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Tax Glossary
Low-Risk PKP (PKP Berisiko Rendah)
A Low-Risk PKP (Pengusaha Kena Pajak Berisiko Rendah) is a Taxable Enterprise designated by Indonesia's Directorate General of Taxes as a low-risk profile and therefore entitled to advance refunds of excess VAT payments. The legal basis is Article 9(4c) of the VAT Law, implemented by PMK 28 of 2026, effective 1 May 2026. Eligible categories include public companies listed on the Indonesia Stock Exchange, state-owned and regional-owned enterprises, majority-owned BUMN subsidiaries, main customs partners (MITA), Authorized Economic Operators (AEO), registered manufacturers, large pharmaceutical wholesalers, certain medical device distributors, and consistent exporters of goods or services. The status is valid for 2 tax years and must be applied for through the Coretax system. The main benefit: VAT refunds are processed through document research instead of a full audit, with disbursement within one month of a complete application.
Tax Glossary
PKP Registration
PKP Registration (Pengukuhan PKP) is the formal process by which the KPP registers an entrepreneur as a VAT-registered taxpayer, either upon application or ex officio. Governed by Article 2 paragraph (2) of the VAT Law and PER-02/PJ/2018. Entrepreneurs whose turnover exceeds Rp 4.8 billion in a fiscal year must apply for PKP status by the end of the following month. Upon registration, the entrepreneur receives a PKP Certificate and must issue e-Faktur from the following month. Late registration may result in sanctions.
Tax Glossary
PKP (VAT-Registered Entrepreneur)
A PKP is a VAT-registered entrepreneur required to collect, remit, and report VAT. Governed by Article 1 paragraph 15 of the VAT Law. Registration is mandatory when annual turnover exceeds Rp 4.8 billion (PMK No. 197/PMK.03/2013); voluntary registration is available below this threshold. Once registered, a PKP must issue a Tax Invoice for every BKP/JKP supply, remit VAT by end of the following month, and file the monthly VAT return by the same deadline.
Tax Glossary
Aggregated Tax Invoice (Faktur Pajak Digunggung)
An aggregated tax invoice (faktur pajak digunggung) is a tax invoice issued by a Retail PKP (Pengusaha Kena Pajak Pedagang Eceran or PKP PE) for the delivery of taxable goods (BKP) or services (JKP) to end consumers, without including buyer identity, name, or signature. The mechanism is governed by Article 14 paragraph (1) of the Law on General Provisions and Procedures of Taxation (UU KUP) and Articles 51 through 55 of Director General of Taxes Regulation Number PER-11/PJ/2025. The term digunggung reflects the practice of reporting the total transaction value on a single line in the periodic VAT return, without per-invoice detail. Retail PKP serving end consumers directly, such as mini-markets, clinics, restaurants, or retail shops, may use this mechanism. If a buyer does not meet end-consumer criteria, the PKP must issue a full per-transaction tax invoice.
Tax Glossary
Tax Invoice (Faktur Pajak)
A Tax Invoice (Faktur Pajak) is proof of VAT collection issued by a PKP when supplying taxable goods (BKP) or services (JKP). Governed by Article 13 of the VAT Law and PER-03/PJ/2022. The invoice must be issued at the point of supply, or by the end of the delivery month if payment is received before supply. A late or non-compliant invoice is invalid and cannot be credited as Input Tax. Since 2014, Tax Invoices must be issued electronically via the DJP's e-Faktur application.
Tax Glossary
Input Tax (Pajak Masukan)
Input Tax (Pajak Masukan) is the VAT that should have been paid by a PKP on purchases of taxable goods (BKP) and/or services (JKP), utilization of offshore JKP, or importation of BKP. Governed by Article 1 paragraph 24 of the VAT Law. Input Tax is credited against Output Tax in the same tax period. If Input Tax exceeds Output Tax, the excess can be carried forward or refunded. Non-creditable Input Tax includes: defective Tax Invoices and BKP/JKP purchases unrelated to the business.
