On 8 July 2022, the Minister of Finance (MoF) issued a Regulation No.PMK-112 which stipulates unification of NIK and NPWP for Individuals, Corporates and Government Agencies. 

On 8 December 2023, the Minister of Finance (MoF) issued a Regulation No.PMK-136 which postpone implementation of unification to 1 July 2024

December 2023

PMK-112 and PMK-136 serve as two of the many implementing regulations of the Harmonisation of Tax Regulations (Harmonisasi Peraturan Perpajakan/HPP). Under the new rules, taxpayers that reside in Indonesia should start using their Residential Identity Number (Nomor Induk Kependudukan/NIK) as a Tax ID to replace the old version of NPWP.

Following are few key highlights of the PMKs.

1. Taxpayers with a Residential Identity Number (NIK)

Starting from 14 July 2022, individual taxpayers, including Indonesian citizens and foreigners residing in Indonesia, are required to use their NIK for tax administration purposes. The Directorate General of Taxes (DGT) will activate the NIK as the new Tax ID based on the taxpayer’s registration application or ex-officio, to replace old version 15-digit NPWP.

During conversion from old version NPWP to NIK, the DGT may cross-verify taxpayers’ identity with data at the Directorate General of Population and Civil Registration (Ministry of Home Affairs).

2. Taxpayers without a Residential Identity Number (NIK)

For taxpayers who do not have NIK (i.e. non-resident individuals, Corporate and Government agency taxpayers), DGT will implement a new 16-digit-NPWP to align the digit number of those using 16 digit NIK. The DGT will provide 16-digit-NPWP for newly registered taxpayers starting 8 July 2022 and revise the old NPWP to 16-digit NPWP.

The PMK-136 postponed implementation of new NPWP to 1 July 2024. Therefore, the old version NPWP can only be used until 30 June 2024.

This publication is intended for general information only and should not be interpreted as substitute to any of  our professional advices. All of information contained in this publication refers to the featured regulation as per the date of this publication.

December 2023

Directorate General of Taxation (DGT) has introduced a new feature called the Standardization of Financial Statements Information (SFSI) in the Annual Tax Return reporting for businesses. Standardization of Financial Statements Information (SFSI) with the XBRL format is introduced in light of tax reform program, aiming to create organized and standardized financial reports. SFSI is a standardized financial reporting form that aligns with the Indonesia Stock Exchange’s categorization. SFSI includes three main components, financial statements form, fiscal adjustment forms, and profit/loss forms.

The reporting process for SFSI starts with taxpayers entering their financial information, identifying fiscal adjustments, and generating profits or losses statement using standard forms. Upon entering the data, a validation process takes place. Tax reporting is considered valid upon receipt of notification from the tax reporting system. The benefit for taxpayers is that the data they input is directly integrated into electronic forms (e-form), eliminating the hassle in filling out the e-form.

According to Decree No. 159/PJ/2022, the Directorate General of Taxation (DJP) initially has appointed 37 taxpayers from 10 registered Tax Service Offices (KPP) to carry out the initial implementation of reporting for the Annual Tax Return using the SFSI form. This feature is expected available for corporate taxpayers in various sectors, including general businesses, manufacturing, trade, services, banking or financial institutions, insurance agencies, pension funds, and even infrastructure and real estate.

This publication is intended for general information only and should not be interpreted as substitute to any of  our professional advices. All of information contained in this publication refers to the featured regulation as per the date of this publication.

AEOI, or Automatic Exchange of Information, refers to the exchange of information between tax authorities in response to a request for administrative assistance. It involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g., assets, dividends, interest). It can provide timely information on non-compliance if tax has been evaded on an investment return or underlying capital sum, even if tax administrations had no prior indicators of non-compliance. AEOI allows the tax authorities of the nation in which the taxpayer is registered to swiftly assess the Taxpayer’s Tax Return (SPT) to verify the accuracy of the declared offshore assets, liabilities and income.

According to the OECD, 113 countries, including Indonesia, have agreed to this framework of information exchange by 2022.However, the number of participating jurisdictions decrease in the 2023 lists as per Indonesia Director General of Tax (DGT). In the 2023 list, Liberia, Moldova, Morocco, and Uganda have been removed. On the other side, Thailand, has been added. There are currently 110 nations that have committed to the AEOI.

