TAXPAYER IDENTITY NUMBER SERVICES

Category: Business Establishment & Licenses, Tax & Accounting, Corporate Secretary Services
Written by Riza Zahrotun Nisa on 26/07/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

The Taxpayer Identity Number (TIN) is one of the important documents for citizens, both Indonesian citizens and foreigners working in Indonesia. It does not only function for tax matters but also as one of the administrative requirements. Taxpayers are not only individuals but also corporate taxpayers. For individual taxpayers, it consists of office workers or employees, freelancers, and entrepreneurs. Meanwhile, corporate taxpayers consist of government entities and private entities. In the current digital era, TIN does not have to be made through the Kantor Pelayanan Pajak (KPP) but can also be done online through the DJP website to get a digital one.

This article will explain about TIN in details.

WHAT IS A TAXPAYER IDENTITY NUMBER?

Taxpayer Identity Number or Tax Identification Number (TIN), known as Nomor Pokok Wajib Pajak (NPWP) in Indonesia, is the number given to the taxpayer, or Wajib Pajak (WP) in Indonesia, for tools in tax administration as identification or identity of the taxpayer in fulfilling his rights and obligations. Besides Taxpayer’s Identity, TIN or NPWP has the function of maintaining discipline and compliance with tax payments as well as supervision of the tax administration of taxpayers.

Each taxpayer is only given one NPWP. The NPWP consists of 15 digits; the first 9 are taxpayer code information, and the last 6 are administrative code information. 

  1. The first two digits (XX) indicate the taxpayer's identity. For example, 01 – 03 is a Corporate Taxpayer, 04 – 06 is an Entrepreneur Taxpayer, and so on.
  2. The following six digits (XX.XXX) indicate the registration number or a serial number of the KPP given by the DGT head office.
  3. One digit (.X) then serves as a security code to prevent errors or falsification of the NPWP.
  4. The next three digits (-XXX) are the registered KPP (Kantor Pelayanan Pajak) code.
  5. The last three digits (.XXX) are the Taxpayer status (Single, Central, or Branch). 000 for Single or Central Taxpayer status, while 001, 002, and forth are for Branch Taxpayer status.

WHO NEEDS A TAXPAYER IDENTITY NUMBER?

According to NPWP’s type, a Taxpayer Identity Number is owned by an individual and business entity.

  1. Individual or personal NPWP

    NPWP owned by individuals with income in Indonesia. The following individuals are included in the personal NPWP list, there are:
    • Individuals who have income from work as an employee.
    • Individuals who have income from independent job or working as a freelancer.
    • Individuals who have income from Business or working as an entrepreneur.

  2. Corporate NPWP

    NPWP owned by every company or business entity that earns income in Indonesia. The following companies are included in the list of the Corporate NPWP, there are:
    • Government Entity or Badan Usaha Milik Negara (BUMN).
    • Private Entity or Badan Usaha Milik Swasta (BUMS).

WHY DO YOU NEED A TAXPAYER IDENTITY NUMBER?

A Taxpayer Identity Number is an important document for tax purposes and administration requirements. In detail, they are used for:

  1. Administration Requirements

    • NPWP is used as one of the requirements for creating accounts, such as bank accounts, customer fund accounts or rekening dana nasabah (RDN), and securities accounts.
    • NPWP is one of the documents used as one of the requirements for applying for credit to the bank. The bank needs to ensure whether the prospective debtor is tax compliant. Usually, several credit facilities require an NPWP.
    • NPWP is one of the administrative requirements in making a Trading Business Permit (SIUP). This letter serves to prove the legality of the business entity.
    • Investors in purchasing investment products require an NPWP that functions to eradicate and prevent money laundering and the financing of terrorist activities.

  2. Corporate NPWP

    • Taxpayers who do not have an NPWP must pay a 20% higher tax than the tax that should be paid.
    • NPWP can be used for processing tax refunds, submitting tax deductions, knowing the amount of tax that must be paid, and so on.
    • Taxpayers avoid legal sanctions by having NPWP because taxpayers who do not implement the provisions, namely having NPWP, are subject to criminal sanctions following the applicable article (pasal yang berlaku).

