BASIC TAX TERMINOLOGIES
Basic terminologies used in Indonesian tax system:
Taxpayers (Wajib Pajak or WP) are individuals or statutory bodies which according to provisions of taxation laws, are stipulated to perform taxation obligations, including certain tax collectors or withholders.
Statutory bodies (Badan) are groups of persons, and/or capital which constitutes an unit, undertaking or not undertaking businesses, covering limited liability companies, limited partnership companies, other companies, state or regional administration-owned companies in whatever names and forms, firms, joint companies, cooperatives, pension funds, partnerships, groups, foundations, mass organisations, social and political organisations or organisations of the same type, institutions, permanent establishments and other forms of statutory bodies.
Companies/entrepreneurs (Pengusaha) are individuals or statutory bodies in whatever forms which in their business activities or works/jobs produce goods, import goods, export goods, undertake trading businesses, utilize untangle goods from regions outside the customs area, provide services or utilize services from regions outside the customs area.
Taxable companies/entrepreneur (Pengusaha Kena Pajak or PKP) are the companies/entrepreneurs as meant in point 3 which deliver taxable goods or services subjected to the collection of tax on the basis of the Value-Added Tax Law of 1984 and its amendments, excluding small-scale businesses whose criteria are stipulated by the Minister of Finance, except small-scale businesses deciding to be validated as taxable companies.
Taxpayer Code Numbers (Nomor Pokok Wajib Pajak or NPWP) are code numbers given to taxpayers as means in the taxation administration which are used as personal identities or identities of taxpayers in exercising and fulfilling taxation rights and obligations.
Tax Period (Masa Pajak) is a period whose duration is equal to one calendar month or other periods stipulated by a decision of the Minister of Finance at the maximum of 3 (three) calendar months.
Tax Year (Tahun Pajak) is a period of 1 (one) calendar year unless taxpayers use accounting years different from the calendar year.
Part of Tax Year (Bagian Tahun Pajak) is part of the period of one tax year.
Tax Due (Pajak Terutang) is the amount of taxes which must be paid at a certain time, tax period, tax year or part of tax year according to provisions of taxation laws.
Tax Return (Surat Pemberitahuan Pajak Terutang or SPT) is a form used by a Taxpayer to report the calculation and payment of tax due according to the provisions of tax law.
Periodic Tax Return (Surat Pemberitahuan Pajak Terutang Masa or SPT Masa) is a tax return for one tax period.
Annual Tax Returns (Surat Pemberitahuan Pajak Tahunan or SPT Tahunan) is a tax return for one tax year or part of tax year.
Tax Payment Form (Surat Pembayaran Pajak or SPP) is a letter used by taxpayers to pay or remit tax due to the state cash through Post Offices and/or state- or regional administration-owned banks or other payment point appointed by the Minister of Finance.
Tax Assessment (Surat Ketetapan Pajak or SKP) is a letter of stipulation of tax covering, Underpaid-Tax Assessments or Additional Underpaid-Tax Assessments or Overpaid-Tax Assessments or Nil-Tax Assessments.
Underpaid-Tax Assessement (Surat Ketetapan Pajak Kurang Bayar or SKPKB) is a letter of stipulation of tax determining amounts of principal tax, tax credits, shortage of payment of principal tax, administrative sanctions and the remainder which must be paid.
Additional Underpaid-Tax Assessment (Surat Ketetapan Pajak Kurang Bayar Tambahan or SKPKBT) is a letter of stipulation of tax determining amounts in excess of tax payment because amounts of tax credits exceed tax due, or tax which should not be owned.
Overpaid-Tax Assessment (Surat Ketetapan Pajak Lebih Bayar or SKPLB) shall be a letter of stipulation of tax determining amounts in excess of tax payment because amounts of tax credits exceed tax due, or tax which should not be owned.
Nil-Tax Assessment (Surat Ketetapan Pajak Nihil or SKP Nihil) is a letter of stipulation of tax determining that principal amounts of tax are equal to amounts of tax credits or tax is not owed and tax credits are nil.
Tax Collection Form (Surat Penagihan Pajak or SPP) is a letter to collect tax and/or administrative sanctions in the forms of interest and/or fines.
Distress Warrant (Surat Paksa) is a letter of order to pay tax due and costs of collection of tax.
Tax Credits for Value Added Tax (Kredit Pajak Untuk Pajak Pertambahan Nilai) are input taxes creditable after being reduced by the amounts of preliminary restitution of overpaid tax or after being subtracted by amounts of tax already compensated for, which are deductible from tax due.
Tax Credits for Income Tax (Kredit Pajak Untuk Pajak Penghasilan) are taxes paid by taxpayers themselves plus principal tax due in Tax Collection Letters because Income Tax for the currents year is not paid or underpaid, added by tax on income paid or owed abroad, minus amounts of preliminary restitution to overpaid tax which are deductible from tax due.
Independent Works/Jobs (Pekerjaan Bebas) are jobs executed by individuals having special expertise in a bid to earn income not bound by certain working relations.
Audit (Pemeriksaan) is a series of activities to seek, collect, process data and other kinds of information for testing the compliance with taxation obligations and for other purposes in the framework of the implementation of provisions of taxation laws.
Tax Guarantors (Penanggung Pajak) are individuals or statutory bodies responsible for the payment of tax, including proxies exercising rights and fulfilling obligations of taxpayers according to provisions of taxation laws.
Bookkeeping/Accounting (Pembukuan/Akuntansi) is a recording process executed in an orderly manner to collect financial data and information covering property, liabilities, capital, income and costs as well as prices of acquisition and delivery of goods and services which are closed by compiling financial statements in the form of profit/loss balances and statements at the end of tax years.
Examination (---) is a series of activities executed to evaluate the completion of Tax Returns and attachments including the truth of the writing and calculation.
Investigation into Taxation Crimes (Penyidikan Tindak Pidana Perpajakan) is a series of actions executed by investigators to seek and collect pieces of evidence for clarifying the taxation crimes as well as to find suspects.
Decision on Rectification (Keputusan Pembetulan) is a decision correcting misprints, miscalculations and/or misapplication of certain provisions of taxation or Abolition of Administrative Sanction, Decisions of Reduction or Revocation of Incorrect Tax Assessment or Decisions on Preliminary Restitution of Overpaid Tax.
Decision on Objection (Keputusan Atas Keberatan) is a decision on objections raised by taxpayers to tax assessments or tax withholding or collection by the third parties.
Decision on Appeal (Keputusan Banding) is a decision of the tax court on appeals against decision on objection submitted by taxpayers.
Decision on Preliminary Restitution of Overpaid Tax (Keputusan Atas Pembayaran Pendahuluan Kelebihan Pajak) is a decision determining amounts of preliminary restitution of overpaid tax for certain taxpayers.
Permanent Establishment (Bentuk Usaha Tetap or BUT) is a business entity used by individuals not staying or living in over 183 (one hundred and eighty three) days in a period of 12 (twelve) months or body not established and domiciled in to undertake business or activity in.
Permanent establishment contains a definition of business place, namely facility which can be in the form of land and building, including machines and equipment.
The business place is permanent and used for undertaking business or activity of individual not domiciled or body not established or domiciled in.
Definition of permanent establishment also covers individual or body as a non-independent agent acting for and on behalf of the individual or body not domiciled or located in. Individual nor domiciled or body not established and not domiciled in Indonesia cannot be considered having permanent establishment in Indonesia if the individual or body uses independent agent, broker or mediator for undertaking business or activity in Indonesia as long as the agent or mediator act fully in operating its company.
An insurance firm established and domiciled outside is deemed having permanent establishment in if the insurance firm receives the payment of insurance premiums in and cover risk in through its employees, representatives or agents in. To cover risk in does not mean, the event causing the risk takes place in. It’s necessary to observe that the insured party is residing, domiciled or living in.
Pursuant to the Indonesian Taxation Laws, permanent establishment used by non-resident tax subjects for undertaking their businesses or activities in Indonesia can be classified into BUT in the form of:
1. domicile of management;
2. corporate branch;
3. representative office;
4. office building;
5. factory;
6. workshop;
7. natural resource mining or quarrying, working area of drilling used for mining exploration;
8. fishery, animal husbandry, plantation or forestry;
9. construction, installation or assemble project;
10. provision of service in whatever form by employees or other parties as long as the period 11. 11. does not exceed 60% in a 12-month period;
12. person or body acting as non-independent agent;
13. agent or employee of insurance firm not established and domiciled in , which receives insurance premium or bear risk in
Tax Bailiff (Juru Sita Pajak) is a tax collector assigned to:
a. execute order to collect tax instantaneously and in lump sump;
b. to notify distress warrant;
c. to confiscate property belonging tax guarantors on the basis of Order To Confiscate; and
d. to take someone as hostage on the basis of Order to Hold Hostage.
In executing the tasks, a tax bailiff must be furnished by tax bailiff identity card, which must be shown to tax guarantor. Tax bailiff also can seek assistance from the Police, Prosecutor Office, Department in charge of law and legislation, local government authorities, the National Land Affairs Agency, Directorate General of Sea Transportation, District Court and other parties.
Tax bailiff is authorized to enter and inspect all rooms as well as to open cupboards, shelves and other places to find confiscation object in business place, domicile or residence of the tax guarantor or other places allegedly used for keeping the confiscation object.
