Tax Article

Is it enough for individual taxpayers to record or do bookkeeping?

By: Ronaldo CR69

The Minister of Finance issued regulation Number 54/PMK.03/2021 concerning procedures for recording and certain criteria as well as procedures for maintaining bookkeeping for tax purposes. This regulation is the implementation of Article 28 paragraph (1) of the Law concerning general provisions and tax procedures as most recently amended by Law Number 11 of 2000 concerning Job Creation.

The background to the issuance of the regulations, which were stipulated on May 31 2021 and came into effect for the 2022 tax year, is to provide legal certainty for individual taxpayers, including those who meet certain criteria, who are exempt from the obligation to maintain bookkeeping but are required to carry out records and provide convenience in carrying out bookkeeping for fulfill its tax obligations.

Individuals who are exempt from the obligation to keep bookkeeping but are obliged to keep records

First, individual taxpayers who carry out business activities and/or independent work in accordance with the provisions of tax laws and regulations are allowed to calculate net income using the norms for calculating net income. Second, individual taxpayers who do not carry out business activities or independent work.

Third, individual taxpayers who carry out business activities and/or independent work and their entire gross turnover are not tax objects and/or are subject to final income tax. For the first and third criteria, the gross turnover requirement does not exceed IDR 4,800,000,000.00 (four billion eight hundred million rupiah) in one tax year.

The gross circulation referred to is based on the total gross circulation of all types or places of business and independent work in the previous year. If the individual taxpayer is a married couple, the gross turnover is a combination of income from the business and/or employment of both.

Recording for tax purposes

Recording is the collection of regularly collected data regarding circulation or gross receipts and/or gross income as a basis for calculating the amount of tax payable, including income that is not a tax object and/or subject to final tax. Rules regarding the form and procedures for recording for individual taxpayers have previously been regulated in Minister of Finance regulation Number 197/PMK.03/2007.

Certain taxpayers can calculate net income using the norms for calculating net income and record it by first notifying the Director General of Taxes within the first 3 (three) months of the relevant tax year.

In the case of a new registration in the relevant tax year, the period for annual application of the net income norm is no later than 3 (three) months after registration or may be submitted at the end of the tax year depending on events that occur earlier. This is a requirement that must be fulfilled because if it is not done, the taxpayer is deemed to have chosen bookkeeping.

The required recording at least includes gross turnover originating from all business activities and/or independent work including income subject to final income tax and which is not a tax object as well as all costs incurred to collect and maintain income.

Procedures for maintaining bookkeeping for tax purposes

Bookkeeping is a recording process that is carried out regularly to collect financial data and information which includes assets, liabilities, capital, income and costs as well as the total price of acquisition and delivery of goods or services, which is closed by preparing financial reports in the form of balance sheets and profit and loss statements for the period. the tax year.

Bookkeeping must be carried out based on financial accounting standards in force in Indonesia unless statutory regulations in the tax sector provide otherwise and be prepared based on the principles of principle with an accrual system or cash system consistently using the same bookkeeping method as the previous tax year to prevent shifts in profits or losses.

To calculate the amount of tax payable, bookkeeping at least includes records of assets, liabilities, capital, income, costs, acquisition prices, purchases, delivery of goods or services and sales so that they can be used as a basis for preparing financial reports in the form of balance sheets and profit and loss statements for the tax year period.

Bookkeeping with cash systems based on tax provisions

Cash system is a calculation method based on cash transactions with the provisions that income is recognized when it is received and expenses are recognized when they are actually paid in cash in a tax year. Special tax provisions regulate the implementation of mixed stelsel, namely calculating the amount of income from business and independent work, cost of goods sold and inventory including cash and non-cash transactions.

Acquisition of assets with a useful life of more than one year can only be deducted from income through depreciation and/or amortization starting in the tax year in which the assets were acquired. Valuation and use of inventory to calculate the cost of goods sold based on the acquisition price which is done on an average basis or by prioritizing the inventory obtained first.

Depreciation is carried out in equal parts over a useful life of four years for tangible assets other than buildings or twenty years for tangible assets in the form of buildings, while amortization for intangible assets is carried out in equal parts over a useful life of four years.

Tax payers are required to submit notification to the head of the tax service office where they are registered no later than the submission of the annual income tax return for the previous tax year each year. For newly registered taxpayers, the notification obligation can be carried out no later than 3 (three) months from the time they are registered or the end of the tax year depending on the event that occurs first.

Things that must be considered when carrying out recording or bookkeeping

Recording and bookkeeping must be carried out with due regard to good faith and reflect actual business conditions or activities and be supported by documents that form the basis for recording. Recording must be carried out in Indonesia using Latin letters, Arabic numerals and Rupiah currency units at their actual value and compiled in Indonesian within a period of 1 (one) calendar year from January 1 to December 31 and carried out chronologically and systematically based on sequence of transaction dates.

Books, records and documents that form the basis of Bookkeeping can be maintained electronically or non-electronically and must be kept for 10 (ten) years in Indonesia at the residence, residence and business activities. Carrying out bookkeeping using foreign languages ​​and currencies other than rupiah is permitted after obtaining permission from the Minister in accordance with applicable tax provisions

Individual taxpayers can carry out bookkeeping according to their business characteristics and wishes in accordance with applicable regulations

Individual taxpayers are given the option to carry out bookkeeping or recording according to the type and characteristics of the business as long as it is done in good faith and consistently based on the provisions above. The thing that needs to be taken into account is that if you have chosen to maintain bookkeeping using a cash system and in the following year decide to change your bookkeeping based on the financial accounting standards that apply in Indonesia, you cannot carry out bookkeeping using a cash system again.

This also applies if the taxpayer changes their bookkeeping from an accrual system to a cash system, they must not recognize costs that have been recognized when using the accrual system and the treatment of the residual book value of tangible assets and/or intangible assets can be depreciated and/or amortized according to the system. cash.

It should be remembered that individual taxpayers who have kept bookkeeping since 2022 are not allowed to record and/or calculate net income using the norms for calculating net income in subsequent tax years.