the power of being understood - rsm global · 2021. 3. 19. · the efin activation process is 1...
TRANSCRIPT
THE POWER
OF BEING
UNDERSTOOD
AUDIT | TAX | CONSULTING
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Nick Graham - Managing Partner
Hani Awaliyati - Manager
RSM INDONESIA WEBINAR SERIES TUESDAY, 16 MAR 2021
INDIVIDUAL TAX RETURN PREPARATION AND UPDATES
❑ Indonesian concept of tax resident individual
❑ Income exemption facility for certain foreign individuals that work in Indonesia
❑ Designation of payroll schemes and related income tax consequences
❑ Managing tax risk for individuals with multiple source of income
❑ Preparation of Personal Tax Return (1770S)
Topic Coverage:
TAX RESIDENCE
Income Tax Law Changes: Determination of Individual Tax Subject
Minimizing differences in
the interpretation of the
tax status of Indonesian
citizens and foreigners
Reducing the tax
administration burden
Attract foreigners with
special skills
Improve the competence
of the workforce in
Indonesia
BACKGROUND
Why is tax residence important?
TAX RESIDENT
• Must register as a taxpayer
(obtain NPWP)
• Comply with tax laws &
regulations
• Report & pay tax on worldwide
income
NON-RESIDENT
• Only subject to Indonesian tax
on income sourced from
Indonesia
• Able to utilise applicable tax
treaty to reduce Indonesian
tax
Indonesian Citizens
Foreigners
Become a Domestic Tax Subject if:
c. Is present in Indonesia during a tax year and
intends to reside in Indonesia
a. Lives/place of residence in Indonesia, or
b. Stay in Indonesia > 183 days within 12 months, or
Determination of Individual Tax Subject (tax resident)
The individual:
• Lives in a place (in Indonesia) that:
– Is controlled or can be used at any time;
– Is owned, rented or available for use, and
– Is not a temporary stop-over;
• Has centre of main activity in Indonesia (re: personal, social, economic, and/or
financial affairs), OR
• Carries out daily habits or activities in Indonesia, including a favorite activity or
hobby
(PMK 18/PMK.03/2021, Article 2 Paragraph 2)
Resides/has a place of residence, if:
✓ KITAP;
✓ VITAS that is valid > 183 days;
✓ ITAS that is valid > 183 days;
✓ Contract/agreement for employment, business or activities to occur in Indonesia >
183 days, or
✓ Other docs (e.g. residential rental agreement > 183 days or documents relating to
the relocation of family members to Indonesia)
(PMK 18/PMK.03/2021, Article 2 Paragraph 4)
Intention to reside can be shown by:
Foreign Tax Subject (SPLN)
Individuals that do not reside/intend to reside in
Indonesia
Indonesian citizens who are outside Indonesia > 183 days for 12 months and meet the requirements, among others
ResidenceThe main activity
center
Place for undertaking
habits
Tax subject statusOther specified requirements
FOREIGNERS in Indonesia <183 days for
12 months
Determination of Individual Tax Subject (non-resident)
WNI can become a non-resident if present overseas for > 183 days within a 12-month period
and:
1. Has a residence at a place overseas that is permanent in nature (not temporary/stop-over);
2. Has a central place of main activities overseas as shown by personal, economic and/or
social ties that can be evidenced by:
a. Spouse, children and/or close relatives live outside Indonesia
b. Source of income is from overseas;
c. Has become a member of a religious, educational, social and/or community
organization that is recognized by the government in that country;
3. Has a place for undertaking daily habits or activities outside Indonesia;
4. Has become a tax resident of another country, and/or
5. Satisfies other specified requirements
Non-resident (for WNI)
WNI can become a non-resident if present overseas for > 183 days
within a 12-month period and …..”5. must satisfy other requirements”:
1. Must have finalized all Indonesian tax obligations regarding all
income earned while a tax resident, and
2. Has obtained a Certificate from DJP that has met the conditions
to become a Foreign Tax Subject
Non-resident (for WNI)
• Register and obtain NPWP
• Lodge a Personal Tax Return (1770, or variant)
• Pay tax on worldwide income, after adjustment for
applicable tax credits or exemptions
• Make applicable tax instalment payments (Art25)
General Tax Obligations – for a Tax Resident Individual
TAX FACILITY FOR EXPATRIATES
