One of the corporate taxpayers’ obligations is to pay and submit the annual tax return or Corporate Income Tax (“CIT”) Return. It is mandatory for corporate taxpayers whose Tax ID Number is still effective in FY2020, even though companies have not been operating in FY2020.
The deadline for CIT Return submission is end of the 4th month after the financial year ends. Since most companies use the calendar year (January to December) as financial year, thus by end of April each year this obligation needs to be fulfilled. Late reporting or not reporting the CIT Return will be subject to IDR 1 million penalty and could lead to being investigated by the Tax Office.
The tax form used to submit the CIT Return is Form 1771. Before completing the Form 1771, companies need to prepare following supporting documents:
- Financial Statements as well as supporting documents
- VAT Reconciliation for VAT-able Entrepreneur, comparing the revenue that has been reported in VAT Return and the revenue recorded in Statement of Income
- Payroll Reconciliation, comparing the employee benefit payment that has been reported in WHT Article 21 and employee benefit expense recorded in the Statement of Income
- Tax Credit of WHT Article 23, WHT Article 22, Instalment of Article 25, and WHT Article 24 along with supporting documents
- For the PP23 Final Tax taxpayer, the list of monthly PP23 payments compared to the gross revenue stated in the Statement of Income
- Other information and document required for CIT Return submission such as Related Party Information, Nominative List, DER Report, Latest Deeds, etc.
Companies must ensure to pay any CIT underpayment prior the submission of CIT Return. In case of late payment, taxpayers shall pay penalties based on the applicable monthly Ministry of Finances interest rate plus surcharge for a maximum of 24 months.
Nowadays, the CIT Return need to be submitted through e-filing. Taxpayers can choose either to submit by inputting manually the data into the tax office online platform (DJP Online) using e-form or to prepare the CIT Return using e-SPT software before uploading to DJP Online. CIT Return submission using e-form on DGT Online is more suitable for start-ups or newly established companies since the data and information to input are few.
We recommend to submit your company's FY2020 CIT Return before April 30, 2021 to avoid any penalty for reporting and/or for late reporting.
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