STEPS TO OBTAIN TAXPAYER IDENTITY NUMBER

Indonesian residents are required to have a Taxpayer Identity Number by the Indonesian Tax Office (Direktorat Jenderal Pajak). People can apply for NPWP online or offline.

Taxpayers must register at the Tax Service Office or KPP (Kantor Pelayanan Pajak) in their city of residence to get their Taxpayer Identity Number offline. Expats who reside in Jakarta must register with the Tax Office for Foreign Bodies and Expatriates or Kantor Pelayanan Pajak dan Orang Asing (KPP BADORA). After completing the registration form, taxpayers have to prepare several documents, which also depends on the type of taxpayers.

  1. For employees:
    A copy of ID Card, Kartu Tanda Penduduk (KTP) for Indonesian, passport and Kartu Izin Tinggal Terbatas (KITAS) or Kartu Izin Tinggal Tetap (KITAP) for Foreign Citizens.

  2. For freelancers and entrepreneurs:
    A copy of an ID Card and a statement letter on stamp duty from an individual Taxpayer stating that they are running a business or independent job (freelance).

  3. For business entities:
    A copy of the document of establishment and amendment (Akta Pendirian dan Perubahan), a copy of the Taxpayer Identification Number Card of one of the administrators, and a copy of the Business and/or activity permit document issued by the authorized agency.

After the KPP receives all registration application requirements, the KPP issues a Letter of Receipt (Bukti Penerimaan Surat). KPP issues NPWP Card and Surat Keterangan Terdaftar (SKT) no later than 1 (one) working day after the Letter of Acceptance is issued. NPWP and SKT are sent by Registered Post.

People can use the https://pajak.go.id/ website to register for an NPWP online by creating an online DJP account first. Taxpayers must register via https://ereg.pajak.go.id/daftar by using an active email, then complete the requested data such as the type of taxpayer (personal or corporate), name, email address, mobile number, password, and others. After activating the account, the DJP account has been created.

After activating and creating the account, taxpayers must complete the registration form and upload the documents on the website. After the NPWP application form is Complete, taxpayers can Request a Token and Send the NPWP application. A digital NPWP is made after the application is complete, registered, and sent to the taxpayers’ address.

WHEN CAN YOU GET A TAXPAYER IDENTITY NUMBER?

Taxpayers (Wajib Pajak) are individuals or entities with the ability to pay taxes, withhold taxes, and collect taxes and have rights and obligations related to taxation under applicable regulations. Every citizen or business entity can obtain Taxpayer Identity Number. People or companies can register to get a Taxpayer Identity Number or NPWP anytime. Individual applicants can register when they are 17 or 18 (having an ID Card or KTP).

Some people are not old enough (adolescents) but have income above Penghasilan Tidak Kena Pajak (PTKP), such as child actors, child singers, or models. Everyone who meets the Objective and Subjective requirements is obliged to carry out his tax obligations. Subjective requirements are if you have been born into the world and resided in Indonesia for more than 183 days within 12 months. Then the objective requirement is if the person has income above PTKP. According to the UU PPh No. 36 Tahun 2008 Pasal 7: “The income of an immature child from whatever source of income and the nature of the work is combined with the income of his parents in the same tax year.”

However, NPWP Holder can not automatically be a taxpayer. There are some criteria for becoming a taxpayer:

  1. Employed individuals who earn more than the non-taxable income or Penghasilan Tidak Kena Pajak (PTKP)

    Penghasilan Tidak Kena Pajak (PTKP) is a reduction in gross income given to Individual Domestic Taxpayers before calculating the tax payable (PPh terutang) which is not final. According to Peraturan Menteri Keuangan Republik Indonesia No. 101 /PMK.010/2016 article 1, the non-taxable incomes are:
    • IDR 54,000,000.00 for an individual Taxpayer.
    • IDR 4,500,000.00 additional for married Taxpayers.
    • IDR 54,000,000.00 additional for a wife whose income is combined with the husband's income.
    • IDR 4,500,000.00 additional for each family member or child who is entirely dependent for a maximum of 3 (three) people for each family.

