Frequently Asked Questions: #annualfinancialstatements

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 total assets and/or annual turnover of at least IDR 50 billion, the financial statements must be audited by a registered public accountant (Article 68, Law No. 40/2007). The same audit requirement applies to publicly listed companies, state-owned companies (Persero), and companies that gather public funds or issue debt instruments to the public.
• 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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Usually not. Indonesian law requires an independent audit of the annual financial statements only for defined categories of company, principally:

• Companies whose assets meet the statutory threshold under the Company Law (set at IDR 50 billion)
• Companies that gather funds from the public (banks, insurers, finance companies and similar regulated entities)
• Companies that issue debt instruments, listed companies, and state-owned enterprises
• Companies whose sector regulator or licence imposes an audit requirement

A small services or trading PMA below the asset threshold, unregulated and unlisted, is not legally obliged to appoint a public accountant to audit its accounts. Its obligations are proper bookkeeping, tax filings, and its annual report duties as a PT.

Why small companies still commission audits, in practice:

• Shareholders demand it — foreign parents consolidating an Indonesian subsidiary routinely require audited statements regardless of local law
• Banks and counterparties ask — credit applications and tenders often specify audited accounts
• Disputes — a shareholder who suspects the numbers (a common inquiry we receive from minority partners) can commission an independent audit as the factual foundation for whatever comes next

Note the difference between this statutory audit question and the company’s annual reporting duties, which apply to all PTs regardless of size, and have their own current requirements. When in doubt, ask with your figures to hand: the asset test is mechanical.

Okusi Associates arranges statutory and special-purpose audits through licensed public accountants, and conducts internal audits and financial reviews directly.

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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
• Financial Services Authority (Otoritas Jasa Keuangan / 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) must also submit periodic investment activity reports (LKPM) to the Ministry of Investment and Downstream Industry (BKPM) via the OSS system — quarterly for medium and large businesses.
• 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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