Maybe KH Friend is already quite familiar with what NPWP is. Yes, this Taxpayer Identification Number or NPWP is often used when taking care of something related to taxation.
Therefore, for those who have met the requirements and want to conduct tax transactions, it is necessary to make an NPWP first. So, what exactly is an NPWP? Apart from tax transactions, what are the functions of NPWP and how to make one? Let’s see the full explanation below!
What is a TIN?
Quoted from the official website of the Ministry of Finance (Kemenkeu), NPWP is a taxpayer identification number as an identity in order to fulfill tax rights and obligations.
Meanwhile, Article 1 of Law Number 28 Year 2007 explains that NPWP is an identity or identification mark for taxpayers given by the Directorate General of Taxes (DGT) of the Ministry of Finance.
NPWP consists of 15 digits and each taxpayer only has one NPWP. The details, the first 9 digits are the taxpayer code, the next 3 digits are the administrative code of the registered taxpayer office, and the last 3 digits are the taxpayer status code. This code ensures that one’s tax data is not confused with other taxpayers.
The NPWP also contains important information of the owner, including the full name, the Population Identification Number (NIK), and the KPP branch where the NPWP is issued.
Thus, NPWP can be interpreted as an identity, like KTP and SIM for taxpayers to conduct administrative purposes related to taxation. This NPWP must be owned by Indonesian citizens and foreigners who become taxpayers, both individuals and business entities.
Who Must Have a TIN?
Quoted from the Directorate General of Taxes website, the following is a grouping of taxpayers who are required to have an NPWP:
- Individual Taxpayers
- Individual (Parent): An unmarried taxpayer whose husband is the head of the household.
- Living Apart (HB): A married woman who is taxed separately due to a judicial separation.
- Pisah Harta (PH): Husband and wife who are taxed separately because they want it in writing based on a written separation of assets and income agreement.
- Electing Separately (MT): Married women, other than the HB and PH categories, who are taxed separately because they choose to exercise their rights and fulfill their tax obligations separately from their husbands.
- Undivided Inheritance (WBT): As a unit is a substitute tax subject, replacing those who are entitled, namely the heirs.
- Corporate Taxpayers
- Entity: A group of persons and/or capital that constitutes a unit, whether or not doing business.
- Joint Operation: Form of joint operation that performs the delivery of Taxable Goods and/or Taxable Services on behalf of the joint operation.
- Representative Office of Foreign Company: A foreign trade representative or representative office/liaison office in Indonesia that is not a permanent establishment.
- Treasurer: A government treasurer who pays salaries, wages, honorariums, allowances, and other payments and is required to withhold or collect taxes.
- Activity Organizer: A party other than the previous four corporate taxpayers that makes payment of compensation by any name and in any form in connection with the implementation of activities.
Types of TIN
In order not to misclassify NPWP, you need to understand the types of NPWP. There are two types of NPWP, namely Personal NPWP and Corporate NPWP. Here are the differences:
- Personal TIN
That is an NPWP owned by individuals who have income in Indonesia. The following individuals are included in the personal NPWP list, namely:- Have income from work
- Have income from independent work
- Have income from business
- Agency NPWP
That is an NPWP owned by every company or business entity that earns income in Indonesia. The following companies are included in the list of corporate NPWPs, namely:- Government-owned entity
- Privately owned entity
- Function of TIN
Function of TIN
NPWP is a taxpayer identity that has many functions and benefits, both for inside and outside tax affairs. Especially for a business or entity, NPWP is not only needed to complete tax administration, but also serves as an identity and completeness of making a business license.
For more details, see the explanation of the NPWP function that can facilitate KH’s daily activities below:
Avoiding Fines
First, the function of NPWP is so that KH Friend is not subject to fines for not paying taxes. By having an NPWP, KH Friend will routinely pay taxes, so that they are not late and receive fines.
Simplify Credit Application
Second, the function of NPWP is as one of the credit applications to banks or financial institutions. Almost all credit activities require NPWP requirements, ranging from credit cards, Unsecured Credit (KTA), business capital loans, and so on. Thus, if Sobat KH already has an NPWP, the credit application process is easier because the bank can see the customer’s track record in paying tax obligations.
Making a business license
Next, the function of NPWP is to assist business actors in making a Trade Business License (SIUP). As you know, in Indonesia every business is required to pay taxes. So if a business entity does not have an NPWP, its legality process will be hampered.
Setting up a Bank Account
The next function of NPWP is to open a bank account, as a form of compliance with Bank Indonesia (BI) regulations. This is in accordance with BI Regulation Number 14/27/PBI/2021 Article 14 which states that prospective customers with potential beneficial owners are required to submit NPWP as a form of prevention of money laundering and terrorist financing by commercial banks.
Conditions for Disbursement of Funds from the State
The last function of NPWP is to help KH Friend in disbursing funds from state projects. For example, state projects such as auctions require participants to have an NPWP.
This requirement is also stipulated in the Directorate General of Taxes Regulation which requires bidders/tenders to have an NPWP. This is done by the government as an effort to attract more taxpayers.
How to make a TIN
After knowing the definition and function of NPWP, next we will discuss how to make an NPWP. Although there are many types and requirements, how to make an NPWP for those who have income, profit and non-profit business entities, and entities with branch status are the same. The difference is only in the data entered and the documents required.
KH friends can make NPWP through two methods, namely offline and online. To make an NPWP offline, KH Friend can visit the nearest KPP from the domicile along with the required documents.
But actually, the most common method to make a TIN is through online channels because it is more convenient and faster. The following is the procedure on how to create a TIN online:
- Visit the page ereg.pajak.go.id
- Click on the list menu
- Fill in an active email address and create a password
- Then, you will receive a link to activate your registered email account.
- Follow the guidelines described in the incoming email
- Once the account is activated, try logging back into the account. Enter the email and password you entered during account registration.
- Your KH buddy will go to the registration page. Fill in the requested personal data completely and correctly
- Continue the process of filling out the registration carefully
- Once the personal data is correct, click register. Your registration form will be sent to the tax office.
- If the tax office has received and processed the NPWP application, the registration status will appear on the main page of the ereg.pajak.go.id website.
- KH buddy must choose send token then fill in the captcha, then choose submit.
- KH buddy will be confirmed and sent a token via email
- Copy the token received from the email
- Open the token menu on the main site, paste the copied token, then KH Friend will get a unique code as a condition of submission.
- If the NPWP registration application is approved, the NPWP can be collected at the nearest tax office or sent to the taxpayer’s address by post.
- This is an explanation of what NPWP is, starting from understanding, types, functions, to how to make it. It can be concluded that NPWP is important and must be owned as a good citizen.
Especially for a business or business entity, the existence of NPWP can make it easier for KH Friend to take care of business administration requirements such as applying for credit and capital loans from banks, fulfilling legality documents, and making checking accounts.
How about you, have you and your company fulfilled your tax obligations by having an NPWP? If you don’t have one, just trust your NPWP creation services to Kontrak Hukum.
With only an estimated time of 3 working days, Sobat KH can have a company NPWP that will make it easier for you to manage taxes, borrow money from banks, and of course as a sign that you are tax-compliant. Rest assured that all your data and information is safe and secure.
What are you waiting for? Visit https://kontrakhukum.com/perizinan-dan-perpajakan/ and fulfill your tax obligations by making an NPWP at Kontrak Hukum! If you have any questions about your legal needs, please contact us at Tanya KH or via direct message (DM) to Instagram @kontrakhukum.
