Financial Record-Keeping Requirements in Indonesia: A Guide for Foreign Investors

Foreign investors operating in Indonesia must navigate a complex web of regulations governing auditing, accounting, and financial reporting. With no single unifying regulation on these matters, it’s essential to understand the specific requirements and penalties for non-compliance.

Tax Calendar

The annual deadline for reporting and paying corporate income tax is April 30, unless a company’s fiscal year differs from the calendar year, in which case the deadline is four months after the end of its fiscal year. Failure to comply can result in monthly interest penalties ranging from two percent to 48 percent.

Penalties for Non-Compliance

Companies that fail to comply with Indonesia’s audit and tax requirements may face severe consequences. Issuing false tax and accounting documents can lead to imprisonment, while monthly interest penalties can accumulate quickly. The maximum penalty is 48 percent, and the taxpayer may also be required to pay additional fees.

Consequences of Non-Compliance

Failure to comply with Indonesia’s audit and tax requirements can result in:

• Monthly interest penalties ranging from two percent to 48 percent
• Imprisonment for issuing false tax and accounting documents
• Additional fees and charges

Fiscal Year

The fiscal year in Indonesia typically runs from January 1 to December 31. Companies with a different fiscal year must report and pay taxes accordingly. Penalties apply for failure to comply with these requirements.

Tax Disputes

Disagreements between taxpayers and the Directorate General of Taxes (DGT) often arise after the issuance of a tax assessment notice. Taxpayers may contest the assessment by filing an objection or appeal. The DGT must render a decision on objections within 12 months, while appeals to the Tax Court typically take 12 months.

Avenues for Resolving Tax Disputes

Taxpayers have several options to address disputes with the DGT:

• Objections: taxpayers can file an objection with the DGT within three months of receiving a tax assessment notice. The DGT must render a decision on objections within 12 months.
• Appeals: if the DGT rejects an objection, taxpayers can appeal to the Tax Court. A minimum payment of at least 50 percent of the disputed tax is required before filing an appeal.

Conclusion

Financial record-keeping requirements in Indonesia are critical for foreign investors to comply with. Failure to do so can result in severe consequences, including penalties and imprisonment. To avoid these risks, it’s essential to understand the specific regulations and deadlines applicable to your business. By carefully navigating the complex regulatory landscape of Indonesia, foreign investors can ensure compliance and minimize potential penalties.