An Important Update on Indonesia's Annual Tax Return Period
As we approach the tax income return deadline in March and April of 2024, businesses and employees in Indonesia have adjusted to the updated regulations that govern the monthly withholding tax system. These changes, introduced by Government Regulation No. 58 of 2023, have impacted PPh 21 and all previous tax calculations.?
Understanding the details of these changes and how they can benefit you is essential to stay informed.
??Monthly Withholding (January-November)
The effective tax rate (ETR) is calculated directly on gross income, without annualization or deductions. To streamline the process, monthly income is classified by marital status and income range.
??Annual reconciliation (December)
The standard progressive tax is applied in the final calculation during the end-year period to reconcile any discrepancy between ETR withholdings and the actual tax liability.
Corporate income tax in Indonesia still follows the previous tax regulations. All companies, whether local or foreign, are subject to a standard tax rate of 25% on their earnings. However, certain exemptions are available, such as a 0.5% tax rate on annual turnover for small businesses and specific industries like petroleum, mining, and geothermal.
Both individuals and companies must adhere to the regulations and meet the reporting deadlines to ensure smooth business operations and avoid any potential tax penalties. The deadline for individual tax returns submission is March 31, 2024, while the deadline for corporate income tax reports is April 30, 2024.?
To have a complete understanding of all critical reporting deadlines in Indonesia, download our 2024 Compliance Calendar here.?
??Read and explore further about Indonesia’s tax regulations below: