New accounting system. Is Bali no longer a place for tax evasion?

Legalization 14 January 2025
New accounting system. Is Bali no longer a place for tax evasion?
Bali

It’s time for investors and entrepreneurs to gain a clearer understanding of the taxes that must be paid in Bali.

Need a cheat sheet on the types and amounts of taxes businesses in Indonesia are required to pay? Check out our guide here - Taxes in Indonesia - https://bali-legal.com/en/nalogi-v-indonezii-en.

What’s Changing? Introducing CORETAX

Indonesia is rolling out a new online tax management system called CORETAX. This system aims to streamline tax reporting and registration processes, making compliance more efficient and transparent for businesses.

How Did It Work Before?

Until now, businesses used multiple platforms to handle tax-related tasks:

These systems are now being phased out. Starting January, Indonesian businesses are transitioning to CORETAX - https://pajak.go.id/Coretax, which consolidates all these functions into one seamless online platform.

Businesses already registered in these systems will need to obtain new login credentials for the CORETAX application.

Tax reporting will become more transparent, significantly reducing opportunities for informal agreements or settling tax debts through bribes or percentages.

This shift marks a step forward for Indonesia’s tax system, paving the way for a more efficient, accountable, and fair business environment.

If you’re doing business in Bali, staying informed and proactive about these changes will help you avoid unnecessary stress and ensure full compliance. Need support? We’re here to guide you through it!

What Will Be Visible in the System and What Changes Are Coming?

1. Taxpayer Identification Numbers for Companies and Individuals.

Previously, obtaining a local taxpayer identification number (NPWP) required the following steps:

Registering a company. Learn more about the procedure here: https://bali-legal.com/en/kitas-company-en.

Issuing a residence permit in Indonesia (Investor KITAS). What is KITAS? Details here: https://bali-legal.com/en/kitas-(vnzh-na-2-goda)-en.

Issuing an NPWP based on the KITAS.

The process of obtaining an NPWP was mostly optional. Usually, only the company director would apply for an NPWP to submit reports, while other shareholders could remain "off the radar" of Indonesian tax authorities.

Before registering a company, every shareholder is now required to obtain an NPWP and officially become a tax resident of Indonesia.

Now, BEFORE THE COMPANY IS ESTABLISHED, EVERY FOUNDER IS REQUIRED TO OBTAIN A TAXPAYER NUMBER AND IN FACT - BECOME A TAX RESIDENT OF INDONESIA.

There are significant advantages to these changes.

With proper company management, you can reduce your personal income tax by half and optimize corporate taxes to just 3–5% of all operations.

However, for those who avoided paying taxes entirely, this opportunity will now be closed or significantly restricted.

2. Account Balances for Companies and Individuals.

Few entrepreneurs have considered how taxes are calculated at the end of the year in Indonesia. The tax authorities require only three parameters:

The account balance of the individual or company at the year-end.

Documented assets.

Documented liabilities.

This system previously allowed for tax manipulation and avoidance of "potential taxes" — essentially, taxes that should have been paid by businesses but were hidden from the authorities. For example, transferring income to personal accounts instead of company accounts to avoid declaring profits.

For clients working with us, we’ve already developed a tax optimization system that ensures no “potential taxes” are due at the end of the year. This system was in place even before CORETAX was introduced, and it continues to be a powerful tool for keeping your taxes low while staying compliant.

Get a 50% discount on filing mandatory tax payments for companies with zero turnover - only 9,000,000 IDR per year

filing quarterly and annual reports

quality service and timely fulfillment of obligations

work with an experienced tax agent and support of a Russian-speaking manager

Taxes

If you need to develop a tax optimization and filing scheme, accounting and tax support - use the services of our business support manager in Bali. CONTACT US - IN TELEGRAM или WHATSAPP FOR FAST COMMUNICATION.

The CORETAX system will show your account balances at the end of the calendar year. Take this into account when planning taxes and preparing to submit tax reports.

3. A long procedure for adapting to changes.

A common pain for all entrepreneurs on the island - new rules and NO ONE KNOWS HOW TO COMPLY WITH THEM.

This means something like this. Right now, the procedures for issuing documents for a company are very difficult and are postponed indefinitely due to the fact that the tax office continues to demand documents that are NO LONGER PROVIDED for by the new rules.

Because of this, there is a lot of legal red tape and most company documents are “on hold”.

4. All tax procedures will be conducted online.

Until recently, investors had to personally come to the tax office at the place of business registration and receive their tax number (npwp).

In addition, in cases of tax violations, the director or representative of the company (for example, our tax consultant) had to personally come to the office to give an explanation. This was inconvenient for those businesses that are conducted online.