The Directorate General of Taxes (DGT) on 16 March 2023 issued regulation No. PER-1/PJ/2023 of technical
guidance on withholding tax on royalty received by individual taxpayers who adopt net income calculation norm.

Following are few key highlights.

1. Withholding Tax on Royalty

• Royalty paid, provided, or due to resident taxpayers or permanent establishments is subject to withholding tax article 23.
• Withholding tax rate for royalty is 15% of the “gross amount”.

2. Net income calculation norm for individual tax residents

• For individual tax residents who adopt net income calculation norm, the “gross amount” is set at 40% of the royalty. Therefore, net withholding tax of royalty to the said individual taxpayers is 6%.
• The individual taxpayers must provide the receipt of notification net income calculation norm to the withholder prior to payment.

3. Remittance and reporting of withholding tax

• The withholder must remit withholding tax to the government and report the withholding tax in the monthly unified tax return.
• The withholder is responsible to provide withholding tax slip to the individual taxpayers.

4. Tax Filing for Individual tax residents who earn royalty

• Royalty must be reported by individual taxpayers in Annual Income Tax Return, and withholding tax pertaining to the royalty can be credited in the Annual Income Tax Return.

On 26 October 2020, the Indonesian government issued Law No 10 of 2020 (“Law-10”) regarding stamp duty, which superseded the previous Law No 13 of 1985 (Law-13) and will be effective on 1 January 2021.

Major update on Law-10 is the imposition single tariff of IDR 10,000.

Stamp duty is imposed on documents to be used for civil nature and as evidence in the Court. While majority of documents remain the same with Law-13, there are new types of documents that are subject to stamp duty: securities transaction documents, including futures contract transaction document in any name or form; auction document in the form of auction summary excerpt, minute, copy, and auction summary grosse; and other document that will be further indicated through Government Regulation. Following documents are no longer subject to stamp duty: document stating money deposit in a bank, document containing bank account balance, and document issued by the central bank for the implementation of monetary policy. Related to “agreements”, Law-10 does no longer restrict whether the document is used as evidence or not.

Law-10 updates threshold for document stating sum of money that is subject to stamp duty, which is now increased to nominal value of more than IDR 5 million, compared to the previous IDR 250,000.

While taxable events for stamp duty under Law-13 are upon delivery, completion, or place of document being used, under Law-10, this provision is revised to be based on the process of the document, such as upon signature, completion, delivery, submission to the court, and place of usage. Each process provides reference to certain types of document that is dutiable.

Law-10 introduces new concept of “stamp duty collector”, which stipulates the party who has obligation to collect, remit, and report the stamp duty to tax office. When stamp duty collector does not fulfil its obligation on collection and remittance, tax office may issue tax assessment letter along with 100% administrative sanction of underpayment stamp duty. Besides, tax office may issue tax collection letter for late payment and reporting. Further provision regarding stamp duty collector will be specified through Minister of Finance Regulation.

Stamp duty may be remitted through stamp or tax payment slip. Further, Law-10 adds another type of stamp, i.e. electronic stamp which will have unique code and special identification, in addition to the current physical “sticky stamp” and other form of stamps (created with digital clamp machine, computerized system, printing technology, and other system or technology).

On 2 November 2020, the Indonesian Government issued Law No 11 of 2020 regarding Job Creation. In continuation of the last Vol 5, this publication addresses implication of the Law on Value Added Tax and General Tax Provision.

VALUE ADDED TAX

Key changes in the VAT Law are:

1. Definition of taxable goods delivery now excludes delivery of taxable goods under consignment.
2. Definition of non-taxable goods delivery is now including transfer of taxable goods for the purpose of equity contribution for paid up capital if both transferor and transferee are registered as VAT-able entrepreneurs.
3. Product from coal mining is now subject to VAT.
4. VAT-able entrepreneur can now credit all input VAT upon consumption of taxable goods and/or services prior to initial delivery of taxable goods and/or services (previously VAT credit available for capital goods only), provided that VAT credit requirements are met.
5. If VAT-able entrepreneur in pre-operating phase does not perform delivery of taxable goods and/or services within three years since initial VAT credit, the input VAT that has been credited shall be adjusted. The three-years period may be extended for some business sectors. This provision is also applicable for business liquidation, revocation of VAT-able entrepreneur status, or having its VAT-able entrepreneur status revoked ex-officio, within three years since initial VAT credit.
6. VAT-able entrepreneur in pre-operating phase can no longer apply for monthly VAT refund.
7. Entrepreneur can now credit its input VAT before having registered as VAT-able entrepreneur, by up to 80% of the output VAT that should be collected.
8. Input VAT which are not reported in VAT return but voluntary disclosed and/or discovered in tax audit process can be credited by VAT-able entrepreneur, provided that the input VAT meets requirements of creditable input VAT.
9. Input VAT which are assessed under tax assessment letter can be credited by VAT-able entrepreneur by the amount as stated in the tax assessment letter, provided that the tax assessment has already been paid and no further legal action being pursued.
10. Retailer VAT-able entrepreneur can prepare tax invoice without stating the identity of the buyer and the name and signature upon delivery of taxable goods and/or services to end-customers (subject to further Minister of Finance Regulation).

