Accounting, Financial Reporting, and Audit in Indonesia
Financial and Tax Compliance in Indonesia
Accounting & Bookkeeping
Mandatory, retention of primary documents for at least 10 years
Financial Statements Preparation
Annually
Accounting Standards
Indonesian SAK standards, harmonized with IFRS
Consolidated Financial Statements
Mandatory if subsidiary companies are held
Dormant Reporting Option
Permitted in the absence of activity, however, mandatory tax reporting remains required
Filing Financial Statements with the Registry
No
Filing Financial Statements with the Tax Authority
Mandatory together with the annual tax return
Statutory Audit
Upon reaching certain criteria and for established types of business activities
Annual Tax Return
Annually by April 30
VAT Reporting
Monthly, subject to VAT registration
Regulatory Reporting
Monthly reports on employee payroll taxes, advance corporate income taxes, and withholding taxes.
Quarterly Investment Activity Report
Annual Return
Annually to the Ministry of Justice within 30 days from the date of the annual general meeting
Financial Reporting and Filing Workflow for an Indonesian Company
Accounting & Bookkeeping
As full tax residents, PT PMA (foreign-owned companies) are required to maintain continuous accounting records and input data into the Coretax tax reporting system, including invoices, payroll records, tax computations, and confirmations of business transactions.
Under Indonesian investment legislation, all PT PMAs are automatically classified as large or medium-sized businesses and cannot apply simplified accounting rules.
Ongoing Tax Compliance
Throughout the year, the company is required to fulfill regular tax obligations, including:
- monthly filing of returns for employee income taxes (PPh 21);
- advance corporate income taxes (PPh 25);
- withholding taxes; and
- monthly VAT reporting.
The primary interaction with tax authorities is conducted through the electronic Coretax system, which is used for filing returns, tax administration, and monitoring settlements with the budget.
Financial Statements Preparation
Financial statements of a company with foreign investments are prepared:
- in accordance with Indonesian financial reporting standards (PSAK – Pernyataan Standar Akuntansi Keuangan);
- in the Indonesian language;
- in Indonesian Rupiahs (the reporting currency can be changed based on an official request);
- by a certified Indonesian accountant.
If the company operates as a holding entity, the preparation of consolidated financial statements may be required.
Statutory Audit
The audit of financial statements is mandatory upon reaching certain financial thresholds and for specific types of business activities.
The audit is performed by a licensed Indonesian auditor and includes an examination of bookkeeping records, primary documentation, and financial statements.
In practice, many PT PMAs undergo an audit even in the absence of a direct statutory obligation, as audited statements are frequently required by banks, investors, counterparties, and government authorities.
Tax Return Preparation
Based on the audited financial statements:
- Profits Tax Return form is completed;
- a Tax Computation is prepared, in which accounting profit is adjusted in compliance with tax legislation.
A tax return submitted without audited financial statements is treated as an incomplete filing.
Tax Return Filing
The Annual Profits Tax Return (SPT Tahunan Badan), to which the annual financial statements must be attached, is submitted via the Coretax system.
Companies with foreign investments also submit financial reporting to the new Unified Financial Reporting Platform (PBPK).
Parallel Annual Obligations
Independent of tax reporting, the company is required to file:
- anAnnual Report to the Ministry of Justicewithin 30 days from the date of notarization of the general meeting minutes that include such report; and
- Investment Activity Reports every quarter, by the 15th day of the following month.
When registering a PT PMA in Indonesia, you immediately agree to maintain full, classical bookkeeping. Micro-enterprise reporting is closed to foreigners, even in the absence of commercial activity. Annual balance sheets will be verified twice: through the Coretax tax system and through the interagency unified financial reporting platform (PBPK), and the financial statements must be prepared by a licensed accountant.
Accounting Pricing and Fees
VAT Registration
Preparation and Submission of VAT Returns
Advisory Services, Support during Tax Audits
Accounting in Indonesia
Financial Reporting Standards in Indonesia
The development of financial reporting standards in Indonesia is carried out by the Financial Accounting Standards Board (DSAK) under the Institute of Chartered Accountants of Indonesia (IAI). The national financial reporting standards are called Standar Akuntansi Keuangan (SAK) and are harmonized with International Financial Reporting Standards (IFRS).
Two systems of standards are distinguished:
- PSAK (Pernyataan Standar Akuntansi Keuangan) are the primary set of standards for entities with public accountability and large businesses (including PT PMA, regardless of the scale of their operations). It is fully harmonized with IFRS.
- SAK EP (Standar Akuntansi Keuangan Entitas Privat) are standards for private entities without public accountability and are based on simplified IFRS principles for small and medium-sized enterprises. They apply only to local small and medium-sized businesses.
