Once a PT PMA has been established in Indonesia, its accounting process needs to be ready when the company starts receiving capital, paying expenses, purchasing assets, hiring employees, or generating revenue. Setting this up early allows these transactions to enter into the company’s records as they occur rather than having to reconstruct them later.
Setting Up Accounting After Incorporation
The company needs to establish its chart of accounts, accounting system, opening balances, bank accounts, and procedures for collecting supporting documents.
Initial transactions can include shareholder capital contributions, incorporation and pre-operating costs, office expenses, fixed-asset purchases, employee costs, supplier payments, and eventually customer revenue. Each transaction needs to be recorded correctly rather than treating all early costs as startup expenses.
Responsibilities also need to be clear where accounting involves several parties. The Indonesian team may collect invoices and payment records, an external provider may maintain and close the accounts, and an overseas finance team may require information for group reporting.
Setting up accounting for a new PT PMA? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
If accounting is set up after transactions have already begun, the company may need to rebuild its opening records using earlier payments and supporting documents.
Connecting Accounting with Tax Compliance
The company’s accounting records provide the transaction data needed for Indonesian tax compliance. Payments to employees, suppliers, service providers, and overseas recipients can create withholding tax obligations, while sales and purchases can affect VAT where the company is registered as a taxable entrepreneur (PKP).
Accounting records also support corporate income tax calculations, so the figures reported for tax purposes need to match or be reconciled with the company’s accounting records and supporting documents.
Establishing the Month-End Closing Process
Once operations begin, the company needs a repeatable process for closing its accounts. This can include reconciling bank accounts, receivables and payables, reviewing tax balances, recording fixed-asset movements, reconciling intercompany balances, and making the necessary month-end adjustments.
For companies reporting to an overseas headquarters, the closing timetable may also need to meet the group’s monthly reporting deadline.
Without these reconciliations, differences can remain between bank balances, accounting records, tax filings, and amounts due to or from related companies.
Integrating Indonesian Accounting with Group Reporting
An Indonesian subsidiary generally needs to maintain its accounting records in line with the Indonesian financial reporting framework while also providing financial information in the format required by its overseas parent.
The parent may use a different chart of accounts, reporting currency, reporting format, or closing timetable. It may also require additional information for consolidating the Indonesian subsidiary into group financial statements.
Need Indonesian accounting aligned with group reporting? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
Mapping these requirements when the accounting process is established can reduce the need to reclassify transactions or rebuild financial information whenever reports are submitted to headquarters. Intercompany balances should also be reconciled with the corresponding overseas group entities so differences can be identified before consolidation.
Accounting Support for PT PMAs With MAP Resources Indonesia
MAP Resources Indonesia supports foreign investors with establishing and maintaining accounting processes for newly established PT PMAs in Indonesia. Contact us at info@mapresourcesindonesia.com to discuss accounting support for your PT PMA.