Income tax is imposed only on income originating from Indonesia provided that:
a. Have certain skills and
b. Valid for 4 tax years from the time you first became SPDN
Including income related to work, services, or activities in Indonesia that are paid outside Indonesia
Cannot use Indonesia’s tax treaty network to reduce tax on income from overseas
Must lodge an application
Foreigner –
during the first 4 years
in Indonesia
Temporary facility to exempt worldwide income from Indonesian tax
Criteria to Qualify as an Expert
● Must hold a position that is in accordance with Manpower regulations (if an employee), OR
● Is appointed by the minister in charge of government affairs re research (if a researcher), AND
● Must be a citizen of another country, AND
● Has expertise in the fields of science, technology and/or mathematics, as evidenced by:
o A certificate of expertise from an institution in Indonesia or the country of origin,
o Education certificate, and/or
o At least 5 years work experience
in the area of expertise, AND
● Has an obligation to provide knowledge transfer
Type of Job Position with Certain Expertise for Expatriates
Type of Job Position with Certain Expertise for Expatriates (cont’d)
Type of Job Position with Certain Expertise for Expatriates (cont’d)
TAXATION OF REMUNERATION
▪ All income from an employer is subject to Article 21 WHT
▪ Tax is generally calculated on an annualized basis for
expatriates and a period-of-employment basis for
Indonesians
▪ Benefits received in kind are not subject to Article 21 WHT,
but are not deductible to the employer
General
There are 4 schemes that
might operate
Gross system = tax is
deducted from salary and
the after-tax salary is paid
to the employee. The
employee bears the tax.
Net system = tax is not
deducted from the salary.
The quoted salary is paid
to the employee and the
employer bears the tax.
The tax is a BIK.
Gross-up = tax is not
deducted from the salary.
The quoted salary is paid
to the employee and the
employer grosses up and
bears the tax.
Hybrid = some
combination of the above
(e.g. salary might be gross
but a car allowance might
be net).
How remuneration might be taxed by your employer
How remuneration might be taxed by your employer (cont’d)
Example: A1 – Gross Method
How remuneration might be taxed by your employer (cont’d)
Example: A1 – Gross Up Method (Tax Allowance)
• Arguably a gross-up is only permitted if the employment agreement specifies
this since it could result in higher employer-based income that could push other
income into a higher tax tier.
• An exception occurs re BIK if the employer’s business income is subject to
Final Tax, or not taxed (e.g. Construction, Real Estate or KP3A Representative
Offices).
– Any BIK must be taxed under Article 21 and therefore (usually) a gross-up is
required so the employee does not bear the tax
• BPJS - have both employer and employee contributions for most components
(except JKK & JKM).
– Typically, the employer does not bear the employee contributions because
the employee receives the benefit of these
How remuneration might be taxed by your employer (cont’d)
TAXATION OF MULTIPLE SOURCES OF INCOME
• Must report and pay tax on worldwide income
(unless able to access the facility for experts).
• Do not forget that other countries are sharing
information with Indonesia re financial assets
(AEOI).
• Indonesia taxes the husband & wife as a single unit,
except in limited circumstances.
• Income from more than one employer (in parallel)
and other income will result in additional tax
• Article 25 instalments will be due if there
is a year-end tax liability
Taxation of multiple sources of income
INDIVIDUAL TAX RETURN PREPARATION
1770SS• Employee with a total gross income not more than
IDR 60 million a year
• used if the taxpayer earns income who only works
for one company or has income derived from one
source
1770S• Employee with a total gross income more than IDR
60 million a year
• receive income from more than one source
1770• Income from business/independent work who
maintain bookkeeping or net income based on
norm calculation
• taxpayers who work for more than one employer
have income that is subject to Final Income Tax,
have other domestic income (interest, royalties,
etc.), or offshore income
• E.g. Entrepreneur, business owner, professional
who use norm such as doctor, lawyer, etc.
