What does NPWP mean? NPWP stands for Taxpayer Identification Number , which is a number given to taxpayers (WP) as a means of tax administration and is used as identification or self-identification of taxpayers in carrying out their taxation rights and obligations.
Basically every Indonesian citizen who has worked or has income is required to have a TIN, be it individuals or companies or investors. The amount of tax from each profession will vary according to the amount of income and type of profession.
Every type of work, be it employee, entrepreneur, professional, or investor, if you get income in Indonesia, then you must pay income tax. However, the Indonesian government enforces the rules for Non-Taxable Income (PTKP) so that people who earn a certain nominal are not taxed.
Also read: Definition of Tax
Difference between Personal NPWP and Agency NPWP
In general, the Taxpayer Identification Number can be divided into two types;
- Personal NPWP, which is a Taxpayer Identification Number that is owned individually by every individual who has worked or earns income in Indonesia.
- Corporate Taxpayer Identification Number, which is the Taxpayer Identification Number that is owned by each entity or company that has income in Indonesia.
An employee or employee must have a personal NPWP. Whereas someone who has a business, entrepreneur or investor must have a personal NPWP and also a corporate NPWP for his company.
Personal NPWP card form and NPWP Body shape and size are the same. The difference is in the information contained in the tax office database, such as;
- The name of the taxpayer
- Taxpayer address
- Type of business
- Company owner
- Deed number
- Type of business and branches
- Assets owned
- And some other company information
Functions and Benefits of NPWP
As mentioned earlier, the most important NPWP function is as a means of tax administration. With the Taxpayer Identification Number, everyone’s data and tax calculations will not be exchanged.
The functions and benefits of NPWP are as follows:
1. Tax Administration Function
- As the identity of a taxpayer (WP) to facilitate the management of rights and obligations related to taxation.
- As a means of identifying and simplifying the tax administration process.
- Become part of taxpayer tax documents.
2. Licensing Administration Function
- As a supporting document for applying for bank credit.
- As a supporting document to create an account at the Bank.
- As supporting documents for making a passport if someone wants to go abroad.
Specifically for entrepreneurs or entrepreneurs, NPWP can function as:
- Documents to meet administrative requirements following the auction of government projects, BUMN and BUMD.
- Documents for filing a business license, for example SIUP (Trading Business License).
- Supporting documents for payment of final taxes, such as final income tax, VAT, BPHTB, and others.
3. Tax Service Functions
- As a document for tax returns if there is an overpayment of taxes.
- As a document for the purpose of reducing tax payments.
- As a document for reporting and depositing taxes.
4. Other NPWP Functions
- Documents to apply for a job, some companies in Indonesia require prospective workers to have a TIN. For those who are still fresh graduatesand do not yet have a NPWP, the Directorate General of Taxes issued a policy to assist in making NPWP for them.
- Documents to buy investment products, Mutual Funds is one investment product that requires customers to attach a TIN in their documents. The aim is to prevent and eradicate money laundering and financing terrorist activities.
Also read: Definition of Tax Amnesty
Requirements for making NPWP
1. Terms of Making Personal NPWP
- Photocopy of identification, National Identity Card (KTP) for Indonesian citizens.
- Photocopy of passport, KITAS (Stay Permit Card) or Permanent Stay Permit Card (KITAP) for foreign nationals.
- Photocopy of SK PNS for Civil Servants, photocopy of employment certificate for private employees.
- Fill in the registration form for making NPWP at the tax office.
2. Requirements for Entrepreneurship NPWP
- Photocopy of Identity Card (KTP)
- Photocopy of certificate of business, at least from the local RT. If the company is a limited liability company (PT) then it must include a deed of establishment or SIUP.
- Fill in the participation form at the tax office and prepare a stamp duty of Rp. 6,000
- Fill out some required forms at the tax office.