Foreign-owned companies operating in Indonesia can outsource their recurring tax compliance to a local provider. Outsourcing the work does not transfer the taxpayer’s underlying responsibility for complying with its Indonesian tax obligations.
What Do Tax Compliance Services in Indonesia Cover?
Recurring tax compliance can include corporate income tax, withholding taxes, VAT, and the preparation and submission of the relevant tax returns.
Corporate income tax compliance can include calculating monthly Article 25 income tax (PPh 25) installments where applicable, reconciling the company’s tax position, and preparing the annual corporate income tax return. A corporate taxpayer generally must submit its annual return within four months after the end of its tax year. For a company using the calendar year, this normally means April 30.
Companies can also have withholding or collection obligations arising from payments to employees, domestic service providers, overseas recipients, imports, and other transactions. The tax that applies depends on what the payment is for and who receives it.
Need support managing your company’s tax compliance in Indonesia? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
Companies registered as taxable entrepreneurs (Pengusaha Kena Pajak or PKP) also have VAT compliance obligations. This includes the treatment of output and input VAT, tax invoices, any VAT payable, and submission of the monthly VAT return, which generally must be filed by the end of the following month.
Connecting Accounting Records With Tax Compliance
Payments recorded in the company’s accounts to suppliers, employees, overseas related parties, and other recipients can create different withholding or VAT consequences, while expenses may receive different treatment for corporate income tax purposes.
The company needs to reconcile its accounting records with the amounts reported in its periodic tax filings. Any differences should be identified and supported during the year rather than left until the annual tax return is prepared.
Invoices, contracts, tax invoices, payment records, and other transaction documents may be needed to support the tax treatment reported by the company.
Managing Monthly and Annual Tax Compliance
The taxes a company needs to deal with each month depend on the transactions and activities that took place.
Coretax is now central to many Indonesian tax administration processes, including tax payments and the filing of periodic tax returns. Companies outsourcing tax compliance still need their accounting information and supporting documents to reach the provider in time for the applicable calculations, payments, and filings.
For ongoing tax compliance support in Indonesia, contact MAP Resources Indonesia at info@mapresourcesindonesia.com
For the annual corporate income tax return, the company must reconcile its accounting profit with its taxable income and make adjustments where accounting and tax treatment differ.
When Tax Compliance Becomes More Complex
Cross-border and related-party transactions can add additional tax requirements to the recurring compliance process. Payments to overseas recipients may involve Indonesian withholding tax and tax treaty considerations, while intercompany transactions can also create transfer pricing requirements.
Imports, foreign employees, VAT transactions, and operations through multiple Indonesian entities can create additional tax and reporting requirements.
Tax Compliance Services in Indonesia With MAP Resources Indonesia
MAP Resources Indonesia supports foreign-owned companies with recurring Indonesian tax compliance and reporting. Contact us at info@mapresourcesindonesia.com to discuss ongoing tax compliance support for your Indonesian operations.
