Companies in Indonesia must maintain accounting books and supporting documents to substantiate their financial transactions and tax obligations. Foreign-owned companies (PT PMAs) must generally retain these records for 10 years in Indonesia, even if their accounting functions are managed overseas.
What Accounting Records Must Companies Maintain in Indonesia?
Indonesian tax regulations require companies to maintain bookkeeping records covering assets, liabilities, equity, income, expenses, purchases, and sales.
For accounting assistance in Indonesia, reach MAP Resources at info@mapresourcesindonesia.com
The principal records include:
- General ledger and accounting journals: Financial transactions, adjustments, and transfers between accounts.
- Sales and purchase records: Transaction values, dates, and details of goods or services.
- Accounts receivable and payable: Outstanding customer balances and obligations to creditors.
- Bank and cash records: Receipts, payments, and account balances.
- Fixed asset records: Acquisition costs, depreciation, disposals, and carrying values.
- Inventory records: Stock movements, quantities, and valuations, where applicable.
- Capital and liability records: Shareholder contributions, loans, repayments, and changes in equity.
Bookkeeping must generally be maintained in Indonesian and rupiah (IDR), unless the company qualifies for and follows the applicable rules permitting another language or currency.
Which Supporting Documents Must Companies Keep?
|
Transaction type |
Supporting documents |
|
Sales and revenue |
Customer invoices, contracts, delivery records, and payment confirmations |
|
Purchases and expenses |
Supplier invoices, receipts, purchase orders, and service agreements |
|
Banking and payments |
Bank statements, transfer confirmations, and payment records |
| Payroll |
Employment contracts, payroll registers, payslips, and salary payment records |
|
Fixed assets |
Purchase invoices, ownership documents, and disposal records |
| Inventory |
Purchase invoices, stock movement records, and physical inventory counts |
| Shareholder and related-party transactions |
Loan agreements, capital contribution records, intercompany invoices, and corporate approvals |
Not every document listed is mandatory for every transaction. A supplier invoice, for instance, may need to be supplemented by evidence of service delivery or payment to substantiate the expense.
Transactions with overseas shareholders or affiliated companies may also require transfer pricing documentation, depending on the nature and scale of the transactions.
How Must Companies Store and Retain Their Accounting Records?
Corporate taxpayers must retain the required records at their place of domicile in Indonesia, in accordance with the applicable tax provisions.
Electronic bookkeeping is permitted, provided the information remains accessible and can be produced during tax examinations.
Need bookkeeping support? Email MAP Resources Indonesia at info@mapresourcesindonesia.com
For PT PMAs using accounting systems managed by overseas parent companies, access to a foreign accounting platform alone should not be assumed to satisfy domestic retention requirements. Companies must also preserve access to historical records after changing software or accounting providers.
What Happens if a Company Cannot Produce Its Accounting Records?
Incomplete or unavailable records can have the following consequences:
- Disallowed tax deductions: The Directorate General of Taxes (DGT) may reject expenses that cannot be adequately substantiated.
- Rejected input VAT claims: Missing or defective tax invoices may prevent companies from claiming input VAT credits.
- Additional tax assessments: If insufficient records prevent the DGT from reliably determining taxable income, it may calculate taxable income using the assessment methods permitted under Indonesian tax regulations. Additional taxes and applicable administrative sanctions may follow.
- Financial statement audit difficulties: Auditors may be unable to verify transactions or balances, potentially resulting in modified audit opinions.
Deliberately failing to maintain or produce required records may constitute a criminal tax offence if the statutory conditions are met, including the potential loss of state revenue.
Contact MAP Resources Indonesia for Accounting and Bookkeeping Support
MAP Resources Indonesia assists foreign-owned companies with maintaining accounting records, organizing supporting documents, and meeting Indonesian bookkeeping requirements. Contact info@mapresourcesindonesia.com for assistance.
