Towards the Single Identity Number

By Andrean Rifaldo, the Directorate General of Taxes officer

On July 19, 2022, while celebrating the National Tax Day, Finance Minister Sri Mulyani introduced a major innovation in the tax landscape: the integration of the Population Identification Number (NIK) as the Taxpayer Identification Number (NPWP).

The week before, Minister of Finance Regulation (PMK) Number 112 of 2022 had been issued as the regulatory basis for integrating the population and taxation data.

However, a year and a half had passed, yet the program is still in progress. On December 8, 2023, the regulation was amended through PMK Number 136 of 2022. One of its provisions postponed the full implementation of NIK as NPWP until July 2024, shifting from the initial plan set for January 2024.

Several reasons account for this delay. The full implementation of NIK as NPWP was planned to align with the launch of the novel core tax administration system, as stated by the Director General of Taxes, Suryo Utomo, during the November 2023 State Budget press conference.

The novel system is currently under development and is expected to be effective by midyear. Consequently, the implementation of NIK as NPWP is also delayed.

Furthermore, many NIKs and NPWPs have not yet been matched. As of January 2, only 59.88 million out of 72.46 million taxpayers have undergone matching, with 55.92 million of them directly matched by the Directorate General of Taxes.

There are 12.5 million individuals who have not undergone matching. Consequently, the effective date of NIK as NPWP is postponed, extending the deadline until the end of June.

This additional time provides an opportunity for these individuals, with various service channels are provided by the Directorate General of Taxes to facilitate compliance with this obligation.

Through their respective accounts, taxpayers can perform self-matching by checking the validation status of their data before or after submitting the Annual Personal Income Tax Return (SPT), which is now also in the reporting period.

The process is quite simple. Log in to the DJP Online using the individuals’ respective NPWP and tax account password. Then, click on the Profile tab, which will display the status of the main data validation.

Taxpayers whose status is not yet valid and needs updating can fill in the NIK, name, place, and date of birth data according to the Identity Card (KTP) on the provided form.

If assistance is needed, taxpayers can contact the tax assistance hotline, Kring Pajak, at 1500200, or visit the nearest Tax Service Office (KPP).

The matching process is intended to enable the public to fully benefit from the integration of population and taxation numbers in the coming July. These benefits extend beyond the need to access tax applications.

In the upcoming period, there are plans for individuals to use the NIK as a replacement for NPWP in transactions with other parties, such as banking, stock exchange, and other financial institutions.

For employers, this integration also brings convenience as there is no longer a need to collect employees’ NPWP data. NIK can be used directly for employee income tax deduction and reporting purposes.

Unified scheme like this are not uncommon. In several countries with simpler bureaucratic systems, similar practices have been in place for a long time.

In the United States, the Social Security Number is also used for tax purposes. Similarly, Sweden, Canada, and Japan have a single number that serves both social protection and taxation needs.

The unification of NIK as NPWP is a great leap toward simplifying the tax administration system. The public is urged not to worry about the emergence of additional tax obligations, as the determination of taxpayers is based on subjective and objective tests regulated in the Law of Tax Regulation Harmonization.

Individuals are required to register as taxpayers only if they run businesses, are self-employed, or earn income from employment that exceeds the non-taxable income threshold (PTKP). This implies that not all KTP holders are required to become taxpayers.

Indonesian citizens are urged to to take advantage of this extended time to match NIK and NPWP. This way, the implementation of the new core tax system can proceed smoothly in July, creating a simpler bureaucratic administrative process.

*) 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 on Kompas.com on January 15th, 2024.

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