Types of Personal Income Tax Return
P.S.
Should be lodged by 31 March of the following year,
after payment of any tax.
1. Come directly to the Tax Office
2. E-filing / e-form
3. Post Office
4. Via expedition services (registered)
5. Tax Application Service Providers
Submission of Annual Individual Tax Return
E-Filing Submission Type of Services
Fill in the
Tax Return
by Online
Upload the
e-Tax
Return
Annual Personal Tax Return 1770SS
Annual Personal Tax Return 1770S
Annual Personal Tax Return 1770
Annual Corporate Income Tax Return 1771
E-Form
Annual Personal Tax Return 1770S
Annual Personal Tax Return 1770
Annual Corporate Income Tax Return 1771
E-Filing Submission Type of Services
• TAX ID (NPWP)
• EFIN (electronic filing
identification number)
• Register and activate DJP ONLINE
ACCOUNT
3 Important Things for e-filling
Tax Office
KPP sends EFIN to taxpayer
or Taxpayer come directly to the Tax Office to request
EFIN activation
TaxpayerThe EFIN activation process is 1 working day
If you already have an
active EFIN
1. Use EFIN to register
for a DJP Online
account on the website
www.pajak.go.id
2. Single Login
www.pajak.go.id
3. The activation link is sent via
the taxpayer's email. Click on the
link to activate your DJP Online
Account
4. Your DJP Online
account has been
created. You can do
e-Filing
DJP Online Account Activation
1. Login at
www.pajak.go.id with
DJP Online Account
2. Select the e-Filing
service on the
"Report" menu
4.Obtain and fill
in the verification
code3. Create the
Tax Return
5. Send Tax
Return
6. Electronic
Receipt Sent to
your email
E-Filing Procedure
1. Lists of Withholding Tax Slip (Tax withheld by other parties)
2. Income List
3. List of Member of Family’s Dependent (based on Family Card)
4. List of Assets
5. List of Liabilities
6. Other Related Docs
Other Information to be Provided
TAX RETURN 1770S
LOG IN :
Visit the web/site
www.djponline.pajak.go.id
fill in your Tax ID (NPWP) and password,
Fill in the image code / CAPTCHA,
then click "Login“.
E-Filing Simulation – 1770s
Select a service: e-Filing
E-Filing Simulation – 1770s (cont’d)
SERVICE :
Select: Create SPT
Follow the e-Filing Guide
If you already have sufficient
knowledge to complete 1770S
Form, please choose to fill out
the form "With Form/Without
guidance“
If you want to be guided and the
display form is simplified, please
choose to fill in the form "With
guidance"
E-Filing Simulation – 1770s (cont’d)
GUIDANCE :
Fill in the Year of the Return, and choose whether it is the First one (= Normal) or a Revision
1. INPUT :
E-Filing Simulation – 1770s (cont’d)
If you have a Withholding Tax slip, fill in “step two”
2. INPUT :
E-Filing Simulation – 1770s (cont’d)
For example: tax deduction from government employee's salary
in the form 1721-A2, then input into this dialog box
E-Filing Simulation – 1770s (cont’d)
Once saved, it will appear in the list of withholding tax slip summary in Step 2 :
E-Filing Simulation – 1770s (cont’d)
Input Net Domestic Income related to the Employment
3. INPUT :
E-Filing Simulation – 1770s (cont’d)
Input Other Domestic Income, if any
4. INPUT :
E-Filing Simulation – 1770s (cont’d)
Input Foreign Income, if any
5. INPUT :
E-Filing Simulation – 1770s (cont’d)
Input income as non tax object, if any…. For example: an inheritance of IDR10,000,000
6. INPUT :
E-Filing Simulation – 1770s (cont’d)
Input the Income subject to Final Income Tax, if any ….
For example: Lucky Draw Prize worth IDR 20,000,000,
withheld by 25% Final Income Tax (IDR 5,000,000)
7. INPUT :
E-Filing Simulation – 1770s (cont’d)
Input the Assets you have.
