Frequently Asked Questions: #annualfinancialstatements

Financial reporting requirements for companies in Indonesia are governed by various regulations and standards. Here's an overview of the key regulatory requirements:

Applicable Regulations:

• Indonesian Financial Accounting Standards (PSAK)
• Law No. 40 of 2007 on Limited Liability Companies
• Capital Market and Financial Institution Supervisory Agency (OJK) regulations for public companies

Key Requirements:

• Annual Financial Statements: Companies must prepare annual financial statements consisting of:

  • Balance sheet
  • Income statement
  • Cash flow statement
  • Statement of changes in equity
  • Notes to the financial statements

• Accounting Standards: Financial statements must be prepared in accordance with Indonesian Financial Accounting Standards (PSAK), which are largely aligned with International Financial Reporting Standards (IFRS).

• Language and Currency: Financial statements should be prepared in Indonesian language and presented in Indonesian Rupiah (IDR).

• Filing Deadlines:

  • Private companies: Within 6 months after the end of the financial year
  • Public companies: Within 4 months after the end of the financial year

• Audit Requirements:

  • Public companies: Annual financial statements must be audited by a registered public accountant
  • Private companies: Audit requirements depend on company size and other factors (e.g., total assets, annual turnover)

• Board of Directors' Report: Companies must prepare an annual report of the Board of Directors, providing an overview of the company's performance and future plans.

• Consolidated Financial Statements: Required for companies with subsidiaries, presenting the financial position and results of the entire group.

• Specific Industry Requirements: Certain industries (e.g., banking, insurance) may have additional reporting requirements set by their respective regulatory bodies.

• Tax Reporting: Companies must submit annual corporate income tax returns, which should be based on the audited financial statements.

Additional Considerations:

• Companies may need to maintain their accounting records for a minimum of 10 years.
• Foreign-owned companies (PMA) may have additional reporting requirements to the Investment Coordinating Board (BKPM).
• Publicly listed companies are subject to more stringent reporting and disclosure requirements set by the OJK and Indonesia Stock Exchange (IDX).

It's important to consult with qualified professionals or refer to the latest regulations for the most up-to-date and specific requirements applicable to your company's situation.

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PMA companies in Indonesia are required to prepare and submit annual financial statements to the Indonesian Tax Office. Here are the key requirements:

Preparation of Financial Statements:

• Financial statements must be prepared in accordance with Indonesian Financial Accounting Standards (SAK).
• The statements should include:
  • Balance Sheet
  • Income Statement
  • Cash Flow Statement
  • Statement of Changes in Equity
  • Notes to the Financial Statements

Submission Requirements:

• Deadline: Annual financial statements must be submitted along with the Annual Corporate Income Tax Return (SPT Tahunan PPh Badan) by the end of the fourth month after the end of the fiscal year.
• Language: Financial statements should be prepared in Indonesian language.
• Currency: The statements should use Indonesian Rupiah (IDR) as the reporting currency.

Additional Requirements:

• For companies with gross revenue exceeding IDR 50 billion per year, the financial statements must be audited by a certified public accountant.
• Companies listed on the Indonesian Stock Exchange have additional reporting requirements set by the Financial Services Authority (OJK).

Supporting Documents:

• Trial Balance
• General Ledger
• Sub-ledgers for major accounts
• Bank statements and reconciliations
• Fixed asset register
• Inventory list (if applicable)

Electronic Submission:

• The Indonesian Tax Office has implemented an e-Filing system for tax returns and financial statements.
• Companies are required to submit their financial statements electronically through this system.

Penalties:

• Failure to submit financial statements or submitting incomplete/inaccurate statements can result in penalties, including fines and potential tax audits.

It's important to note that the specific requirements may vary depending on the company's size, industry, and other factors. Engaging with a professional accounting firm or tax consultant familiar with Indonesian regulations is highly recommended to ensure full compliance and accurate reporting.

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Based on the information provided, here are the key requirements for preparing and submitting annual financial statements to the Indonesian Tax Office:

1. Financial statements must include:

   • Statement of Financial Position (Balance Sheet)
   • Statement of Comprehensive Income (Income Statement)
   • General Ledger
   • List of Assets and depreciation
   • List of prepayments, leases and amortization

2. Financial statements must be prepared in accordance with Indonesian accounting standards and tax regulations.

3. The statements must be prepared in the Indonesian language and use Indonesian Rupiah currency. Certain companies may be permitted to use English and USD after obtaining approval.

4. Books, records and supporting documents must be stored for 10 years in Indonesia.

5. The fiscal year is typically January 1 to December 31, but companies can use a different fiscal year with approval.

6. Annual financial statements must be submitted within 4 months after the end of the fiscal year.

7. Submission is done electronically through the Directorate General of Taxes website.

8. Companies must have a tax ID number (NPWP) to submit financial statements.

9. An electronic filing number (EFIN) is required for online submission. This can be obtained from the tax office.

10. For corporate taxpayers, additional documents required include:

    • Monthly and annual withholding tax reports
    • Monthly income tax reports
    • Annual income tax report
    • Investment plan

11. Small companies with annual revenue under 4.8 billion rupiah may be eligible for simplified 0.5% tax reporting.

12. Late submission can result in penalties, including a 2% monthly interest charge on tax payable.

13. Companies may need to engage professional accounting services to ensure proper preparation and compliance.

Okusi Associates offers comprehensive accounting and tax reporting services to assist companies in meeting these requirements and ensuring compliance with Indonesian tax regulations.

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