All companies registered in Indonesia must pay and report the applicable taxes as well as submit their annual financial statement (AFS) in Indonesia.
In this guide, you will find the essential requirements for submitting the AFS in Indonesia for your tax return.
Due dates for AFS filing
If your company’s fiscal year is from 1 January to 31 December, you need to submit your financial statement for 2019 as well as your annual corporate income tax report by 30 April 2020.
However, if your company’s fiscal year is different from a calendar year, the reporting deadline is four months after the end of your fiscal year.
You must submit your corporate income tax report and AFS statement in Indonesia to your regional tax office. If your annual turnover is more than IDR 50 billion (~US$ 3.5 million), you need to have your financial statement audited as well.
Consequences of late or NO reporting in Indonesia?
Failure to comply with the Indonesian accounting and compliance requirements will result in monthly interest penalties on late payments starting from 2% and reaching up to 48%. If you exceed the deadline even by one day, it counts as a full month, and tax officials may impose the penalties accordingly.
Point to be noted is companies that have failed to comply will receive increased attention from the tax officials in the future.
Indonesia’s tax laws are changing often and not being aware of some regulations does not mean that you don’t have to follow them. In fact, not reporting taxes correctly is one of the seven common mistakes foreign investors do in Indonesia.
Avoid the unnecessary risk of putting yourself or your company in a vulnerable position and consult with Straits Partners’s tax consultants to have your tax reporting and compliance in Indonesia done the right way. Contact us via [email protected]
Composition of AFS in Indonesia include?
According to the Indonesian Financial Accounting Standards (SAK), your annual financial statement should comprise the following information:
|Balance sheet||Includes company’s assets, liabilities, and owner’s equity|
|Profit and loss statement||Shows your company’s income, expenses, and profit in the previous year|
|Cash flow report||Reports your company’s cash flow activities|
|Statement of changes in company equity||Reports on changes in equity during the last year|
|Notes to the financial report||Description of items in the abovementioned reports in further detail|
Keep in mind that you must have all your accounting records and financial statements in Indonesian Bahasa unless you have received permission from the Ministry of Finance to use a different language.
Want to skip having to delve into Indonesia’s complex tax laws? Our team of experienced accountants will gladly take this burden off your shoulders and prepare your financial statement on your behalf.
Contact us for a free consultation.
What is taxable income in Indonesia?
Similar to any other country, With some exceptions, any income you receive from Indonesia or abroad is taxable income in Indonesia:
|Taxable income||Non–taxable income|
|Salaries, gratifications, allowance, commissions, bonuses, etc. |
Rewards and prizes from lotteries or jobs
Profits from business and sales of assets
Gain from interests, dividends, royalties
Rental and other income from the use of assets
Foreign exchange gains
Assets in lieu of shares
Benefits in Kind
Dividends from retained earnings
As for the legal entities, any profits the company received (gross revenue minus expenses) during the previous year are subject to taxes.
How to reduce corporate income tax in Indonesia
Take note that in Indonesia, most direct and indirect expenses can be recorded as expenses which will help you optimize your tax liabilities. These include:
Any direct operational costs, such as supplies, salaries, travel costs, insurance, promotion/marketing, administration, all taxes withheld by third parties
Loss on the transfer of assets or foreign exchange
Scholarship and training costs
Uncollectible account receivables
Donations to national disasters, social infrastructure, education facilities, fitness
Indonesia has also been very favorable toward small and medium-sized enterprises (SMEs). SMEs in Indonesia with annual revenue of less than IDR 4.8 billion (USD 320,000) can apply for a lower income tax rate which was even reduced to 0.5% in July 2018 from the previous 1%.
Want to learn more about how to optimize your company’s taxes in Indonesia? Read more about the reduced income tax rate in Indonesia or contact our tax consultants for a complimentary consultation via [email protected]
Other annual tax and compliance requirements in Indonesia
In addition to monthly tax payment and reporting deadlines in Indonesia, the most important annual compliance deadlines are the following:
|Type of tax||Reporting and payment deadline|
|Personal income tax||31 March|
|Corporate income tax||30 April|
|Land and building tax||Payment deadline six months from receiving a tax notification letter|
To learn more about the individual income tax, read our previous article on how to report personal income tax in Indonesia
Annual tax return in Indonesia
Companies in Indonesia can also apply for the yearly tax return which deadline is also on 30 April.
The general income tax rate for companies in Indonesia is 12.5 – 25% of the profit. If you are paying the income tax based on the general tax rates, you can also apply for an annual tax return. However, if you have used the reduced income tax rate of 0.5%, you cannot file a tax return in Indonesia.
Also, keep in mind that applying for a tax return does not always mean that you will get money back. The tax authorities may reject your application or conduct a thorough tax audit before they accept your tax return application which can result in you having to pay extra instead.
For this reason, it is wise to consult with an accountant and a tax consultant first to make sure you have done your tax reporting in Indonesia right and make changes if necessary.
Feel free to reach out to us at [email protected]