TAXPAYER IDENTITY NUMBER SERVICES
Category: Business Establishment & Licenses, Tax & Accounting, Compliance Services
Written by Laura Yubelia Gracia and reviewed by Agung Maulana on 26/07/2023
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
Written by Laura Yubelia Gracia and reviewed by Agung Maulana on 26/07/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
Taxpayer Identity Number (Nomor Pokok Wajib Pajak / NPWP) serves as a unique identification number for taxpayers in Indonesia and is essential for fulfilling tax obligations, accessing tax-related benefits, and conducting various financial and business transactions.
Table of Contents
What is a Taxpayer Identity Number?
NPWP is a number given to a taxpayer as a tool in tax administration that is used as a personal identification or identity of the taxpayer in exercising his/her tax rights and obligations.
Function of the Taxpayer Identity Number
The main function of the NPWP is to identify and track taxpayers for tax administration purposes. It is used for various tax-related activities, such as filing tax returns, paying taxes, claiming tax benefits, government transactions, financial & business transactions, and conducting tax audits. The NPWP is a crucial requirement for individuals and businesses to fulfill their tax obligations in Indonesia.
- 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.
- The following six digits (XX.XXX) indicate the registration number or a serial number of the KPP given by the DGT head office.
- One digit (.X) then serves as a security code to prevent errors or falsification of the NPWP.
- The next three digits (-XXX) are the registered KPP (Kantor Pelayanan Pajak) code.
- 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.
Latest Provisions Related to Taxpayer Identity Number
Since July 14, 2022, provisions related to the NPWP apply, namely:
- Personal taxpayers who are residents use the Citizenship Identification Number (NIK) as the TIN. Residents are Indonesian citizens and foreigners residing in Indonesia;
- Non-resident personal taxpayers, corporate taxpayers, and government agency taxpayers use NPWP with a sixteen-digit format. Non-resident individual taxpayers, corporate taxpayers, and government agency taxpayers who have been registered and have a NPWP with a fifteen-digit format before July 14, 2022, use a NPWP with a sixteen-digit format by adding a zero in front of the NPWP with a fifteen-digit format.
The use of a sixteen-digit NPWP following the above provisions:
- Used in tax administration services on a limited basis until December 31, 2023;
- Used in administrative services organized by the Directorate General of Taxes (DGT) and other parties starting from January 1, 2024.
In line with the provisions mentioned earlier, there are specific classifications for taxpayers based on their individual or corporate status and other relevant categories.
Taxpayer Classification
NPWP is given to taxpayers who have fulfilled the subjective and objective requirements as regulated in tax laws and regulations.
Subjective requirements are requirements following the provisions regarding tax subjects.
Objective requirements are requirements for tax subjects who receive or obtain income or are required to make deductions/collections.
Taxpayers are grouped into two types and several categories including:
| Group | Category | Description |
|---|---|---|
| Personal Taxpayer | Head of Family (Kepala Keluarga) | Taxpayers who are not married, and the husband is the head of the family |
| Living Separately (Hidup Berpisah) | Married women who are taxed separately due to living separately based on a judge's decision | |
| Split Property (Pisah Harta) | Husband and wife who are taxed separately because they want to based on a written separation of assets and income agreement. | |
| Electing Separated (Memilih Terpisah) | A married woman, other than the categories of Living Separated and Separated Assets, who is taxed separately because she chooses to exercise her rights and fulfill her tax obligations separately from her husband. | |
| Group Taxpayer | Corporate | A group of people and/or capital that constitutes a unit either conducting business or not conducting business. |
| Joint Operation | A form of a joint operation that performs the delivery of Taxable Goods and/or Taxable Services on behalf of the joint operation. | |
| Representative Office of Foreign Company | Taxpayer of foreign trade representative or representative office/liaison office in Indonesia that is not a permanent establishment. | |
| Treasurer | Government treasurer who pays salaries, wages, honorariums, allowances, and other payments and is required to withhold or collect taxes. | |
| Activity Organizer | A party other than the four previous corporate taxpayers who make payment of compensation by name and in any form in connection with the implementation of activities. |
To obtain an NPWP, which is given to taxpayers who meet the subjective and objective requirements as stipulated in tax laws and regulations, every eligible taxpayer must complete the registration process at either the Tax Office (KPP) or the Tax Services, Dissemination, and Consultation Office (KP2KP).
Taxpayer Identity Number Registration
Every taxpayer who has fulfilled the subjective and objective requirements must register at the Tax Office (KPP) or the Tax Services, Dissemination, and Consultation Office (KP2KP) whose working area covers:
- Taxpayer's residence;
- Taxpayer's domicile;
- Taxpayer's place of business activity.
Taxpayer registration is done by applying electronically or physically, and attaching the required documents.
