A Guide to the Annual Tax Return

By Andrean Rifaldo, the Directorate General of Taxes officer

Near the end of February, a message was sent to the email addresses of 5.4 million taxpayers. The sender was the Directorate General of Taxes (DGT), and the recipient’s name was personalized. It was a thank you note for having submitted the Annual Tax Return within the first two months of 2024.

One month approaching the deadline to file Annual Individual Tax Return, the DGT will once again send a similar email to remind 25 million taxpayers who have not yet submitted their tax returns.

Indeed, missing the Annual Tax Return filing deadline is not always intentional. Sometimes, a lack of information and understanding about tax obligations can be the main cause.

The submission of the Annual Tax Return is an obligation that arises every change of year. It can be filled out from January 1st until March 31st for individuals and April 30th for companies.

However, in the Tax Regulation Harmonization Law, there are provisions that specifically apply to personal business owners, freelancers, and business entities that perform bookkeeping.

Taxpayers with non-calendar fiscal years have a reporting period of 3 months for individuals and 4 months for business entities, calculated after the end of the fiscal year.

For instance, if a taxpayer’s fiscal year spans from May to April, the deadline for submitting their Annual Tax Returns is by the end of July for individuals and the end of August for companies.

However, to benefit from this option, taxpayers must first request approval from the DGT for the difference in fiscal years. The application should be submitted to the Primary Tax Office where the taxpayer is registered.

Who Should File

Essentially, filing the Annual Tax Return is a mandatory obligation after registering to obtain the Taxpayer Identification Number. Number. However, specific taxpayer criteria can be exempted from this obligation, such as those with a non-effective status.

A non-effective status applies to taxpayers who no longer meet the subjective and objective requirements as taxpayers, yet their Taxpayer Identification Number has not been or chosen to be retained.

Typically, this status is granted to individuals who no longer have income or earn income from employment that does not exceed the Non-Taxable Income Threshold, and to companies that are no longer conducting business.

Meanwhile, taxpayers with an active status must submit the Annual Tax Return. This requirement applies to individuals and business entities that do not meet the aforementioned criteria.

If a taxpayer originally had an active status but then meets the mentioned criteria due to no longer having income, they should submit a request to the registered Primary Tax Office to be designated as a non-effective taxpayer.

How to File

Filing the Annual Tax Return is now conducted entirely online. Therefore, reporting can be done from anywhere and at any time without the need to visit the tax office.

Here's how: taxpayers can log in to their respective accounts on the DJP Online website using their registered Taxpayer Identification Number. The Personal Identity Number can also be used if it has been matched.

When filing the Annual Tax Return, the Electronic Filing Identification Number (EFIN) is only used for taxpayers who are registering their DJP Online account for the first time, or have registered but forgotten their password.

For taxpayers who do not yet have or have forgotten their EFIN, requests for an EFIN number can be made through the official channels of the DGT via the Kring Pajak hotline at 1500200, email at lupa.efin@pajak.go.id, live chat on the pajak.go.id website, or by visiting the nearest tax office (KPP/KP2KP) in person.

The existence of EFIN plays a crucial role in ensuring the security and integrity of taxpayers' accounts and data. Therefore, EFIN must be kept confidential to prevent misuse by unauthorized parties.

After logging into the DJP Online account, taxpayers can proceed to the reporting section, where they will be presented with options for the e-Filing and e-Form applications. The e-Filing option is intended for individuals who do not conduct business and/or freelance work.

Meanwhile, e-Form is intended for companies or individuals engaged in business and/or freelance work. The information entered in both is not significantly different.

Taxpayers must provide income details, tax deductions, assets, and financial obligations for the reported fiscal year. Those with accounting records will also include additional informations, such as costs and capital ownership details.

After the Annual Tax Return is submitted, taxpayers will instantly receive a proof of electronic receipt via their registered email address. This receipt will also be recorded in the Annual Tax Return history displayed in the taxpayer's DJP Online account.

Why We Should File

In practice, there is often a question of why it's not sufficient to just pay taxes and still have to submit an Annual Tax Return. To address this, it is important to understand how the tax collection system is implemented.

Generally, the tax collection system is divided into three types: self-assessment, official assessment, and withholding system.

In the official assessment system, tax calculation is done by tax officials, so taxpayers only need to pay the amount due. This system applies, for example, in the Land and Building Tax Assessment Notice managed by local governments.

Meanwhile, tax calculation in the self-assessment system is based on the income information reported by taxpayers. Therefore, the obligation to submit an Annual Tax Return serves as a means to calculate the tax amount each year.

The self-assessment system is not unique to Indonesia, as it is also implemented in many countries to calculate annual income tax. For example, in the United States, every individual must file their annual tax forms before April 15th each year. In the United Kingdom, the reporting deadline is October 31st for paper filings and January 31st for electronic filings.

Additionally, the Annual Tax Return also serves as a source of information to tackle tax evasion. For instance, by comparing the Annual Tax Return data reported by employees, any discrepancies in the taxes withheld by employers but not remitted to the government can be identified.

Therefore, taxpayers do not need to worry when reporting the Annual Tax Returns. The status of underpayment of taxes only arises if there is income taxable according to the provisions of the law, but it has never been withheld by another party.

For individuals whose income is below the non-taxable threshold or only receive income from employment, the amount of tax due should be nil, meaning that there is nothing to be paid when reporting the Annual Tax Return.

*) This article represents the author's personal views and does not represent the stance of the institution. The Indonesian version of this article has been published in Kompas.com on March 4th, 2024.

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