Indonesian taxpayers are generally required to maintain bookkeeping using Latin letters, Arabic numerals, Rupiah, and Bahasa Indonesia. Foreign-owned companies can use English for tax bookkeeping, but the procedure depends on whether the company continues using Rupiah or also changes its bookkeeping currency to USD.
Can a Foreign-Owned Company Keep Its Books in English?
Yes. A taxpayer can maintain its bookkeeping or records in English while continuing to use Rupiah by submitting the required electronic notification to the Directorate General of Taxes (DGT).
The notification must generally be submitted no later than three months after the beginning of the financial year in which English bookkeeping is used. The taxpayer must also satisfy the applicable administrative requirements, including holding a valid fiscal certificate when the notification is submitted.
Changing the language of your Indonesian bookkeeping? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
This allows a foreign-owned company to use English for its Indonesian tax books without changing the bookkeeping currency to USD.
What If the Company Wants to Use English and USD?
A different procedure applies when a PT PMA wants to maintain its books in both English and USD.
A PT PMA can apply to maintain its bookkeeping in English and USD under the procedure available to foreign-investment taxpayers. The application must generally be submitted electronically no later than three months before the relevant financial year begins, or within three months of incorporation for a newly established taxpayer.
The application requires the company to state that its bookkeeping will be maintained in English and that its assets, liabilities, equity, income, and expenses will be recorded in USD. A valid fiscal certificate is also required.
Can Headquarters Still Use Separate Management Reporting?
A foreign parent company can maintain management reports, consolidation packages, or other group reporting in the format needed by headquarters.
These reports are separate from the Indonesian tax books. Where group reporting uses another currency, accounting treatment, or consolidation adjustment, the company should be able to reconcile those figures with its Indonesian books.
For bookkeeping and group-reporting support, email MAP Resources Indonesia at info@mapresourcesindonesia.com
English-language management reporting does not require the company to maintain a second set of Indonesian statutory books.
What Happens If the Bookkeeping Does Not Follow the Required Procedure?
Using English for Indonesian tax bookkeeping without completing the applicable notification or approval procedure can result in the bookkeeping failing to meet Indonesian tax requirements.
The same issue applies where a company uses USD for its tax books without obtaining the required permission. This can become material during a tax audit, when the DGT examines the records supporting the company’s tax calculations and filings.
Once a taxpayer has obtained the relevant notification number or permission, it must generally maintain the selected English or English-and-USD bookkeeping arrangement for at least five tax years. If it later receives approval to return to Bahasa Indonesia and Rupiah, it generally cannot switch back to English or English-and-USD bookkeeping for another five years.
Manage Indonesian Bookkeeping with MAP Resources Indonesia
MAP Resources Indonesia advises foreign-owned companies on meeting Indonesia’s bookkeeping language and currency requirements. Contact us today at info@mapresourcesindonesia.com.
