As you know, NPWP or Taxpayer Identification Number is an identity given to taxpayers, both individuals and business entities, which is used for tax administration in Indonesia.
This NPWP serves as an identification mark in every tax transaction and is also a mandatory requirement in various purposes such as applying for credit, setting up a bank account, and applying for a business license.
But is everyone required to have a TIN? And who should have an NPWP? Let’s see the further explanation in this article!
Definition of NPWP
Law No. 28/2007 defines NPWP as a taxpayer identity granted by the Directorate General of Taxation (DGT).
NPWP has a 15-digit number that differs between taxpayers. Based on information at indonesia.go.id, the following is an explanation of the numbers in the NPWP:
- The first nine digits indicate the identity of the taxpayer
- The next three digits are the code for the Tax Office (KPP). if newly registered as a taxpayer, then the code is the code where the taxpayer registered. Meanwhile, for old taxpayers, the code is the place where the taxpayer is currently.
- The last three digits mean taxpayer status. If the last digit shows 000, it means central or single.
- Meanwhile, if 00x means branch and the last number is the branch sequence.
- Meanwhile, a new regulation recently came out stating that Indonesian citizens can use the Population Identification Number (NIK) as the NPWP. As for foreigners, agencies, and government agencies, they only need to add zeros in front of their active NPWP, so that the NPWP will become 16 digits.
What is the Function of NPWP?
NPWP is not just a tax identity, but there are several other functions of NPWP. Here is the explanation:
- Credit Application Requirements
When you apply for a loan, financial institutions may ask for your NPWP to ensure that you are tax-compliant.
- To apply for a business license
An entrepreneur or business entity needs an NPWP as one of the administrative requirements to apply for various business licenses, such as Micro and Small Business License (IUMK), Trade Business License (SIUP), and Business Identification Number (NIB).
- Tax Administration Requirements
Another function of NPWP is to be a requirement for tax administration. For example, when you want to report taxes, the person concerned must have an NPWP first. NPWP makes the tax charged lighter compared to citizens who do not have an NPWP.
Then, who is required to have an NPWP?
The provisions of Article 2 of Perdirjen Pajak No. 4/2020 explain that every taxpayer who has fulfilled the subjective and objective requirements is obliged to register themselves to be given an NPWP.
Furthermore, NPWP needs to be owned by the following 4 groups:
- Individual taxpayers
- Undivided inheritance taxpayers
- Corporate taxpayers
- Government agencies appointed to withhold and/or collect taxes in accordance with the provisions of laws and regulations in the field of taxation.
Individual taxpayer groups and undivided inheritance taxpayers are included in the individual taxpayer NPWP type.
Then, corporate taxpayers and government agencies fall into the type of corporate taxpayer NPWP.
Furthermore, those included in the personal taxpayer category are as follows:
- Workers with fixed income
- Business owner
- Freelancers
- Married woman who wishes to separate property from her husband
- Heirs of undivided inheritance
Meanwhile, those included in the corporate taxpayer category are:
- Agency
- Joint operation
- Foreign company representative office
- Government treasurer
- Activity organizer
KH Contact
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