This is Full Guideline Success Business in Indonesia for Foreign

Understand Accounting and Tax Compliance

Navigating the complex tax and accounting landscape in Indonesia is crucial for ensuring compliance and optimizing your business operations. Here's a comprehensive overview of the key requirements to consider:

Tax Requirements:

• Corporate Income Tax (CIT):

  • General rate: 22%

  • Reduced rate for certain companies: 19% for publicly listed companies meeting specific criteria and 50% for small enterprises with annual turnover below IDR 50 billion.

• Value Added Tax (VAT):

  • Standard rate: 12%

  • Non-taxable goods and services: Certain items are exempt from VAT.

• Withholding Taxes:

  • Income tax withholding: Applies to various income types, including salaries, interest, royalties, and technical services.

  • Tax rates vary depending on the nature of the income and the recipient's tax status.

• Other Taxes:

  • Luxury goods tax: Imposed on certain luxury items.

  • Land and building tax: Applicable to property ownership.

  • Stamp duty: Levied on various legal documents.

Accounting Requirements:

• Financial Year-End:

  • Standard financial year-end: January 1 to December 31.

  • Alternative financial year-ends are possible with approval.

• Financial Statement Submission:

  • Deadline: Four months after the end of the financial year.

  • Submission location: Regional tax office.

• Audit Requirements:

  • Companies with total assets exceeding IDR 25 billion or annual gross turnover exceeding IDR 50 billion must have their financial statements audited by a registered public accountant.

• Accounting Standards:

  • Public and private companies must adhere to the Indonesian Financial Accounting Standards (SAK) which are based on International Financial Reporting Standards (IFRS).

• Recordkeeping:

  • All accounting records must be maintained in Bahasa Indonesia and the financial books should be kept in Rupiah.

  • Certain exceptions exist for foreign investment companies, permanent establishments, and listed companies.

Additional Considerations:

• Tax Incentives:

  • Various tax incentives and exemptions may be available for specific industries and regions.

• Transfer Pricing:

  • Transactions between related parties must comply with transfer pricing regulations to ensure fair pricing.

• E-Invoicing:

  • Electronic invoicing is mandatory for certain taxpayers.

• Taxpayer Identification Number (NPWP):

  • All businesses and individuals conducting business activities in Indonesia must obtain an NPWP.

NPWP Registration Learn More. . .

EFIN Registration Learn More. . .