Digitalization and Control of Accounting and Tax Reporting
Following the enforcement of Government Regulation No. 43 of 2025, requirements for report verification have become stricter, and financial statements must be signed only by a certified Indonesian accountant, while the data itself is automatically cross-checked between the new Coretax tax system and the PBPK financial platform.
Coretax (CTAS) is a state tax system established by the Directorate General of Taxes (DJP) to automate tax collection, tax return submissions, and electronic invoicing.
Only accounting data that affects tax calculation is transmitted to the Coretax tax system, specifically:
- Invoices (e-Faktur) for every sale or purchase with VAT. In this case, it is crucial that your data matches the data of your counterparties, otherwise the system will log a violation;
- Tax returns (SPT), both monthly returns for VAT and withholding taxes, as well as annual returns;
- Withholding tax certificates issued upon paying employee salaries or paying contractors for services.
PBPK (Platform Bersama Pelaporan Keuangan) is the Unified Financial Reporting Platform.
Its objective is the integration of the company’s financial statements (balance sheet, profit and loss statement, cash flows, etc.) and providing access to it for several authorities simultaneously: the Ministry of Finance, the Central Bank, the Financial Services Authority, and other supervisory bodies.
These online platforms complement each other: the Coretax system controls the correctness of tax calculation and payment, while PBPK collects general financial analytics for regulators and investors to eliminate discrepancies in the data that companies submit to different departments. Only finalized reports and returns are entered into these systems, rather than primary daily records of internal bookkeeping.
Financial Statements of an Indonesian Company
Reporting Period
By default, the financial year (reporting period) in Indonesia coincides with the calendar year and lasts from 1 January to 31 December. A company has the right to establish a different financial year if it is conditioned by the specifics of its business activities or by the requirements of the parent company for financial statements consolidation.
The initial reporting period commences on the date of company registration and concludes on the final day of the selected financial year (as a rule, 31 December). If a company is registered in the second half of the year, the Directorate General of Taxes may approve a reporting period exceeding 12 months, lasting until the end of the subsequent financial year.
General Requirements for Financial Statements
A complete set of financial statements for an Indonesian company consists of 5 primary financial components:
- Balance Sheet;
- Profit and Loss Statement;
- Cash Flow Statement;
- Statement of Changes in Equity; and
- Notes to the Financial Statements.
Financial statements must include comparative data for the preceding year so that interested parties and regulatory bodies can assess financial trends.
In accordance with Indonesian legislation, a clear separation of functions is provided for the preparation and approval of reporting:
- the Board of Directors of the company bears responsibility for the preparation and accuracy of the data; directors sign the statements before presenting them to shareholders and government authorities;
- the financial statements of medium and large enterprises (which include companies with foreign investments) can be compiled only by certified accountants holding a valid state license in Indonesia (in accordance with Government Regulation No. 43 of 2025).
Reporting Currency
Reporting must be prepared in Indonesian Rupiahs, however, a company with foreign investments has the right to file an application with the Ministry of Finance to maintain bookkeeping and submit financial reporting in USD in the English language. The approval of such an application requires compliance with established criteria (e.g., the company operates as a branch or a subsidiary structure of a foreign company, and the primary revenues and expenses of the company are denominated in US Dollars), and accounting is maintained under IFRS for consolidation purposes.
The application must be submitted and approved before the commencement of the financial year from which the company plans to transition to accounting in the alternative currency.
Filing Deadlines for Financial Statements
Annual financial statements must be presented to the General Meeting of Shareholders (RUPS) within 6 months from the financial year-end date.
Financial statements are submitted with the Coretax tax system as an attachment to the tax return no later than 4 months from the financial year-end date.
Government Regulation No. 43 of 2025 introduces the obligation to submit financial statements to the Unified Financial Reporting Platform (PBPK) as well. This requirement applies to financial sector entities (banks, insurance and fintech companies, funds), public companies, and issuers in the capital market, as well as parties interacting with the financial sector, including:
- limited liability companies holding bank loans (debtors of financial institutions);
recipients of investments from Indonesian funds; and - получателей инвестиций от индонезийских фондов; а также
- medium and large businesses maintaining full bookkeeping in accordance with national standards.
PT PMAs are classified as medium and large businesses.
Consolidated Financial Statements
Consolidated financial statements are required for the companies registered in Indonesia that hold subsidiary companies. Consolidated reporting must be prepared in accordance with the financial reporting standards of Indonesia. The key factor for reporting consolidation is the existence of control by the parent company over the subsidiary.
An Indonesian holding company may be exempt from preparing consolidated reporting if it is itself a subsidiary company of another parent company, and such parent company prepares consolidated financial statements available for public use under standards comparable to IFRS.
Consolidated reporting is subject to statutory audit.
