Tax is the obligation of all citizens as taxpayers. Tax law is regulated by the government as the holder of the authority to regulate rights and responsibilities. Some taxes are charged directly to taxpayers, those that are charged to tax objects. Tax reporting in Indonesia is known as the Self-Assessment Method system. Although the Telang Income Tax is deducted directly, taxpayers must still report their taxes independently.
For individuals, tax burden is influenced by income. As for the company or entity, the tax burden is influenced by profits from the relevant company. The profit of a company describes financial performance in a certain period. The company compiles financial statements in an accounting cycle to find out financial position, financial performance, and cash flow in that period.
According to Law No. 28 of 2007 concerning General Provisions and Taxation Procedures, Tax is a mandatory contribution to the state owed by individuals or entities that are forced based on the law, by not getting direct rewards and used for the state needs for the maximum people’s prosperity.
Tax law is a set of rules that define taxpayers’ rights and responsibilities, as well as their relationships with the government or tax collectors. The government will be represented in this case by the Direktorat Jenderal Pajak (DJP), which has the authority to regulate and manage tax matters. Tax law functions as a reference in creating a tax collection system based on justice and efficiency and is regulated as clearly as possible in the law on the tax law.
There are two kinds of tax laws, formal tax law, and material tax law:
Examples are the types of formal and material tax laws, the Income Tax (PPh) and Value Added Tax (VAT/ PPN), separate formal and material tax laws.
For the formal tax laws of the two types of taxes (Income Tax and Value Added Tax) refer to Law No. 6 of 1983 concerning General Provisions and Tax Procedures which has been amended until the latest amendment to Law No. 16 of 2009. Thus, the rights and obligations of the Taxpayer relating to Income Tax (PPh) and Value Added Tax (PPN) can be found in the KUP (Ketentuan Umum dan Tata Cara Perpajakan).
As for the material tax law on the type of Income Tax (PPh), it is separate from the material tax law on the type of Value Added Tax (VAT). For material tax law on Income Tax (PPh), it refers to Law No. 7 of 1983 which has been amended until the last time in Law No. 36 of 2008. As for material tax law on Value Added Tax (VAT/ PPN), it refers to Law No. 8 of 1983 which has been amended until the last time in Law N0.42 of 2009.
In Indonesia, taxes are categorized based on three things. First, based on the group or the way of collection (direct tax and indirect tax). Second, based on its nature (subjective tax and objective tax). Third, based on the Collection Institution (Central Tax and Regional Tax).
The tax collection system with the Self Assessment Method in Indonesia has succeeded in moving the responsibility of calculating, paying and reporting taxes by the taxpayer himself. Through this system, although the implementation of tax payments has been carried out through the mechanism of cutting by other parties, for example by the employer, the taxpayers are still obliged to submit an annual notification letter (SPT Tahunan). Therefore, even though the Income Tax (PPH) has been deducted by the employer, workers are required to fill and submit the SPT Tahunan to the Tax Office.
All citizens, except those who are exempted by laws and regulations, are required to pay taxes. The state imposes penalties on people who do not pay their taxes because of its compulsory nature. The goal is for the taxpayer to become more compliant with his or her tax duties.
The accounting cycle is the process of making financial statements in a company where this activity includes all transactions from the operational activities of a business or company so that it can see the condition of the company getting a profit or loss in the company’s economic growth.
According to Ikatan Akuntansi Indonesia (IAI), financial statements are a structured presentation of the financial position and financial performance of an entity. The purpose of the financial statement report is to provide information about the financial position, financial performance, and cash flow of entities that are beneficial for most users of financial statements in making economic decisions. The financial statements also show the results of management accountability for the use of resources entrusted to them. Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
In Indonesia, the making of financial statements follows Pedoman Standar Akuntasi Keuangan (PSAK), which determines five types of financial statements, namely the income statement, balance sheet, changes in capital, cash flow, and notes to the financial statements:
Accounting or Financial Reports can be useful for several activities, especially in financial cases.
Financial Advisor (FA) will help you to make decisions related to finance and investment, both individual and company. Besides the advisory, your FA, as an educator, will help you to understand what is involved in meeting your future goals. Tax planning also related to this service. Tax planning allows clients to make better decisions that will have long-term financial implications on both current and future taxation.
The imposition of taxes in Indonesia can be based on taxpayers as in income tax (subjective tax) or based on tax objects such as VAT/ VAT (objective tax).
The income statement describes the performance of a company because this report shows the details of income, expenditure, and profit or loss generated by the company within a certain period. In this report, there is also information regarding the number of costs incurred for operations.
The balance sheet describes the financial condition of a company because through the balance sheet we can find out the composition of the company’s assets and its capital arrangement. Company capital can be sourced from paid-up capital, stock capital, and debt. The balance sheet can also be used as an analysis of the flexibility and financial liquidity of the company.
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