  2. Employed individuals who earn income outside of their gross salary

    The company usually deducts salary taxes through Pajak Penghasilan (PPh) Pasal 21 Karyawan. After that, it is reported independently by the Taxpayer (Wajib Pajak) in the Annual Tax Return or Surat Pemberitahuan Tahunan (SPT). Meanwhile, income outside salary is referred to as personal income tax or PPh Orang Pribadi (PPh OP). The calculation of PPh OP after deducting the PTKP are:
    • The first layer of IDR 50 million is subject to a 5% tariff.
    • The second layer above IDR 50 million to IDR 250 million is subject to a 15% tariff.
    • The third layer above IDR 250 million to IDR 500 million is subject to a 25% tariff.
    • The fourth layer above Rp 500 million is subject to a 30% tariff.

  3. Individual taxpayers who receive income from self-employment and/or business activities

    The object of personal income tax (PPh OP), which is income from Business or independent work, consists of:
    • Operating profit or income.
    • Contributions received or obtained by the association from its members consisting of taxpayers who run or work independently.

  4. Individual taxpayers who receive income from capital (penghasilan dari modal)

    Income from capital or investment, which is the object of Personal Income Tax, includes:
    • Gains due to the sale or transfer of property include.
    • Interest and dividend.
    • Royalties or rewards for exercising rights.
    • Rent and other income.

  5. Expats who stay or present in Indonesia for more than 183 days within a single period of 12 months or who are already present in Indonesia and have the intention to live in Indonesia

    Under the Manpower Act (Undang-Undang Ketenagakerjaan), every person who receives income is subject to income tax. No exception for foreign nationals who work and earn income in Indonesia is subject to PPh 26. Based on Law No. 36 of 2008 (UU No. 36 Tahun 2008), PPh 26 is an income tax withheld from a business entity that makes payment transactions in the form of salaries, interest, and royalties to taxpayers overseas.

  6. Dependent spouses who are included in the husband's tax number and are not provided with different tax numbers

    The Income Tax Law or Undang-Undang Pajak Penghasilan (PPh) imposes different obligations for husbands and wives as individual taxpayers. Married female taxpayers are allowed to choose to be able to carry out their tax obligations alone or together with their husbands.

HOW CAN WE HELP

There are several conditions that made an individual or business is deemed/eligible as a tax resident in Indonesia or the other way around, a non-tax resident of Indonesia. An ignorance of those terms and conditions of can result in fines and wrongly fulfilled tax obligations. With thorough knowledge in Indonesia Tax Law, Putranto Alliance can help you determined your eligibility as Indonesia tax residence.

We can help you and your business in obtaining Taxpayer Identity Number (TIN/ NPWP – Nomor Pokok Wajib Pajak) or relinquish it once you cease your business operation in Indonesia, which necessitate a tax audit by Tax Authority that we can also help you out with. We are also offering other services related to TIN services such as changes in address or applying of TIN for your branch office.

FAQ

Annual Tax Return (SPT) is a letter used by the taxpayer to report the calculation and/or payment of taxes, tax objects, non-tax objects, and/or assets and liabilities following the provisions of tax laws and regulations. SPT can be in the form of paper (hard copy) or electronic documents (e-SPT or e-Filing)

 

The subject of personal income tax is a person or party responsible for income tax received or earned in a Fiscal Year or part of a Fiscal Year. The subject of income tax is a person who has to pay PPh and is referred to as a Taxpayer (WP), which is determined through the ownership of a Taxpayer Identification Number (NPWP).

The Kantor Pelayanan Pajak (KPP) is a work unit of the Directorate General of Taxes in charge of serving public taxation. The Tax Service Office relates to the taxpayer as an agency of the DJP. The Kantor Pelayanan Pajak consists of KPP Madya and KPP Pratama.

  • Kantor Pelayanan Pajak Madya, or what is known as the Medium Tax Office, is a Tax Service Office that handles corporate/corporate taxpayers who have a large enough income in the district/city area.
  • Kantor Pelayanan Pajak Pratama, or STO (Small Tax Office), is the KPP with the largest number and is spread throughout Indonesia, so this KPP also serves the most taxpayers.

Thank you for sharing

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