Audit of Financial Statemet in Indonesia
Documents Required for an Audit
To prepare the necessary files after each reporting period, we require the following documents detailing your company’s activities:
- Bank statements (digital format preferred)
- Contracts executed during the reporting period
- Active historical agreements covering the reporting period (e.g., loan agreements signed in previous periods)
- Supporting primary documentation showing corporate transactions during the period (invoices, acts of completion, bills of lading, etc.)
Copies of these documents are sufficient for the audit process.
Types of Auditor's Reports
Following the audit, a licensed independent auditor issues a report under Indonesian Auditing Standards, featuring one of the following opinion types:
- Unqualified Opinion is the most favorable one and certifies that the financial statements present a true and fair view of the company’s financial position in all material respects and comply fully with national accounting standards (SAK/PSAK).
- Qualified Opinion is issued, if the auditors identify specific minor deviations or face limitations in accessing certain financial records.
While tax authorities accept this report, it can trigger restrictions from banks or result in a denial of credit line renewals.
- Adverse Opinion or Disclaimer of Opinion occurs due to severe regulatory violations, material misstatements, or an intentional withholding of financial documents. These outcomes represent serious offenses that invalidate the report, require mandatory financial restructuring, and trigger an immediate field tax audit.
Commercial Value of an Audit
While small and medium-sized local businesses are exempt from mandatory audits, many PT PMAs choose to undergo a voluntary audit for several operational reasons:
- Boosting credibility with international banks and financial institutions
- Attracting external investments or facilitating corporate M&A transactions
- Mitigating tax risks before official reviews (an audit uncovers accounting errors before the Directorate General of Taxes detects them and launches an investigation)
- Enhancing oversight by shareholders and parent companies over local management and personnel
- Participating in large corporate or state tenders
Operating without audited financial statements can heavily restrict a company’s ability to scale its business and secure relationships with major financial partners.
Tax Audits in Indonesia (Audit Pajak)
Annual Profits Tax Returns in Indonesia
Tax Period and Return Filing
The Annual Profits Tax Return (SPT Tahunan Badan) must be submitted via the Coretax system no later than 4 months after the end of the tax year. The annual financial statements must be attached to this return. For a standard tax period that aligns with the calendar year, the filing deadline expires on April 30.
Determination of Taxable Profits
The calculation of corporate profit tax is based on the profit reflected in the company’s financial statements, adjusted in accordance with applicable tax rules.
In Indonesia, this process is known as Fiscal Reconciliation (Rekonsiliasi Fiskal), which involves:
- Expense adjustments, taking into account that certain expenses may be disallowed for tax purposes
- Income adjustments, accounting for tax exemptions or special tax rates applicable to certain types of business activities
For companies with direct foreign investments (PT PMA), tax authorities pay closer attention to transactions with foreign related parties and compliance with the arm’s length principle. This requires the preparation of additional transfer pricing documentation.
Penalties and Liability for Non-Compliance
Indonesian laws enforce liability for missing filing deadlines or presenting fraudulent data. Sanctions include administrative, financial, and criminal penalties targeting both the company and its management.
| Requirement | Penalties and Sanctions |
| Accounting & Bookkeeping | Failure to comply: A fine ranging from 200% to 400% of the unpaid tax amount, and/or imprisonment of the director for 6 months to 6 years for intentional concealment of data, forgery, or destruction of required records. |
| Monthly Tax Returns (VAT, payroll taxes, withholding taxes, corporate tax installments) | Late filing: A flat administrative fine of 500,000 IDR per missing VAT return, and 100,000 IDR per missing return for other taxes. |
| Annual Corporate Tax Return | Late filing: A flat administrative fine of 1,000,000 IDR.
Submission of incorrect returns:
|
| Tax Payments | Late payment:
Interest penalties calculated using a floating monthly rate set by the Ministry of Finance (based on the Central Bank interest rate plus a risk margin). Enforcement measures: Asset and bank account freezes, property confiscation, and physical detention (Gijzeling) of foreign directors until the tax debt is fully settled. |
| Invoices in Coretax System | Issuing an incorrect invoice or delaying its registration in the system is punishable by a fine equal to 1% of the transaction’s tax base. |
| Filing Reports to Unified Platform (PBPK) | Late filing or non-compliance: Administrative sanctions from supervisory ministries, formal written warnings, public disclosure of violations, fines up to 100 million IDR, and the suspension or revocation of corporate licenses. |
| Filing Investment Activity Reports (LKPM) to BKPM | Late filing or non-compliance: Enforced progressively starting with three official warning letters, restrictions on commercial activities, blocking of access to the OSS licensing portal, and final cancellation of the corporate license. |
If a company fails to file its annual corporate tax return on time, the tax authorities have the power to calculate and issue an assessment for mandatory monthly corporate income tax installments (PPh 25). This estimated assessment is based on the tax amount payable for the previous reporting period.
