PKP and non-PKP

3 Replies

Hi guys, I was wondering if someone can shed some light on the tax terms PKP and non-PKP. I know one is for subject to value added tax and the non is exempted. But what are the circumstance for this, and how does an organization (a company or a foundation) fall under the latter category? Would there be any other taxes that are incurred if a legal entity becomes non-PKP?  


Mario-884284 1416575890

Hi candy kingdom,

This is a very complex explanation. As such I've taken a translation from a very good article (in Indonesian) explaining the whole PKP / non-PKP and the impact for businesses. 

Please find the original and also the translation (excuse the grammar it's straight Google Translate)


Original Article here

Starting January 1, 2014, employers with sales (turnover) of no more than USD 4.8 billion a year is not mandatory status Taxable Person (PKP). That is, are exempt from the obligation to withhold, deposit and report the VAT payable.

It was stated in the Regulation of the Minister of Finance (PMK) No. 197 / PMK.03 / 2013, which was published recently.

"Rules are defined as at December 20, 2013, will come into force effective from 1 January 2014," explains Head of External Relations Section of the DGT Chandra Budi, in a press release.

As stated in Article 3A VAT Act, employers who do Taxable Goods (BKP) or taxable services (JKP), shall report his business to be confirmed as PKP and shall withhold, deposit and report outstanding VAT, EXCEPT small entrepreneurs the limits set by the Minister of Finance.

PMK No. 68 / PMK.03 / 2010 on "Limitation of Small Employers Value Added Tax" states, which are exempt from the obligation 'picked-deposit-reported' VAT payable is entrepreneurs with annual turnover of more than USD 600 million.

On December 20, 2013 and, PMK No. 68 / PMK.03 / 2010 formally repealed and replaced by PMK No. 197 / PMK.03 / 2013.

"With this PMK, which means that entrepreneurs with a turnover not exceeding USD 4.8 billion a year and choose to be non-PFM, is not required to be PKP and obligations inherent perpajakann," said Chandra further.

If judging, figure 4.8 billion this feels familiar. And sure enough, PMK who raised the PKP turnover was indeed associated with PP 46/2013 (1% final income tax rates) which has been running since July 2013 ago.

In a press release, Chandra Budi admitted that the purpose of the issuance of FMD is not other than to encourage taxpayers with a turnover not exceeding USD 4.8 billion a year more participating schemes Income Tax (VAT) Final.

As published in various media, PP 46/2013 numbers have drawn protests from small entrepreneurs. The essence of this Government Regulation requires small businesses with a turnover of no more than 4.8 billion a year to pay the final income tax of 1% of gross turnover. In other words, they are subject to income tax of 1% of the total sales regardless of whether profit or loss. It was considered burdensome.

"With this increase in the turnover limit, then the concession agreement with a turnover not exceeding USD 4.8 billion and choose to be non-PFM no longer required to make a tax invoice and no longer need to report Notification (SPT) VAT period," said Chandra.

Then, if the increase in the turnover limit PKP in this new PMK really can reduce the burden of small businesses?


Does The Change in PKP Turnover Levels Make it Easier for The Small Entrepreneur?

In my opinion, totally NOT affect the SMEs with turnover under $ 600 million a year, because so far they are not required anyway PKP. Regardless of whether an objection or not, still they are subject to income tax of 1% either in a profit or loss.

However, a hefty helping small businesses with turnover of USD 600 million - 4.8 billion a year, as long as they are required to PKP. By raising the limits PKP be 4.8 billion, meaning they are no longer bothered by the obligation to carry out the collection and reporting of VAT.

"What if my company turnover of no more than 4.8 billion a year but already has the status of PKP?" Maybe there who think so.


Turnover Not More Than 4.8 Billion But Already With PKP Status?

I'm sure a lot of taxpayer with a turnover of no more than 4.8 billion a year but already the status of PKP. If you want to apply for the revocation status of PFM, thus freed from the obligation to implement VAT. In this PMK 197/2013, Article 7 PMK 68/2010 kententuan has been changed to the following:

"In the event that the employer has been confirmed as a Taxable Person and the amount of gross income and / or gross receipts within 1 (one) financial year does not exceed USD 4,800,000,000.00 (four billion eight hundred million dollars), Taxable Person may apply for revocation inaugural VAT purposes. "

Is it necessary to request the revocation status of PKP?

In my opinion, you should not rush. Just as limits on the final income tax of 1%, I personally catch signal Rp 4.8 billion limit is not something that could WP own value, but still need to be verified by the fiscus (tax office), sooner or later. This is clearly implied in Article 5 of PMK 68/2010 (as amended into PMK 197/2013) which read as follows:

"(1) If the obtained data and / or information indicating the existence of tax obligations referred to in Article 4 paragraph (2) are not met entrepreneurs, Director General of Taxes in position can be confirmed businessman VAT purposes.
(2) The Director General of Taxation can issue tax assessments and / or letter of the tax bill for the tax period before the employer confirmed as a Taxable Person referred to in paragraph (1), effective as of the amount of gross income and / or gross receipts of more than $ 4,800. 000,000.00 (four billion eight hundred million dollars). "

Once again, be careful. Not to be a blunder. By filing the revocation status of PKP, can be will make a WP (Wajib Pajak/Taxable Entity) "incoming radar" examination by the tax authorities.

So, what needs to be done?

Consider the "trade-offs". While in the field, I find each WP face different conditions. To decide whether to apply for the revocation status of PFM or not, can consider the following two factors:

VAT influence on Competitiveness Products / Services - Calculations, whether these factors affect the VAT during the selling price of the products / services sold-Tus affect the competitiveness? If yes means the revocation status of PKP will be profitable. Sales of more exports for example, the selling price is not affected by the VAT (VAT rates for exports 0%), so no need to apply for the revocation status of PKP. For example, Mas Wongso (admin JAK), VAT does not affect much the selling price to the consumer goods sold in the mini-marketnya, so he decided to keep the status of PKP although turnover of no more than 4.8 billion a year. I think it's a smart choice.
Available / Presence Energy Taxation - If during the tax affairs handled whilst not have much time, obligations 'picked-deposit-reported' VAT may be very troublesome, so the revocation status of PKP will be quite helpful. If not, then do not need to be done.
After considering the above factors, if they feel the need to apply for the revocation status of PKP, WP should consult with Account Representative (AR) in the LTO first. Ask for opinions, feedback and guidance as needed. In preparation, may be able to download this PMK 197/2013 on official website DJP, print out and take the time to see the AR, who knows he is not aware of the existence of this PMK.

Note: I translated this "quick and dirty" using Google translate, so it gives the general sense, but for details of course you should contact your local Accountant.

You can find a list of them here

keefeandy 1416742942

Hi Mario,

When is the time to file the tax return here in Indonesia? What countries have taxation agreements with Indonesia?


Mario-884284 1416745121

I think the deadline for filing tax returns are by the end of March if I am not mistaken. This issue on PKP exemption is an attempt to get more small businesses to contribute and pay taxes. Instead of focusing on the VAT, businesses with a smaller annual revenue will be taxed a percentage of the sales generated. It is best to get a reliable tax consultant to help with this.

if you look up the directory of Accountants there are those who can give the updated advice on these different tax-related issues.

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