Accounting Services

Accounting businesses in Indonesia frequently provide the following services:

Accounting: This includes creating budgets, financial statements, producing local tax filings, collaborating with auditors to undertake audits and business appraisals, and providing forensic accounting services to firms dealing with fraud.

Bookkeeping: This includes handling accounts, billing, payroll, and keeping a record of transactions in your firm that may be needed for future decision-making.

Staffing decisions: This entails assisting you with payroll and handling government paperwork, tax and insurance obligations, and calculating the cost of recruiting, training, and paying an employee, especially if there are mergers or expansions.

Consulting: This entails advising you on financial strategies, tax burdens, business updates, financial investments, and future moves in terms of mergers and acquisitions, as well as assisting you in setting Key Performance Indicators (KPIs) and troubleshooting the problem, testing solutions, and resetting the KPI accordingly.

Automated accounting workflow: This entails giving you the most up-to-date accounting software and cloud accounting, allowing you to have a clear data inventory, automated workflows, and KPI tracking.

Tax management: This includes creating financial reports, calculating the company’s tax burden, ensuring all tax deadlines are fulfilled, completing and filing tax returns, as well as assisting you in lowering your tax exposure and dealing with past tax arrears. These services are tailored to comply with Indonesian tax laws and regulations.

If you plan to outsource these obligations to accounting companies in Indonesia, the professional accountants in these businesses will undertake tax planning and preparation, and the firm will work with licensed auditors to deal with The Directorate General of Taxes (DGT). The company may also assist you with valuation studies for funding, mergers, and acquisitions. You can be confident that these accountants will handle your company’s compliance and tax issues with care. Accountants will also assist and advise you on your present financial situation as well as your future financial actions. This allows you to focus more on your core business activities while ensuring that administrative tasks are taken care of professionally.

The Value Added Tax (VAT), also known as Pajak Pertambahan Nilai (PPN) in Indonesia, is a consumption tax imposed on each production stage of both goods and services until the final product sales. The VAT rate in Indonesia is 11% as of April 1, 2022, and will increase to 12% by January 1, 2025. VAT is calculated by applying the VAT rate to the relevant tax base. In most cases, the tax base is the transaction value agreed upon between the parties involved.

By law, all goods and services, unless otherwise stated, are considered taxable. However, there is a list of goods and services that are exempt from taxation. Companies and individuals are required to report their business activities and fulfill their VAT obligations on a monthly basis.

The basic idea behind VAT in Indonesia is that only the value added to products or services would be taxed. The VAT system is intended to ensure that the VAT price is eventually paid by the final consumer and does not impose an additional burden on businesses throughout the value chain. There are mandatory and voluntary registrations available, with the latter applicable in the case of taxable products that are below the threshold or in the instance of individuals who were exempt from registration but prefer to go through this procedure.

In Indonesia, the following categories of businesses are liable to VAT:

Businesses with annual revenue below that threshold can register voluntarily. It’s important to note that certain goods and services are not subject to VAT. For example, goods that are taken directly from their source (e.g., crude oil, natural gas, coal), financial services (e.g., banking, insurance and finance leasing), etc.

In Indonesia, corporate income tax is also a direct tax paid to the government levied on both resident and non-resident corporations receiving income from Indonesia. The corporate income tax rate is a flat rate of 22%. However, public companies that satisfy a minimum listing requirement of 40% and certain other conditions are entitled to a tax discount of 3% off the standard rate, providing an effective tax rate of 19%. Small enterprises with an annual turnover of not more than IDR 50 billion are entitled to a 50% tax discount of the standard rate, which is imposed proportionally on taxable income on the part of gross turnover up to IDR 4.8 billion.

Companies in Indonesia are generally required to settle their tax liabilities either by direct payments, third party withholdings, or a combination of both. Foreign companies without a PE in Indonesia have to settle their tax liabilities for their Indonesian-sourced income through withholding of the tax by the Indonesian party paying the income. Companies must furnish estimates of their tax payable for a fiscal year no later than 30 days before the start of the base period.

Bookkeeping organizes data that will be evaluated throughout the accounting phase. Accounting is the process of summarizing, evaluating, and conveying financial data for an organization, whereas bookkeeping is just concerned with recognizing and documenting financial transactions. Management may utilize accounting data to make crucial decisions when the procedures incorporate financial reporting rather than bookkeeping. Accounting necessitates analysis and yields corporate knowledge. Bookkeeping does not provide information about a company’s financial status. Accounting helps to provide a comprehensive picture of a company’s financial situation.