Personal Liability of Directors and Beneficial Owners
A key feature of Indonesian corporate law (Articles 97 and 104 of Company Law No. 40/2007) is the concept of joint and several personal liability for the company’s management:
- Personal liability of directors for company obligations applies if it is proven that bankruptcy, tax assessments, or lawsuits resulted from their negligence or failure to maintain proper accounting records.
- Liability of beneficial owners and shareholders applies if they used the company for personal gain, committed wrongful acts in the company’s name, or directly instructed directors to falsify financial statements. Under Indonesian law, such individuals are recognized as de facto controllers. They face the full extent of financial sanctions and criminal law, completely piercing the corporate veil of limited liability.
FAQ
Is an audit mandatory in Indonesia?
An independent financial audit is not mandatory for all companies. Under Company Law No. 40 of 2007, it is required only if an entity meets specific criteria. An audit is mandatory if the company’s total assets or annual turnover reach 50 billion IDR or more. This requirement also automatically applies to all public companies, financial institutions, and state-owned enterprises.
While local small and medium-sized businesses are exempt, foreign-owned companies (PT PMA) often undergo a voluntary audit to build trust with local banks and counterparties.
Which accounting standards apply in Indonesia?
Indonesia uses a national system of financial reporting standards called SAK (Standar Akuntansi Keuangan). Large enterprises, public entities, and foreign investment companies (PT PMA) must maintain their books under full PSAK (Pernyataan Standar Akuntansi Keuangan) standards, which are closely harmonized with IFRS. Local small and medium-sized private companies without public accountability use a simplified standard called SAK EP, which is based on IFRS for SMEs.
Is financial reporting required for dormant companies?
Yes. Having dormant status does not exempt a legal entity from record-keeping and financial reporting obligations. Companies must prepare an annual balance sheet and submit an annual corporate tax return via the Coretax system.
Even if there are zero commercial transactions, invoices, or bank account movements, the company must still report its basic corporate details, such as paid-up capital, and minimal maintenance expenses.
Is financial reporting required if a company has no commercial activity inside Indonesia?
Yes, it is mandatory. Unlike jurisdictions with a territorial tax system, Indonesia applies a worldwide residency principle. All registered companies, including foreign investment PT PMA structures, are recognized as tax residents and must report their global income regardless of where the transactions take place. Any offshore operations, invoices, contracts, and profits must be:
- Recorded in the company’s books under national SAK/PSAK standards
- Converted into the national currency (IDR) using the official Ministry of Finance exchange rate
- Included in the annual financial statements and declared within the annual corporate income tax return via Coretax (the standard tax rate is 22%, and double tax reliefs may apply for taxes paid abroad)
Concealing offshore transactions is treated under local law as intentional misreporting and tax evasion.
Can a foreign investment company use the simplified SAK EP standards, or must it apply IFRS?
Foreign investment companies (PT PMA) must prepare their financial statements based on Indonesian PSAK standards. If a foreign parent company requires reporting under IFRS for group consolidation, the local entity must manage both reporting frameworks. In practice, this means maintaining the core accounting records under PSAK for local regulatory compliance and preparing separate adjustment sheets that align the Indonesian figures with IFRS rules for group reporting.
Is professional accounting support required for an Indonesian company?
Professional bookkeeping and tax maintenance are essential for a foreign direct investment company (PT PMA) from both a practical and legal standpoint.
Unlike traditional offshore jurisdictions where accounting can be done retroactively once a year, Indonesia’s regulatory environment makes self-administration impossible for the following key reasons:
- Monthly tax compliance cycles require filing returns for VAT, payroll taxes, and withholding taxes every single month, regardless of whether the company had operational activity. Filing delays or technical errors automatically freeze business operations and trigger fines.
- Statutory accountant qualifications mandate that the financial statements of medium and large enterprises, which automatically include all PT PMA entities, must be prepared by an Indonesian-licensed accountant.
- Complex fiscal reconciliations involve continuous tracking of deductible business expenses, recalculated tax bases, and manual adjustments required for corporate profit tax filing.
Full professional accounting support is necessary for an Indonesian company from its very first day of incorporation.
Who is legally liable for the preparation of the company's financial statements?
The Board of Directors bears full legal liability for the accuracy and completeness of the financial statements. However, following the launch of the state-run electronic Coretax system and PSAK standards, foreign management cannot handle the accounting independently. It is highly recommended to hire a local accountant or outsource the work to a local corporate service provider.
Every single transaction requires instant verification of Indonesian tax IDs and the issuance of electronic invoices directly inside Coretax. Furthermore, defending corporate interests before tax inspectors and handling official correspondence must be executed promptly and in the Indonesian language. All tax submissions are accepted exclusively in electronic format.