GENERAL TAX PROVISION

Key changes in the GTP Law are:

1. Interest penalty is now capped at 24 months, maximum, which is calculated based on the monthly interest rate determined by the Minister of Finance, taking into account premiums which vary upon different conditions which resulting the interest penalty. Part of a month is considered as one full month. The calculation of interest penalty along with its applicability are as follow:
   • Benchmark interest rate divided by 1qq2:
     • Late payment of tax underpayment based on tax underpayment assessment letter, additional tax underpayment assessment letter, amendment decision letter, objection decision letter, appeal decision letter, or judicial review decision letter.
     • Late payment of tax underpayment based on tax installment or tax deferral.
     • Late payment of tax underpayment based on the difference of tax payable on the extended tax annual income tax return and the final annual income tax return.
   • Benchmark interest rate plus 5%, and divided by 12:
     • Tax underpayment as the result of amendment of annual tax return.
     • Tax underpayment as the result of amendment of monthly tax return.
     • Late payment of tax payable based on monthly tax return.
     • Late payment of tax payable based on annual income tax return.
     • Tax underpayment as stated on tax collection letter for current year income tax; or tax collection letter issued in regard to typo or miscalculation based on evaluation from tax office.
   • Benchmark interest rate plus 10%, and divided by 12:
     • Tax underpayment as the result of disclosure of incorrect statement in the tax return during tax audit.
   • Benchmark interest rate plus 15%, and divided by 12
     • Tax underpayment based on tax assessment letter as the result of tax audit.
     • Tax underpayment based on tax assessment letter as the result of being given VAT-able entrepreneur status ex-officio.
     • Tax underpayment based on tax assessment letter as the result of late repayment of uncreditable input VAT by VAT-able entrepreneur prior to its operation.
   • In case of VAT audit (with reference to Article 13(1) point a and c), only the highest amount of administrative sanction shall be charged, i.e. between interest and increase.
   • VAT-able entrepreneur who does not issue tax invoice or late in issuing tax invoice and does not fill the tax invoice in accordance with complete requirements is subject to administrative sanction in the form of fines at a rate of 1% of VAT base (reduced from current 2%).
   • The interest reward is calculated based on the monthly benchmark interest rate determined by the Minister of Finance, and divided by 12, with maximum period of 24 months. Part of a month is considered as one full month. This provision is applicable to:
     • Refund of tax overpayment.
     • Late issuance of tax overpayment assessment letter.
     • Tax overpayment assessment letter pertaining to certain condition of preliminary investigation audit (does not proceed to tax investigation, or continued to tax investigation but does not proceed to tax criminal prosecution, or continued to tax investigation and tax criminal prosecution but the court’s decision disregards the prosecution).
2. Taxpayer who neglects in submission of tax return or submit tax return with incorrect or incomplete information is subject to fine by at least one time of the amount of tax payable or maximum two time of the amount of tax payable, or imprisonment by at least three months or maximum one year, disregarding whether it is the first time or not (previous 200% fine for first time taxpayer doing such negligence has been revoked). Previous provision regarding 48% interest penalty on tax assessment letter and additional tax assessment letter for taxpayer committing tax crime after five years statute of limitation has been revoked.
3. Previous provision of 150% fine pertaining to voluntary disclosure for taxpayer already subject to preliminary investigation audit is now reduced to 100%.
4. Previous provision of four times fine on tax underpayment pertaining to termination of tax crime investigation for the benefit of state revenue is now reduced to three times, only if the taxpayer has paid the amount of tax underpayment.