All companies registered in Indonesia must pay and report all applicable taxes, as well as submit their annual financial statement in Indonesia.
In this guide, you will find the essential requirements for submitting the annual financial statement in Indonesia for your tax return.
What is the deadline for submitting a financial statement in Indonesia?
If your company’s fiscal year is from 1st January to 31st December, you need to submit your financial statement for 2018, along with your annual corporate income tax report, by 30th April 2019. However, if your company’s fiscal year is different from the calendar year, the reporting deadline is four months after the end of your fiscal year.
You must submit your corporate income tax report and financial statement in Indonesia to your regional tax office. If your annual turnover is more than IDR 50billion (~US$ 3.5million), you need to have your financial statement audited as well.
What are the consequences of late or not reporting in Indonesia?
Failure to comply with the Indonesian accounting and compliance requirements will result in monthly interest penalties on late payments, this starts from 2% and reaches up to 48%. If you exceed the deadline even by one day it counts as a full month, and tax officials will impose the penalties accordingly.
Also, remember that companies that have failed to comply will receive increased attention from the tax officials in the future.
Indonesia’s tax laws are often changing and not being aware of some regulations does not mean that you don’t have to follow them. In fact, not reporting taxes correctly is one of the seven common mistakes foreign investors do in Indonesia.
Avoid the unnecessary risk of putting yourself or your company in a vulnerable position and consult with Emerhub’s tax consultants to have your tax reporting and compliance in Indonesia done the right way. Contact us via [email protected]
Which reports does the financial statement in Indonesia include?
According to the Indonesian Financial Accounting Standards (SAK), your annual financial statement must comprise the following information:
|Balance sheet||Includes company’s assets, liabilities, and owner’s equity|
|Profit and loss statement||Shows your company’s income, expenses, and profit in the previous year|
|Cash flow report||Reports your company’s cash flow activities|
|Statement of changes in company equity||Reports on changes in equity during the last year|
|Notes to the financial report||Description of items in the abovementioned reports in further detail|
Keep in mind that you must have all your accounting records and financial statements in Indonesian unless you have received permission from the Ministry of Finance to use a different language.
Want to skip having to delve into Indonesia’s complex tax laws? Our team of experienced accountants will gladly take this burden off your shoulders and prepare your financial statement on your behalf.
What is taxable income in Indonesia?
With some exceptions, any income you receive from Indonesia or abroad is taxable income in Indonesia:
|Taxable income||Nontaxable income|
As for legal entities, any profits the company received (gross revenue minus expenses) during the previous year are subject to taxes.
How to reduce corporate income tax in Indonesia
Take note that in Indonesia, most direct and indirect expenses can be recorded as expenses which will help you optimize your tax liabilities. These include:
- Any direct operational costs, such as supplies, salaries, travel costs, insurance, promotions/marketing, administration, all taxes withheld by third parties
- Amortization costs
- Loss on the transfer of assets or foreign exchange
- Scholarship and training costs
- Uncollectible account receivables
- Donations to national disasters, social infrastructure, education facilities, fitness
Indonesia has also been very favorable toward small and medium-sized enterprises (SMEs). SMEs in Indonesia, with annual revenue of less than IDR 4.8 billion (USD 320,000), can apply for a lower income tax rate which was reduced to 0.5% in July 2018 from the previous 1%.
Want to learn more about how to optimize your company’s taxes in Indonesia? Read more about the reduced income tax rate in Indonesia or contact our tax consultants for a complimentary consultation via [email protected]
Other annual tax and compliance requirements in Indonesia
In addition to monthly tax payment and reporting deadlines in Indonesia, the most important annual compliance deadlines are the following:
|Type of tax||Reporting and payment deadline|
|Personal income tax||31 March|
|Corporate income tax||30 April|
|Land and building tax||Payment deadline six months from receiving a tax notification letter|
To learn more about individual income tax, read our previous article on how to report personal income tax in Indonesia
Annual tax return in Indonesia
Companies in Indonesia can also apply for the yearly tax return, the deadline for this is also on 30 April. The general income tax rate for companies in Indonesia is 12.5-25% of the profits. If you are paying income tax based on the general tax rates, you can also apply for an annual tax return. However, if you have used the reduced income tax rate of 0.5%, you cannot file a tax return in Indonesia.
Also, keep in mind that applying for a tax return does not always mean that you will get money back. The tax authorities may reject your application or conduct a thorough tax audit before they accept your tax return application which can result in you having to pay extra instead.
For this reason, it is wise to consult with an accountant and a tax consultant first to make sure you have done your tax reporting in Indonesia right and make changes if necessary. Reach out to Emerhub consultants for a complimentary consultation in Jakarta [email protected] or Bali [email protected].