Tax Glossary
Monthly VAT Return (SPT Masa PPN)
The Monthly VAT Return (SPT Masa PPN) is the monthly report that every PKP must submit to DJP, summarizing Output Tax, creditable Input Tax, and the net VAT payable or overpaid. Governed by Article 15A of the VAT Law and PER-29/PJ/2015. The filing deadline is the end of the following month after the tax period. Since April 2022, filing is done through the e-Faktur application, which auto-generates return data from uploaded invoices.
Tax Glossary
Gross Income
Gross Income (Penghasilan Bruto) is the total income received or earned by a taxpayer in a tax year before any deductions for expenses, PTKP, or other allowances. Governed by Article 4 of the Income Tax Law (UU No. 36/2008). For individuals, gross income includes salaries, allowances, bonuses, honoraria, interest, dividends, royalties, capital gains, and other income. Gross income is the starting point for computing Taxable Income (PKP) after subtracting allowable deductions and PTKP.
Tax Glossary
VAT (Value Added Tax / PPN)
VAT (Pajak Pertambahan Nilai / PPN) is a tax levied on every supply of taxable goods (BKP) and/or taxable services (JKP) within Indonesia's customs area. Governed by Law No. 8/1983 on VAT, last amended by Law No. 7/2021 (UU HPP). The standard VAT rate is 11% since 1 April 2022, rising to 12% from 1 January 2025. PPN is an indirect tax: the economic burden falls on the final consumer, while the registered taxpayer (PKP) acts as a collector, remitting the difference between Output Tax (PK) and Input Tax (PM) to the state.
Tax Glossary
Output Tax (Pajak Keluaran)
Output Tax (Pajak Keluaran) is the VAT that a PKP must collect when supplying taxable goods (BKP), taxable services (JKP), or exporting. Governed by Article 1 paragraph 25 of the VAT Law. Output Tax = DPP x applicable VAT rate. Collection must be evidenced by a Tax Invoice. The difference between Output Tax and Input Tax is either the amount to remit (if PK > PM) or the overpayment to claim back (if PM > PK).
Tax Glossary
Kanwil DJP (Regional Tax Office)
Kanwil DJP, the Regional Tax Office (Kantor Wilayah Direktorat Jenderal Pajak), is a vertical institution under Indonesia's Directorate General of Taxes (DJP) that supervises a group of local Tax Service Offices (KPP) within its working area. Under Minister of Finance Regulation (PMK) No. 18 of 2026, Kanwil DJP is responsible for coordination, technical guidance, evaluation, oversight, and analysis and follow-up of taxpayer compliance in its region. Since PMK 18/2026 took effect on 1 April 2026, DJP functional and implementing officer positions sit only at Kanwil DJP and no longer at KPP. Kanwil DJP is grouped into the Large Taxpayer Office (LTO), Kanwil DJP Jakarta Special, and the other regional offices organised by province or grouped provinces. Kanwil DJP outside LTO and Jakarta Special now also has authority over VAT centralisation requests (pemusatan tempat PPN terutang) for multi-branch VAT-registered businesses (PKP).
Tax Glossary
Tax Collection Letter (STP)
An STP (Tax Collection Letter) is used to collect tax and/or administrative penalties in the form of interest and/or fines. Governed by Article 14 of UU KUP. DJP issues an STP when: current-year income tax is unpaid or underpaid; a return has arithmetic or writing errors leading to underpayment; a taxpayer is subject to penalty interest or fines; a PKP fails to issue or issues a late Tax Invoice. STP has the same legal force as an SKP. Payment is due within 1 month of the STP issuance date.
Tax Glossary
Tax Refund (Restitusi)
A Tax Refund (Restitusi) is the return of overpaid tax to a taxpayer who has paid, or had withheld/collected, more than the actual tax due. Governed by Articles 17 and 17B of UU KUP and Article 9 paragraph (4) of the VAT Law. The process: apply in the return, DJP audits, and issues an SKPLB if the overpayment is confirmed. Processing times: 12 months for corporate PPh; 12 months for general VAT; 8 months for low-risk PKP (accelerated refund). DJP pays 2% monthly interest on late refunds.