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Both, individual and corporate tax residents have to submit reports on annual income tax in Indonesia by the 31st of March and April, respectively.
Your company has to report its taxes in Indonesia even if no business transactions take place. It is crucial to do the reporting correctly to avoid penalties and additional expenses. In this article, we will go over the main taxes companies and individuals need to report and how to do it if you are not physically in Indonesia.
Reporting can only be done online. To register online, individuals and companies must register an online tax file number (EFIN).
Annual Corporate Income Tax Reporting
The deadline for annual corporate income tax reporting is the end of April the following calendar year. I.e the deadline for the corporate income tax report of 2020 is 30 April 2021.
Who Must Report Corporate Income Tax?
Reporting is mandatory for companies whose tax card was issued in 2020, even if the company has not earned any income in 2020. Companies are not required to report monthly corporate income tax if they do not have any income (nor any expenses requiring withholding taxes). However, even with zero business activities, companies are required to report annual tax.
Monthly tax reporting includes the following:
- reporting income tax;
- reportng value added tax (the VAT) by the taxable enterprise (PKP), in the event your company is VAT registered.
Annual tax reporting includes the below. If there is anything to correct or revise in the monthly reporting, it can be done when submitting the annual report.
- Reporting the income generated
- Reporting the assets and liabilities
Corporate Income Tax Rates
The corporate income tax (the CIT) rate will decrease next year by 2 %. This means that when you report on your taxes from January 2021 to December 2021, your company will be paying 22% of CIT from the net profit of the company. The following year, when you report on 2021, the CIT will be 20% from the net profit of the company. However, most of the small businesses will qualify for tax incentives, and the tax rates are smaller than the normal rates.
Tax Incentives for Small Businesses in Bali
- Small enterprises (i.e. corporate taxpayers with an annual turnover of no more than IDR 50 billion) are entitled to a 50% tax discount of the standard rate. This discount is applied proportionally on gross taxable income up to IDR 4.8 billion.
- Certain enterprises with gross turnover of no more than IDR 4.8 billion are subject to final income tax at 0.5% from the gross turnover.
There are different tax regimes that your company can choose from. Emerhub can help to decide what is the most efficient tax model for your planned business model.
Requirements for Corporate Income Tax Reporting
There are a lot of parts that make up a complete tax report in Bali. Listed below are the main requirements.
- Company’s tax identification number (NPWP) and its SKT (Surat Keterangan Terdaftar).
- Previous tax reports with all documentation (if any)
- Complete set of Financial Reports for the year that will be reported
- Balance Sheet;
- Income Statement
- General Ledger
- List of Assets and depreciation
- List of prepayments, lease and its amortization
| Type of Tax | Tax Payment Deadline | Tax Return Filing Deadline |
| Article21/26 (Payroll) | The 10th day of the following month | The 20th day of the following month |
| Article 23/26 Income Tax | The 10th day of the following month | The 20th day of the following month |
| Article 25 Income Tax Installment | The 15th day of the following month | The 20th day of the following month |
| Type of Tax | Tax Payment Deadline | Tax Return Filing Deadline |
| Article21/26 (Payroll) | The 10th day of the following month | The 20th day of the following month |
| Article 22 Income Tax on Imports/Payments to Tax Collector | The 10th day of the following month | The 20th day of the following month |
| VAT | Prior to the tax return filing deadline | The end of the following month |
| Type of Tax | Tax Payment Deadline | Tax Return Filing Deadline |
| Corporate Income Tax | The end of the fourth month after the book year-end before filing the tax return | The end of the fourth month after the book year-end |
| Land and Building Tax | Six months after the receipt of a Tax Due Notification Letter from the local government | N/A |
Tax Reporting Penalties in Indonesia
Late payments of the above taxes incur interest penalties with a rate resulting from the application of the MoF Interest Rate (MIR) plus a surcharge. Part of a month, for example a single day, is considered a full month.
Late filing of a tax return of failure to file a tax return incurs an administrative penalty at the following amounts
| Type of Tax Return | IDR |
| VAT Return | 500,000 |
| Other Monthly Tax Return | 100,000 |
| CIT Return | 1,000,000 |
Why is it important to report corporate income tax correctly?
One of the most common mistakes that companies make is not submitting the tax reports on time. Late reporting or not reporting your company’s income will eventually lead to a tax audit.
It is a common misconception that if the company does not earn any income it is not required to report taxes. However, the annual tax report (even if it is just the reporting of no income) is mandatory. Also, if your company has expenses, some of these expenses are subject to withholding taxes. In this case, your company must pay as well as report the withholding taxes. If the company has not filed the tax report and paid withholding taxes there will be a penalty for late payment as well as late reporting. If your company also invests more than 2.5 million IDR, you will need to also submit an investment report.
Annual personal income tax reporting
Reporting on income tax in Indonesia mandatory for individuals who have a tax card (NPWP). Unlike corporations, individuals have no other option but the 31st of December as the final day of the fiscal year. As the Indonesian income tax system is a self-assessment regime, the individual must settle any underpaid tax on annual income before submitting the IIT Return no later than the 31st of March to avoid any late payment penalties.
