Foreign-owned companies in Indonesia must manage monthly tax obligations covering employee salaries, supplier payments, corporate income tax installments and, where applicable, VAT.
Monthly Tax Filing Requirements for Foreign-Owned Companies
Value-Added Tax (VAT)
Companies registered as taxable entrepreneurs (Pengusaha Kena Pajak, or PKP) must generally submit monthly VAT returns, including for periods without taxable transactions.
VAT returns reconcile output VAT on sales with eligible input VAT on purchases. Excess input VAT may generally be carried forward, while refunds are subject to applicable requirements.
Employee Income Tax (PPh 21)
Employers generally withhold PPh 21 on employment income paid to Indonesian tax residents, including qualifying foreign employees.
Simplify your monthly tax filings with MAP Resources Indonesia. Email info@mapresourcesindonesia.com
Employment income paid to non-resident individuals may be subject to PPh 26, taking account of applicable tax treaties.
Employers generally calculate monthly PPh 21 using Indonesia’s applicable effective withholding rates, with an annual reconciliation in the employee’s final tax period. Payroll records must account for taxable salaries, allowances, bonuses and other relevant employment benefits.
Withholding Tax (PPh 23 and PPh 26)
PPh 23 generally applies to specified payments to Indonesian tax residents, including certain services, royalties and interest.
PPh 26 generally applies to relevant payments to non-residents. Applicable tax treaties may reduce withholding rates where the recipient meets the treaty requirements.
Companies must issue electronic withholding certificates and report these transactions through their monthly withholding tax returns.
Monthly Corporate Income Tax Installments (PPh 25)
Under Article 25 of Indonesia’s Income Tax Law, companies generally make monthly advance payments toward their annual corporate income tax liability.
Installment amounts generally depend on the previous annual tax return, subject to applicable adjustments and exceptions.
An electronically validated PPh 25 payment generally satisfies the monthly reporting obligation without a separate return. Companies with nil installments or other exceptional circumstances should check whether separate reporting is required.
Monthly Tax Payment and Filing Deadlines
| Tax obligation | Payment deadline | Filing deadline |
|---|---|---|
| VAT (PPN) | By the end of the following month, before submitting the return | End of the following month |
| Employee income tax (PPh 21) | 15th of the following month | 20th of the following month |
| Withholding tax (PPh 23/26) | 15th of the following month | 20th of the following month |
| Corporate income tax installments (PPh 25) | 15th of the following month | Generally satisfied through validated payment |
Submitting Monthly Tax Returns Through Coretax
Companies use Coretax DJP to prepare electronic withholding certificates, issue tax invoices, generate payment codes and submit monthly tax returns.
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Electronic withholding certificates record the tax deducted from relevant payments and provide information for the corresponding monthly withholding tax returns. For VAT, registered taxpayers issue electronic tax invoices and reconcile their sales and purchase transactions before submitting their returns.
An authorized representative reviews the applicable return, settles any outstanding tax using the relevant payment facility and completes electronic submission.
Correcting Monthly Returns and Managing Penalties
Companies may amend previously submitted monthly returns, subject to applicable restrictions. Corrections involving withholding certificates or VAT invoices may also require amendments to the underlying electronic documents.
The standard administrative fines for late submission include:
| Return | Late-filing fine |
|---|---|
| Monthly VAT return | IDR 500,000 (USD 31.25) |
| Monthly income tax return | IDR 100,000 (USD 6.25) |
Late payment may attract administrative interest calculated using the applicable statutory rate. Additional tax arising from amendments may also carry interest, depending on the circumstances.
Accounting records and supporting tax documentation must generally be retained for 10 years.
Contact MAP Resources Indonesia for Monthly Tax Compliance
MAP Resources Indonesia assists foreign-owned companies with monthly VAT reporting, payroll tax withholding, corporate income tax installments and Coretax submissions. Contact us at info@mapresourcesindonesia.com.