And if you consider that it is not so easy to LIVE in Bali PERMANENTLY (after all, island life makes its own adjustments and often investors and businessmen prefer to live in several countries at the same time), this adds certain difficulties.

Now it is planned that all interactions will be online only and to receive the first tax number you will not even need to fly to the island.

What will this lead to?

1. More tax reports.

Each company, in addition to submitting basic reports, such as:

monthly report for an existing business;

mandatory quarterly report;

annual report for the company;

annual report for the director.

More about support and types of reports and companies - https://bali-legal.com/en/about-accounting-en.

You will also need to submit an annual report for each shareholder (by the number of npwp).

This will increase the cost of servicing the company by about 10% per year. About 200 USD.

2. Strict planning of the structure of liabilities/assets and account balances is required.

If earlier founders without a tax number could be holders of the company's funds and not pay taxes, now the focus is also on the structure of their bank accounts. On the structure of their assets and liabilities to the same extent as the directors of the company.

This increases the risk of running into a “potensial tax”, which is calculated based on the difference between the actual money earned from commercial activities in Indonesia and the company's balance sheet.

For example:

The company commissioner has a salary of 300 USD per month, which indicates an annual income of 3,600 USD or approximately 55,000,000 IDR.

At the same time, the commissioner's personal balance is 400,000,000 IDR (about 25,000 USD).

The difference between these amounts can be defined as income received in Indonesia and hidden for the purpose of tax evasion.

In this case, the “potential tax” will be equal to 10% (the amount of personal income tax) of the difference 400,000,000 - 55,000,000 = 345,000,000 IDR = 34,500,000 IDR tax (about 2,000 USD).

Monthly PROMO

till 28.02.2025

Submitting mandatory tax reports for only 750,000 IDR per month!

Special conditions for companies with zero turnover when paying for the year

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New accounting system. Is Bali no longer a place for tax evasion?

3. Right now it is impossible to predict the exact time frame for opening your company.

The standard period for registering a business in Indonesia is 21 days. This period can be reduced to 3 working days (emergency options)

However, now no one can guarantee that the system introduced by the government will work and most importantly, WHEN WILL IT WORK?

Expect longer terms for preparing all legal documents from the list for opening a company:

DEED OF INCORPORATION

AKTA PENDIRIAN PERSEROAN TERBATAS (DEED OF INCORPORATION OF A LIMITED LIABILITY COMPANY)

KONFIRMASI KESESUAIAN KEGIATAN PEMANFAATAN RUANG (for each license)

PERNYATAAN MANDIRI (INDEPENDENT STATEMENT for each license)

PERIZINAN BERUSAHA BERBASIS RISIKO SERTIFIKAT STANDAR (RISK BASED BUSINESS LICENSING STANDARD CERTIFICATE for each license)

NPWP NUMBER (BISINESS TAX NUMBER)

KEPUTUSAN MENTERI HUKUM DAN HAK ASASI MANUSIA REPUBLIK INDONESIA (DECISION OF THE MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA)

NOMOR INDUK BERUSAHA (BUSINESS IDENTIFICATION NUMBER)

PENGESAHAN PENDIRIAN (VALIDATION OF ESTABLISHMENT)

SURAT PERNYATAAN KESANGGUPAN PENGELOLAAN DAN PEMANTAUAN LINGKUNGAN HIDUP (STATEMENT OF ENVIRONMENTAL MANAGEMENT AND MONITORING CAPABILITY)

4. Tax audits will be more accurate and justified.

Now the tax office will easily see the results of your activity/inaction and determine the turnover, estimated tax to be paid.

If the level of expectations does not meet, an on-site audit of the business can be organized.

At the same time, Indonesia does not provide a 3-year period for “adaptation” to the rules of doing business in the country. An audit can come in the first year of the company's existence if the tax office considers that you are hiding income or underpaying to the treasury.

Against the backdrop of the political situation, many local businessmen believe that foreign businesses pay less than they could pay and RIGHT NOW THIS IS A SORE TOPIC FOR LOCALS WHO ARE CONVINCED THAT A FOREIGNER OWES THEM ONLY BECAUSE HE IS A FOREIGNER

5. Simplified procedure for registering a business WITHOUT THE NEED TO FLY INTO THE COUNTRY.

This provides great prospects for running an online business. And considering that tax rates have not changed and companies can also use the initial period of 3 years at a rate of 0.5% on all incoming payments, online schools will seriously consider this opportunity to store money and distribute it.

If you need help opening and maintaining a business in Bali, CONTACT US - TELEGRAM или WHATSAPP FOR FAST COMMUNICATION.

or fill out the form below to receive a free consultation on running a business, calculating taxes and supporting business processes on a turnkey basis.

Together, we will make life on the island comfortable.

 

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