Indonesian Tax Law

There are two types of car tax in Indonesia: the annual car tax to be paid when the vehicle certificate is renewed, and the car tax to be paid every five years when the license plate is replaced and the engine registration number is checked.

Indonesia's value-added tax is a tax on the transfer of value added in the supply chain, and the problem was that foreign digital services companies were exempt from VAT when they sold goods and services within Indonesia and did not bear VAT on purchases because they were outside the country.

Indonesia's social security system, BPJS, includes both social insurance and medical insurance, and low-income social insurance subscribers who earn less than 5 million rupiah per month will receive a wage subsidy of 600,000 rupiah per month from the government for four months as a wage subsidy for the coronation disaster.

In order to conduct business activities in Indonesia, one is obliged to register and pay NPWP (Taxpayer Identification Number) as either a domestic individual, corporation or permanent establishment (PE), and foreign e-commerce businesses, which were previously difficult to certify as PE, will also have to register as PE and pay VAT.

Foreign e-commerce operators such as Netflix and ZOOM, which do not have an existing law in Indonesia but have significant domestic sales, will also be treated as PE (permanent establishments) and will be made to pay ETT (electronic transaction tax) through their Indonesian distributors, according to an omnibus law issued to the National Assembly in February.

Tax incentives related to Indonesia's new coronaviruses include exemption from personal income tax PPH21 for individuals for employees earning less than 200 million rupiah per year, and exemption from PP23 (0.5% of external standard taxable sales) for small and medium enterprises (UMKM) from April to September.

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).

A taxable business PKP is a legal entity subject to value-added tax PPN and pays VAT on the difference between 10% (PPN-Out) of sales of taxable items BKP and taxable services JKP and 10% (PPN-In) of purchases.

The 1% separate tax regime (PP46) on turnover (PP23), which is available to SMEs with an annual turnover of less than 4.8 miliyar, has been revised (PP46) and the tax rate has been reduced to 0.5%, while the period of application is limited to three years. If the profit margin is less than 4%, the normal corporate income tax rate is a benefit.

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).

The VAT paid upfront in the supply chain is borne by the end consumer who does not charge 10% VAT due to the sales activity, resulting in the payment from the consumer to the tax office being made on behalf of each business.

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.