Guide For Foreign Investor - General Provision

What kind of tax does the Director General of Taxes (DGT) administer?
DGT administers income tax, Value Added tax, and Land and Building Tax.

Who qualifies as a Taxpayers?
Taxpayers are individual or corporation who has any tax obligation either income tax or Value Added tax.

REGISTRATION

The requirement s of registration are:
-Certification from Board of Investment (BKPM)
-Notary deed for establishment of the corportion
-Power of attorney if the application is signed by person who is not the authorized person in the company

Soon after the requirements are fulfilled, Tax Service Office will issue a Taxpayers Identification Number. The number is valid for all taxes transaction including Income tax and Value add tax.

New foreign investment corporation, however, may choose to register at the tax service office where the corporation is domiciled.

Where do I have to register if I have several branches?
Taxpayer, who has more than one place of business, branches, representatives which are located outside Jakarta, should register at each tax office which is responsible for each place of business for the purpose of withholding taxes and Value Added tax only.

When do I have to have a TIN?
Corporation and individuals that are liable to be taxed shall have TIN as an and identity for tax purposes. Single TIN will apply for both Income Tax and Withholding Tax.

Is it possible to register via internet?
The DGT already launch E-register to make the registration process more convenient to you.

Is there any action taken by DGT id a firm, which have any obligation in VAT does not register?
The director General of Taxes may issue a Taxpayer Identification Number and or to confirm a firm as a Taxable Person for VAT purposes ex-officio in case a Taxpayer for VAT purposes does not fulfill the obligation to register.

How long does the registration process take?
The registration process will take about one working day.

Is there any fee for that service?
The registration process is free of charge.

How do I pay my tax?
The tax due can be paid by taking a payment slip (SSP) to a bank, or just asking your bank to pay with e-payment.

When do I have to file the annual corporate tax return?
The corporate tax return should be filed not later than three months after end of a taxable year. For instance, if PT AAA has a taxable year of January – December, then the return should be filed not later than the end of March of the succeeding year.

The taxable year may vary. It depends on the accounting period of a corporation chooses his taxable year, the corporation should continue to use that period unless the accounting period of the corporation is changed.

Any changes of the taxable year is permitted if a corporation submit an application to change the period, and it will be audited by the tax office.

Who should sign the tax return for a corporation?
In case a taxpayer is an entity, the Tax Return must be signed by a member of the management or board of directors.

In case a Tax Return is completed and signed by other than the taxpayer, a power of attorney must be attached.

What should be attached to the annual tax return?
The annual Income Tax Return of a Taxpayer who is obliged to maintain bookkeeping must be accompanied by financial statements in the form of balance sheet and income statement as well as other information required to calculate the amount of Taxable Income.

What is the sanction if we fail a complete tax return?
Incomplete tax return will not be received by the tax office. As a consequence, the taxpayer will be considered as not filing the return and it will be subject to penalty according to the law of General provisions and tax procedures.

What is complete tax return?
Tax return is considered as a complete return if the information listed in the form is all fulfilled, the attachment is complete, and the return is signed by the authorized person.

How do I fulfill my tax return?
Every Taxpayer shall be obliged to complete its Tax Return in Indonesia Language, Latin alphabet. Arabic numerals, and Rupiah currency, and to sign and file it to the district tax office where the taxpayer is registered.

A Taxpayer which has obtained a permission from the Minister of Finance to use foreign language and non-Rupiah currency in its Tax Return, shall file its tax Return in the language and the currency other than Rupiah as permitted, as regulated by a decree of the Minister of Finance.

How do I file the annual tax return?
The tax return should be filed at the tax office with which the taxpayer is registered or sending it by certified delivery either through post office or courier service. If you file directly to the tax office, you will get a receipt of your filing.
If you use a post office or courier service, the documentation received from that office may be used as a filing receipt.

Failure to comply with the filing deadline will be subjected to an administrative sanction of Rp. 100,000.

Can I ask for any extension to file the annual tax return?
Timing to file the corporate tax return has a prescribed due date. However, a corporation may request an extension to file with following documents/condition:
-Letter of request;
-A temporary tax return (code Y);
-An interim financial statement; and
-Pay the estimated tax due based on the temporary tax return.

The extension is given for a maximum of six months after the end of the period of filing.

Is it possible to make any correction if an error (s) is found in my tax return?
Taxpayer my amend a filed tax return voluntarily by submitting written statement, within two years from the end of a taxable period, provided that the Director General of Taxes has not commenced a tax audit.

Is there any penalty for the increase of tax payable due to an amended tax return?
In case a Taxpayer voluntarily amends a filed tax return which result in an increase of the tax payable, the Taxpayer shall be subject to an administrative penalty of 2% (two percent) interest per month on the underpaid tax, calculating from the original due date for filing the Tax Return up to the date of payment of the underpaid tax arising from the correction of the Tax Return.

When do I have to pay the tax?
The tax due based on an annual tax return should be paid not later than the 25th of month in which to file the tax return. For instance, if the taxable year is January –December, payment should be done not later than March 25 of the succeeding year.

Due date for payment of monthly corporate income tax installment is 15 (fifteen) days from the end of a month.

What is the penalty for late payment?
If a payment or remittance of tax payable is made after the due date of the payment or remittance, an administrative penalty in the form of 2% (two percent) interest monthly, calculated from the due date of payment up to the date of payment where fraction of the month is treated as a1 (one) full month shall be imposed.

What is the statute of limitation for tax matters?
Within ten years from the date a tax is payable, or from the end of a Taxable Period, the Director General of Taxes may issue a Notice of Tax Underpayment Assessment in the following conditions:
a. based on the result of a tax audit or other information, a tax payable is unpaid or underpaid;
b. a tax return is not filed within certain period an after being warned in writing, the tax return is not filed within the time specified in the letter or reprimand;
c. based on the result of a tax audit of VAT and Sales Tax on Luxury Goods, it is found that a tax overpayment should not have been carried over or that the 0% (zero percent) rate should not have been applied;
d. the obligation to maintain bookkeeping have not been met, so that the amount of tax payable cannot be determined.

Is there any penalty for notice of underpayment issued by tax office?
The amount of tax underpaid in a Notice of Tax Underpayment Assessment shall be increased by an administrative penalty of 2% (two percent) interest per month for a maximum of 24 (twenty four) months, calculated from the date a tax is payable or from the end of a Taxable Period up to the issuance of the notice of tax underpayment assessment.

The amount of tax underpaid in a Notice of Tax Underpayment Assessment above mentioned shall be increased by 50% or 100% under certain condition.