Tax & Accounting

Accounting is keeping or preparation of the financial records of an entity, the analysis, verification and reporting of such records. Tax accounting in Indonesia concentrates on the preparation, analysis and presentation of tax payments and tax returns. The Indonesian tax system requires the use of specialized accounting principles for tax purposes which can differ from the generally accepted accounting principles (GAAP) for financial reporting. Indonesian tax law covers four basic forms of business ownership: sole proprietorship, partnership, corporation, and limited liability company.  Corporate and personal income are taxed at different rates, both varying according to income levels and including varying marginal rates.

  • Tax Returns and Tax Planning
    • In Indonesia a tax return is a document that must be filed with       the Tax Department declaring liability for taxation. Different bodies must file different returns with respect to various forms of taxation. The main returns currently in use are:
      • Withholding Employee’s Tax (Art 21/26)
      • Withholding Tax (Art 23/26, 4(2))
      • Luxury Goods Tax (PPn BM.)
      • Annual Corporate Tax (SPT Tahunan)
      • Value Added Tax (VAT/PPN)
  • Tax planning is the legal process of arranging your affairs to minimize a tax liability. There is a wide range of reliefs and provisions that are available to legitimately reduce a tax liability without straying into the rather more challenging area known as tax avoidance.
  • Examples range from simply choosing a year-end date early in the tax year to maximize the period from earning profit to paying tax, to arrangements to shelter an appreciating asset from inheritance tax.
  • Tax evasion is different, it is illegally reducing your tax, such as falsifying figures or not disclosing income. This carries serious penalties which can include a criminal prosecution.
  • Bookkeeping and Financial Statements
    • Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. The bookkeeper brings the books to the trial balance stage: an accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
  • A financial statement (or financial report) is a formal record of the financial activities and position of a business, person, or other entity.
  • Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by management:
  • Balance sheet
  • Income statement
  • Statement of changes in equity
  • Cash flow statement
  • For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.
  • Auditing
    • Auditing is the verification of assertions made by others regarding a payoff, and in the context of accounting it is the “unbiased examination and evaluation of the financial statements of an organization”
    • An audit of financial statements aims to express or disclaim an opinion on the financial statements. The auditor expresses an opinion on the fairness with which the financial statements presents the financial position, results of operations, and cash flows of an entity, in accordance with the generally acceptable accounting principle (GAAP) and “in all material respects”. An auditor is also required to identify circumstances in which the generally acceptable accounting principles (GAAP) has not been consistently observed.
  • Advocacy with Tax Office
    • Advocacy is a process of supporting and enabling organization to:
      • Express their views and concerns.
      • Access information and services.
      • Defend and promote their rights and responsibilities.
      • Explore choices and options.
  • We ensure you are treated fairly, and know and understand your rights. If you are having tax problems and have not been able to resolve them with the Tax Office, our advocacy service is your voice. We know this process can be confusing, but the worst thing you can do is nothing at all!