According to the Regulation of The Directorate General of Tax Number PER-20/PJ/2013 Year 2013 concerning Procedure For Registration And Granting Of Taxpayer Registration Number, Business Reporting And Stipulation Of Taxable Entrepreneur, De-Registration Of Taxpayer Registration Number And Revocation Of Stipulation Of Taxable Entrepreneur, As Well As Change Of Data And Transfer Of Taxpayers, the time limit for each taxpayer to register themselves to obtain a NPWP is:
- Personal taxpayers who do not run a business or freelance job must register themselves to obtain a NPWP no later than the end of the following month after the taxpayer's income in an annualized month has exceeded Non-Taxable Income;
- Individual taxpayers who run a business or perform free work must register to obtain a NPWP no later than 1 (one) month after the business, or free work starts;
- Corporate taxpayers must register to obtain a NPWP no later than 1 (one) month after the establishment;
- Treasurer appointed as tax withholder and/or collector shall be required to register to obtain a NPWP at the latest before making tax withholding and/or collection.
Taxpayer Data Changes
The Head of The Tax Office or an official appointed by the Director General of Taxes may make changes to taxpayer data if the data or information contained in the tax administration is different from the actual situation.
Some examples of data changes include:
- Changes in taxpayer identity;
- Change of residence address, domicile, or place of business activity of the Taxpayer;
- Changes in taxpayer's source of income;
- Change in the type of activity of the taxpayer;
- Change of taxpayer into undivided inheritance taxpayer;
- Change in capital structure or ownership of Corporate Taxpayer that does not change the form of legal entity;
- Faulty information in writing taxpayer data in the administration of the Directorate General of Taxes.
Application for data change can be made electronically or in writing, and attached with supporting documents that show the change.
Deletion of Taxpayer Identity Number
In addition to the registration process, it is important to note that the Head of The Tax Office or an official appointed by the Directorate General of Taxes has the authority to make changes to taxpayer data when there are discrepancies between the information in the tax administration and the actual situation.
The deletion of NPWP is carried out by the Head of Tax Office if:
- The Taxpayer and/or his/her heirs if the Taxpayer no longer fulfills the subjective and/or objective requirements following the provisions of tax laws and regulations;
- The corporate taxpayer is liquidated due to business termination or merger;
- Permanent establishment taxpayer ceases its business activities in Indonesia;
- Deemed necessary by the Directorate General of Taxes to abolish the NPWP of a taxpayer who no longer meets the subjective and/or objective requirements following the provisions of tax laws and regulations.
Penalties
Taxpayers who do not have a NPWP not only experience various difficulties but some penalties apply if they do not have a Taxpayer Identity Number.
- If the tax withholding on income in connection with work, services, or activities by name and in any form received or obtained by a domestic individual taxpayer who does not have a NPWP, the amount of the rate applied to taxpayers who do not have a NPWP is 20% (twenty percent) higher than the rate applied to taxpayers who can show a NPWP;
- If the government treasurer collects tax in connection with payment for the delivery of goods; certain entities collect tax from taxpayers who carry out activities in the field of imports or business activities in other fields; and certain corporate taxpayers collect tax from buyers on the sale of goods classified as very luxurious, then the amount of the rate applied to taxpayers who do not have a NPWP is 100% (one hundred percent) higher than the rate applied to taxpayers who can show the NPWP;
- If the taxpayer receiving income from dividends, interest, royalties, gifts, awards, bonuses, rent, and compensation in connection with services does not have a NPWP, the amount of withholding rate is 100% (one hundred percent) higher than the rate applied to taxpayers who can show the NPWP.
How We Can Help
Our Tax and Accounting staff at Putranto Alliance provide comprehensive information on the requirements and procedures involved in obtaining NPWP, including the necessary documents and forms. We help taxpayers to fill out the application accurately and on time, reducing the risk of errors or omissions that could lead to delays or rejections. We will facilitate a smooth and efficient process in obtaining NPWP, helping taxpayers fulfill their tax obligations and enjoy the benefits and privileges associated with being a registered taxpayer.
References
Regulation of The Directorate General of Tax Number PER-20/PJ/2013 Year 2013 concerning Procedure For Registration And Granting Of Taxpayer Registration Number, Business Reporting And Stipulation Of Taxable Entrepreneur, De-Registration Of Taxpayer Registration Number And Revocation Of Stipulation Of Taxable Entrepreneur, As Well As Change Of Data And Transfer Of Taxpayers.
FAQs
The validity period of the NPWP is for life or does not need to be renewed after a certain period.
Taxpayers can apply for a reprint of the NPWP card at the nearest tax office. Taxpayers only need to bring their original ID card, fill out the application, and will get a new NPWP card. The data listed on the NPWP card matches the data in the Directorate General of Taxes’ master file
NPWP can be misused by irresponsible people and harm the state. However, there are sanctions imposed on people who deliberately misuse or use without the right of NPWP, namely imprisonment for a minimum of 6 months and a maximum of 6 years and a fine of at least 2 times the amount of tax payable that is not or underpaid and a maximum of 4 times the amount of tax payable that is not or underpaid
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