related food and beverage (jamuan makan untuk relasi bisnis)", it can be deducted from gross income (Penghasilan Bruto), generally gross profit, as SGA expenses and subject to corporate income tax.

After applying for EFIN (Identification Number) at Kantor Pelayanan Pajak Tax Office (KPP) and receiving EFIN and NPWP, you will be able to use e-filing for income tax return.

Instead of transferring the after-tax net profit after paying income tax from the profit obtained from domestic business to retained earnings or capital reserve, you can remit to overseas subsidiaries to purchase overseas assets (in other words, foreign investment) and post them as assets in the B/S of the overseas subsidiaries, and there will be no complaint.

When we think of tax amnesty (Amnesti Pajak), which has been in effect since July 2016, it tends to be preceded by criminal-smelling explanations like "amnesty for tax evasion" or "recalling hidden assets abroad to the country", but it is an issue to which all Indonesians with NPWP (Taxpayer Identification Number) are party.

Since the real estate appraisal value of land and building tax (PBB-P2 = Pajak Bumi dan Bangunan Perdesaan dan Perkotaan) in Indonesia is set much lower than the market value, the PBB-P2 you pay every year can be fairly cheap.