What reports should a company submit in Bali?

Let’s get this straight from the beginning—even if your company is just nominal, opened solely for a residence permit, or you’re not making a profit and not yet operating, this does not exempt you from filing reports, no matter what company setup specialists on the island might say.

Indonesian law is strict about this: DO YOU HAVE A COMPANY? – IT MUST SUBMIT 3 TYPES OF REPORTS. ARE YOU AN INVESTOR? – YOU MUST SUBMIT 1 REPORT.

In this article, we’ll break down exactly which reports these are. I’ll also show you what these reports look like and provide a clear step-by-step guide on how to legally interact with local regulatory bodies at the end of the article. Make sure to read until the end; it's valuable information.

All the reports shared here are taken from our practice, so names and contact details are redacted for privacy reasons.

1 – Monthly Report

This report includes information on the company’s monthly expenses. Typically, it’s based on the figures passing through your corporate bank account.

I won’t go into detail about which taxes apply to which income/expense categories—you can read about that HERE: https://bali-legal.com/en/nalogi-v-indonezii-en.

I will, however, say that EACH TYPE OF TAX REQUIRES A SEPARATE REPORT.

For example, if you run a restaurant, you need to pay the so-called PHR, a local tax for hotels and restaurants at a rate of 10%. This will have its own report.

For the standard Tax Art 21 (Employee Salary Tax), the report would look like this:

This section shows the total salary amount for permanent employees and the total taxes withheld based on this. The declaration takes into account about 18 expense items that may be related to employee salaries and labor payments.

And this is how the report on taxes paid based on expenses for contractor services and rental of premises (Tax art 23 and 4(2)) looks..

MORE ABOUT INDONESIAN TAXES HERE: https://bali-legal.com/en/nalogi-v-indonezii-en.

When Can You Skip the Monthly Report?

If you have no actual income or expenses passing through the company’s bank account (or even if you don’t have a bank account), you can start submitting this report ONLY WHEN THERE IS A SUBJECT OF TAXATION:

If you have a nominal company and are not conducting real activities, this report is usually not submitted.

What Are the Consequences of Not Submitting?

There could be a tax audit for a business that is operating or even for a nominal company. An audit for an active business is not so scary, as it can usually be resolved with a fine. However, an audit for a nominal company set up to obtain a KITAS can easily turn into a fine of around 10,000 USD or deportation.

Fines for late submission for active businesses are not that large, but if you completely ignore filing reports, the amount can grow quite quickly.

2 – Quarterly Report

When you open a company in Indonesia, the company’s bylaws must specify the amount of investment that the company plans to contribute to its capital in the near future. This procedure is called the company’s investment plan.

The minimum investment plan now is 10,000,000,000.00 IDR, or about 700,000 USD. This is a significant amount, and most companies that open their offices in Indonesia do not invest it all at once but contribute gradually (or even do not contribute at all, but this will be covered in separate articles).

To monitor the compliance of foreign-owned companies with the investment plan, changes in the number of employees, and business licensing issues, a structure called OSS – Online Single Submission (Perizinan Berusaha Terintegrasi Secara Elektronik) was created.

This system requires businesses to provide what is called LKPM:

In the report, there are two main points to note:

When Can You Skip the Report?

NEVER.НИКОГДА. You cannot skip this report for a very simple reason — THESE REPORTS ARE STRICTLY CONTROLLED. If you do not submit a report in the first quarter, you will receive a letter from OSS with a warning. If the report is not submitted in the second quarter, you will get a final warning requiring you to submit the report, along with sanctions. If you do not submit the report in the third quarter, there will be an on-site inspection and a fine.

After submitting the report, you will receive a document confirming that the report has been accepted:

What Are the Consequences of Not Submitting?

As I mentioned, there will be an inspection of the business. If they do not find the business at the registered address, they will look for the founders, which is serious and directly indicates the possibility of a large fine or even deportation from the island.

3 – Annual Company Report

The annual report includes all the summary information from all previous reports + a report on the business’s income/expenses. It is due by the end of April of the year following the reporting year.

In your company's annual report, you will indicate which taxes on income and expenses have already been paid over the last year. This is quite a large document, spanning 18 to 25 pages, so I will not present the entire report here. Instead, we will focus on A FEW IMPORTANT POINTS FOR VISUAL UNDERSTANDING.

You probably don’t need a translation here. The declared net profit and the tax paid for the period are indicated.

Next, there’s a breakdown of profit by categories.

I have already described the cost of hiring an accountant in OUR COMPREHENSIVE TAX GUIDE https://bali-legal.com/files/Guide-po-nalogam.pdf.

You can also contact us so that our team can take care of your reports and help you run your business "legally."

The submission of this report is signed by the director and monitored by a commissioner. All signatures are done electronically through the E-FIN remote reporting system.

When can you skip this report?

Just like the quarterly report, I RECOMMEND SUBMITTING IT! It’s a very smart move, even for a nominal company, to ESTABLISH A WORKING RELATIONSHIP WITH THE GOVERNMENT AUTHORITIES OF INDONESIA.

Here are the 5 main steps you need to take as a business to establish this interaction:

What are the consequences of not submitting?

The same consequences apply – attracting the attention of regulatory bodies. The outcomes can vary, from deportation for nominal companies if you are found, to fines or revocation of operating licenses for real businesses.

IMPORTANT!!!

If you show a negative income for your company for 3 consecutive years, it will 100% lead to an audit for recognizing the business as bankrupt.

4 – Annual Report for Directors and Shareholders

Finally, the last point, which is not related to the company but pertains to the director/commissioner of the company.

From the moment you receive a local NPWP (tax number, as in the example), you are required to submit your tax report every year for the income you earn in Indonesia..

Until you have it, you cannot, firstly, submit reports on your income in Indonesia, and secondly, you are not obligated to do so.

Many of our fellow citizens try to avoid the need to obtain a tax number while having a company, which is correct if you plan to stay in the “GRAY ZONE.” This means you have opened a nominal company and are trying to hide your income, hoping for good karma and a bit of luck.

However, if we consider the scheme I suggest using (from the 5 points mentioned above), you need to obtain a tax number at the moment:

In the annual report of the director, you are NOT OBLIGATED to report ALL INCOME you receive from your activities, especially if this money comes to crypto wallets, third-country cards, cash, etc.

What to Include in the Report?

Report the income received as profit and distributed as dividends from your company. In essence, you’ve got the point. If the company is at zero, you won’t have any profit. If the company has revenue and you distribute profit (including salary to yourself as the director/commissioner) – report this at the end of the year.

When Can You Skip This Report?

When there is no tax number and you are not conducting business in Indonesia. However, from my perspective, this is risky – yet, the scheme still works for now.

What Are the Consequences of Not Submitting?

For an operating business, the consequences can be unpleasant. If you do not submit a report on yourself as the director while receiving official profit, you are not only putting yourself at risk but also your business. Such tax audits happen frequently. They check the real income going into your personal accounts and verify this income with the company’s income. You’ll have to prove the source of your funds, provide explanations, and may end up paying bribes.

The main goal of this article is quite simple. I would like those who come to the island to understand – IF YOU OPEN A BUSINESS/COMPANY HERE AND DO NOT START INTERACTING WITH LOCAL AUTHORITIES, THEY WILL BEGIN TO INTERACT WITH YOU.

To conduct business “legally” and correctly – CONTACT US via WHATSAPP or TELEGRAM for quick communication.

Together, we can make life on the island comfortable.