ACCOUNTING AND TAX REPORTING

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Since 2012

DOING BUSINESS IN INDONESIA

Accounting and Tax Reporting in Indonesia

Accounting and tax reporting are critical, basic business processes requiring accuracy and timeliness. Indonesia has its own finance and tax regulations, and all local companies in Indonesia must comply. Although your company may not yet have business activities or tax liability, you are required to report a monthly tax statement to the tax office.

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Understanding of Taxation in Indonesia

It is compulsory that any PT PMA in Indonesia has to pay taxes and report the company’s financial status regularly. Many of Indonesian taxes that should be paid by PT PMA are similar to what stakeholders should pay in different countries. Among them are monthly and annually withholding taxes, monthly and annually income taxes, Value Added Tax (VAT), Luxury Goods Sales Tax (LGST) - if any, along with the company investment plan. Those taxes should be paid in the local tax office, where the company office is located.When a PT PMA has a domicile  in the Indonesian territory, it will be treated as Indonesian tax resident, so that the company has the obligation as a resident taxpayer. The taxation regulation in Indonesia incorporates both a self-assessment system and a withholding tax system.

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To know more about the Tax Law and regulations, Indonesian government has issued:• The General Provisions and Taxation Procedures Law No. 28 of 2007;• The Income Tax Law No 36 of 2008;• The Value Added VAT (termed ‘Goods and Services and Sales Tax on

Luxury Goods’) Law No 42 of 2009.In order to fulfill the obligation to pay the tax, PT PMA can choose one among these two options:• Hiring an accountant to do all the reporting and payment of the tax.• Finding a tax consultant to help the company dealing with the tax.All the reports and tax document should be sent to the local tax office, where your main head office is located (your registered address).

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Understanding of Taxation in Indonesia

Taxation Schedule in Indonesia

Some taxes should be paid in a monthly basis and some others are required to be filed annually. To give you broader pictures on Indonesian taxation schedules, we give you a brief overview illustrated below.The company’s taxes that should be reported monthly include:

• Corporate Income Tax, • Employee Withholding Tax, • Other Withholding Taxes, • as well as VAT and LGST.

These taxes are usually paid before the 10th day of the following month for the withholding taxes and before the 15th of the following month for the Corporate Income Tax. The first three taxes must be filed or reported before the 20th of the following month, whereas especially for VAT and LGST, they have to be reported at the end of the following month.

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Taxation Schedule in Indonesia

On the other hand, taxes that should be paid annually include:• Corporate Income Tax, • Individual Income Tax, • Land and Building Tax (for both the office and the factory or

warehouse - if any). The deadline for the first two is before filing the tax return, and the deadline for the last one is 6 months after receiving a tax notification letter from the tax office.All taxes should be paid regionally.

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Some warnings to consider

Tax PenaltyBeing late in paying the company taxes and individual taxes in Indonesia may result in financial penalty. The tax payer should pay an interest of 2% per month for late payment. The maximum interest that should be paid by the tax payers is 48%. Considering the big amount of extra money you have to spend for the fine, it is always recommended to follow the deadline strictly. Don’t be late, even for one business day, or it will be calculated as one full month penalty.Tax AuditIt is not an obligation for all companies to hold a financial audit by public accountant. The regional tax office will not put any interest on your company if you always provide complete data or documents during your tax reporting period. It is also important to make sure that you never miss any deadlines and follow all the rule and regulations applied by the Indonesian taxation laws.

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Some warnings to consider

To deal with some disputes on tax-related issues, we can give you several practical recommendations as follow:1. Always keep in mind that you must pay your taxes on time on regular

basis. Once your company is registered, you have the obligation to report your tax recurrently. Don’t miss the deadline, and never try to cheat on the bureaucracy, which means that all the documents needed in the tax reporting should be submitted.

2. Hire local accountants who know the local bureaucracy well. Otherwise, you can invite a third party to handle your taxation matters. Choose a qualified consultancy agency to help you dealing with the Indonesian taxation system. We are keen to help you with this issue.

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Some warnings to consider

3. Be updated with any changing in Indonesian laws and regulations. It is better to have a partner to inform you with any updates. We are always open to be your tax consultant.

4. When your revenue increases dramatically, we strongly recommend you to open a different PT PMA so that you don’t need to pay huge amount of money only for your company taxes. To know how to do that, contact our support team to discuss about it further.

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Accounting and Tax Reporting in Indonesia

To help you to comply with these rules, Cekindo provides complete accounting and tax reporting services, including individual and corporate tax in Indonesia.Our services are performed in a professional and efficient manner by experienced accountants and tax specialists who have local knowledge, ensuring tailored solutions based on your individual requirements in accordance with Standard Operating Procedures. By outsourcing your accounting and tax obligations, you will reduce your operating costs and administrative burden while increasing your business flexibility and growth.

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ACCOUNTING SERVICES

• General ledger

• Balance sheet

• Income statement

• Cash Flow

• Monthly tax report (withholding tax and VAT)

• Annual tax report

• Processing payments

• Issue invoices

TAX REPORTING SERVICES

• Individual Tax

• Corporate Tax

AUDITING SERVICES

• Audit procedures

• Scope of audit services

• Paper checks

• Legalization by Public Accounting Firm

• External audit report

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Cekindo  Services Include The Following:

PT. Cekindo Bisnis GrupMenara BCA Grand Indonesia 50th fl

Jl. MH. Thamrin No. 1Jakarta Pusat 10310, Indonesia

info@cekindo.com/ +6221 580 6889cekindo.com

Why Cekindo?

PT. Cekindo Bisnis Grup is a market entry consulting firm in Central Jakarta, providing one-stop services to assist foreign companies from various industries in expanding to Indonesia

and beyond

Our main services, include Business Set Up, Business Process Outsourcing, and Local Representation; more info

on www.cekindo.com

Our dynamic multinational team based in Jakarta to understand the local market and utilize our extensive network

to support our client’s business and operation in Indonesia

PT. Cekindo Bisnis GrupMenara BCA Grand Indonesia 50th fl

Jl. MH. Thamrin No. 1Jakarta Pusat 10310, Indonesia

info@cekindo.com/ +6221 580 6889cekindo.com

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