Who is obliged to report personal income tax?
When a foreign national resides (or intends to reside) in Indonesia for more than 183 days during a twelve-month period, they will need to report all global income no matter the currency. Remuneration paid will be subject to employee withholding tax at progressive tax rates from 5% to 30% depending on the level of income received.
Foreign nationals will be treated as resident taxpayers and will require a tax identification number (“NPWP”) and must submit Individual Income Tax Returns.
What Indonesian Work Permit holders need to know about tax
When a foreign national applies for an Indonesian work permit that lasts more than six months, the Indonesia Tax Office (ITO) will assume intent to reside in Indonesia.
This will therefore render the foreign nationality as an Indonesian tax resident, irrespective of the number of days actually spent by the employee in the country.
Indonesian tax resident individuals earning income in excess of the annual non- taxable income (“PTKP”) threshold indicated above must register with the ITO in order to submit Individual Income Tax Return (form 1770).
The tax resident is required to disclose income earned from Indonesia and abroad on the return. This includes; employment income, investment income, capital gains, and offshore income.
Individual Income Tax (IIT) Rates
Normal tax rates (updated to 2022 rates)
The table below shows the progressive tax rates for individuals after the deduction of exemptions and relief.
| Progressive Tax Rate | Taxable income (Rp) |
| 5% | Up to 60 million |
| 15% | 60 million – 250 million |
| 25% | 250 million – 500 million |
| 30% | 500 million – 5 billion |
| 35% | Over 5 billion |
Concessional tax rates from severance payments
The final tax rates for severance payments (if paid within two years) are as below. Severance payments made in year three and onwards are taxed at the normal IIT rates.
| Progressive Tax Rate | Taxable Income (Rp) | Incremental Tax (Rp) |
| 0% | Up to 50 million | Nil |
| 5% | 50 million – 100 million | 5 million |
| 15% | 100 million – 500 million | 75 million |
| 25% | Above 500 million | ~ |
The final tax rates for lump sum pension payments from a governmental approved pension fund, old-age security savings from the BPJS in social security (if paid within two years) are as below. Similar to the severance payments made in year three and onwards, the gross income is taxed at the normal IIT rates.
| Progressive Tax Rate | Taxable Income (Rp) | Incremental Tax (Rp) |
| 0% | Up to 50 million | Nil |
| 5% | Above 50 million | ~ |
Individual Tax Allowance.
The following are the Individual Tax Allowances available to individuals as deductions to resident individual taxpayers in calculating his/her taxable income.
| Category | Incremental Tax (Rp) |
| Occupational expenses (5% of gross income with a maximum Rp. 500,000 per month | Rp 500,000 |
| Employee contribution to BPJS for old age security savings (2% of gross income) | Full amount contributed (No maximum) |
| Pension maintenance expenses (5% of gross income with a maximum of Rp. 200,000 per month) | Maximum Rp. 2.4 million |
Exemption from Individual Income Tax and Non-Taxable Income
The following are excluded from an individual’s gross income:
- Aid support and donations;
- Inheritances;
- Payments by an insurance company to an individual taxpayer in connection with health, accident, life or education insurance;
- Benefits in kind received from employers with certain conditions attached; and
- Scholarships that meet the criteria set by the Ministry of Finance.
Non-Taxable Income
The annual non-taxable income (‘PTKP’) for resident individuals depends on the taxpayer’s marital status and number of dependents.
An individual’s marital and dependent status for each year is determined by his or her status as on the first day of January each year. A family is generally regarded as a single tax reporting unit with a single tax identity number (‘NPWP’) in the name of the head of the family (typically the husband/father). Accordingly, the IIT (Individual Income Tax) return would encompass the family’s (including wife and dependent children) income with their assets and liabilities.
| Category | Incremental Tax (Rp) |
| Tax Payer | 54 million |
| Spouse | 4.5 million |
| Each Dependant (Maximum 3) | 4.5 million |
Employer Compliance and Filing Obligations.
An employer is obliged to withhold, remit and report on income tax in Indonesia received by an employee in connection with employment. Furthermore, the income tax must be remitted on a monthly basis by the employer no later than the 10th day of the following month. Subsequently, the monthly tax return should be submitted no later than the 20th day of the following month outlining total compensation and taxes withheld.
Requirements for personal income tax reporting:
- Revenue recap for a year period
- Tax receipt from other parties
- Financial statement (if any company entities are registered in your name)
- Bank statement (current asset value including the balance on your bank account)
- NPWP and family card (KK) or passport and KITAS for foreigners
- Electronic tax filing (EFIN)
The penalties for late reporting of personal income tax is Rp. 100,000
You don’t have to travel to Bali or learn about the tax regulations to report your income tax. Get in touch with Emerhub and we will file the taxes on your behalf.