If in the previous year you have reported the list of assets in e-filing, you can display it again by selecting
"Assets in Last year's tax return"
8. INPUT :
E-Filing Simulation – 1770s (cont’d)
List of Asset Code
Cash and Cash Equivalent
011: cash
012: saving
013: current account
014: deposits
019: cash equivalent
Receivable
021: accounts receivable
022: affiliated receivables (receivable from
related parties as intended in Article 18
paragraph (4) Income Tax Law)
029: other accounts receivable
Investment
031: shares bought for sale back
032: shares
033: corporate bonds
034: Indonesian government bonds(Indonesian Retail
Bonds or ORI, sharia securities country, etc.)
035: other debt securities
036: mutual funds
037: derivative instruments (right, warrant, futures,
options, etc)
038: equity participation in other companies that weren't
top shares include investment capital at CV, Firm,
and the like
039: other investments
Transportation
041: bicycle
042: motorcycle
043: car
049: other means of transportation
Movable Properties
051: precious metals (gold bullion, gold jewellery, platinum bars,
platinum jewellery, other precious metals)
052: precious stones (diamonds, diamonds, precious stone sother)
053: artistic and antique items (art, antiques)
054: cruise ship, airplane, helicopters, jetski, sports equipment special
055: electronic equipment, furniture
059: other movable property
Immovable Properties
061: land and / or buildings for
residence
062: land and / or building for
business(shops, factories,
warehouses, and the like)
063: land or land for business
(land agriculture, plantation,
fishery land, and the like)
069: other immovable
possessions
List of Asset Code
Input Liabilities that you have.
If in the previous year you have reported a list of liabilities in e-filing, you can display it again by selecting
"Liabilities in Last year's tax return"
9. INPUT :
E-Filing Simulation – 1770s (cont’d)
List of Liability Code
101: bank / financial institution Non Bank (Mortgage house, Motor Vehicle Leasing, and its kind)
102: credit card
103: affiliated payable (Loans from parties who have a special relationship as such referred to in Article 18
paragraph (4) of Invite Income Tax)
109: other Debt
Input any dependents you have.
If in the previous year you have reported a list of dependents in e-filing, you can display it again by selecting
"Dependents in Last Year's tax return"
10. INPUT :
E-Filing Simulation – 1770s (cont’d)
Fill in the Compulsory Zakat / Religious Donations that you pay to an Institution management authorized by
the Government
11. INPUT :
E-Filing Simulation – 1770s (cont’d)
Fill in according to husband-and-wife status. In this case, please pay attention if you carry out tax
obligations separately with your husband / wife, live separately, or enter into an asset separation
agreement. (MT / HB / PH) - For example: the taxpayer is the head of the family and the wife does not work
12. INPUT :
E-Filing Simulation – 1770s (cont’d)
Fill in the prepaid Income Tax Article 24 from foreign income, if any.
13. INPUT :
E-Filing Simulation – 1770s (cont’d)
Fill in the total of Income Tax Article 25 installments and Tax Base of Income Tax Article 25 Collection
Letter, if any
14. INPUT :
E-Filing Simulation – 1770s (cont’d)
Income Tax Calculation
15. INPUT :
E-Filing Simulation – 1770s (cont’d)
Article 25 Income Tax Calculation, if any
16. INPUT :
E-Filing Simulation – 1770s (cont’d)
Confirmation/Agreement that the information is correct and prepared/provided in accordance with the tax
regulations
17. INPUT :
E-Filing Simulation – 1770s (cont’d)
Summary of your tax return and obtain the verification code
SUMMARY :
Click Send Tax Return when
you have inputted the
verification code
E-Filing Simulation – 1770s (cont’d)
Your tax return has been
completed and sent.
Please open your email to
receive the Electronic
Receipt (BPE) for the Tax
Return
E-RECEIPT :
E-Filing Simulation – 1770s (cont’d)
RSM INDONESIAPlaza ASIA Level 10
Jl. Jend. Sudirman Kav.59Jakarta 12190 Indonesia
www.rsm.id