Annual Report in Indonesia: Contents, Deadline, Periods & Procedures

As you may know by now, there are many different types of taxes in Indonesia that you should be aware of, whether for individuals or corporations.

Moreover, companies in Indonesia, both local PT and PT PMA, must submit an Annual Report under Indonesian Company Law.

Annual Report Obligation for Companies in Indonesia

Also under Article 66 (1) of Law No. 40 of 2007 concerning Limited Liability Companies (“Company Law”), the Board of Directors of a company must submit an Annual Report to the General Meeting of Shareholders (“GMS”). The GMS where the submission itself is conducted is called the Annual General Meeting of Shareholders (“AGMS”).

The financial statement, one of the contents of the Annual Report, must be prepared based on the financial accounting standard.

Under Article 66 paragraph (4) of the Company Law, for the company that is obliged to be audited, the balance sheet and relevant profit and loss statement that have been audited shall be submitted to the Minister by the prevailing laws and regulations.

Contents of Annual Report in Indonesia

The Annual Report in Indonesia, under Article 66 (2) of Company Law, must consist of at least the following contents:

1. The Financial Report consists of the following items:

• The Balance Sheet of the latest Financial Year in comparison with the previous year;
• Profit and Loss Statement;
• Cash Flow Report;
• Statements of changes in company Equity; and
• Notes to The Financial Report.

2. A Report on the Company Activities in the latest Financial Year;
3. A Report on the implementation of Corporate Social and Environmental Responsibility (CSR) by the Company
4. A Report on the supervisory tasks that have been performed by the Board of Directors during the previous financial year; and
5. The names of the members of the Board of Directors and the Board of Commissioners, as well as the salaries of each member, including any allowances and/or benefits each of them, have received in the latest Financial Year

Who is Responsible for Making Annual Report in Indonesia?

The annual report shall be signed by all members of the Board of Directors and Board of Commissioners during their service period at the relevant accounting year, and it shall be provided in the Company’s office as of the date of notice for GMS to be examined by the shareholders. It is stipulated under Article 67 of the Company Law.

If the member of board directors or member of the board of commissioners does not sign the annual report, then the objected person has to state his reason in writing, or in a separate letter attached to the annual report. Should the person who objected to it does not do the following, it is considered that the annual report is approved.

Does the Annual Report in Indonesia has to be audited?

Under Article 68 paragraph (1) of the Company Law, the member of the board of directors is obliged to submit the annual report of the Company to be audited by a public accountant if:

• The activities of the company are to collect and/or manage the community’s funds, such as a bank, insurance, and mutual fund;
• The company issues a debt acknowledgement letter to the public;
• The company is a public company;
• The company is stated-owned;
• The company owns assets and/or sales with a minimum value of Rp 50,000,000,000.00 (fifty billion Rupiah)
• Required by the prevailing laws and regulations.

If that obligation cannot be fulfilled, the financial report will not be ratified by the GMS. The report on the audit result by the public accountant has to be submitted in writing to the GMS through the board of directors.

Board members are jointly liable if the submitted financial report is false or misleading. Nonetheless, if it gets confirmation such conditions are not because of their fault, members of the Board of Directors and Board of Commissioners may be from that liability.

After the Board of Commissioners’ approval, the Board of Directors must hold the AGMS to present the Annual Report for shareholder approval. Note that the AGMS approval can go through Extraordinary GMS (EGMS) or by Circular Resolution of Shareholders.

Deadline for Annual Report in Indonesia

An Annual Report must conducted and approved at the latest 6 months after the end of the latest Financial Year.

Furthermore, any delay in submitting the Annual Report is the Board of Directors’ responsibility, with members jointly liable for resulting losses.

However, the Company Law does not set any applicable sanctions for the Board of Directors who fail to submit an Annual Report in the Financial Year to the GMS.

Indonesia Investment Activity Report (LKPM)

Every foreign-owned limited liability company (PT PMA) is obligated to submit reports regarding the process of their investment activities according to Law No. 25, 2007.

Furthermore, the Investment Activity Report (LKPM) is the regular report on the progress of the company and the constraints faced by investors. Hence, the Investment Activity Report (LKPM) will help the Indonesian Investment Coordinating Board (BKPM) to analyse and find solutions to challenges faced by investors in Indonesia.

LKPM intended to monitor the realisation of investment and production. And also LKPM covers investing companies in all locations and from every business sector, except companies in the trading sector. For trading business investors, LKPM applies only to the location specified in the business principal license.

Reporting Period for Indonesia Investment Activity Report (LKPM)

However, depending on the legal entity of the company and which stage of the development process the company is in, there are different deadlines for reporting LKPM. Companies that are still in the development process are to report periodically every 3 months, as the following:

January – March

• LKPM you must submit by April 10th of that year.

April – June

• LKPM must be submitted by July 10th of that year.

July – September

• LKPM must be submitted by October 10th of that year.

October – December

• LKPM must be submitted by January 10th of the following year.

However, for the companies that have obtained their business license, the LKPM will be submitted per semester (every 6 months), as:

LKPM Semester I for the period of January – June

• LKPM you must submit the latest by July 10th of that year.

LKPM Semester II for the period of July – December

• LKPM you must submit by January 10th of the following year latest.

For representative offices, the LKPM need to submit only once, by the end of the year.

Hence, foreign investors must submit LKPM for each municipality/city if their capital investment covers multiple locations.

Companies with investments in multiple business sectors must also report each business field separately. However, companies in free trade, free ports, and specific economic zones must submit LKPM to each zone’s head.

Moreover, companies who have completed the merger, the newly-merged company must submit the LKPM for capital investment activities as a result of the merger.

Procedures for Corporate Tax Reporting in Indonesia

The companies must submit the LKPM by the forms as provided for in the BKPM Regulation on LKPM. Submission of LKPM can be done in several ways:

1. Fill out the application online through SPIPISE (Electronic Investment Licensing and Information Services System)
2. By facsimile or deliver hardcopy directly to the Head of BKPM c.q. Deputy for Control of Capital Investment Implementation
3. By e-mail to lkpm@bkpm.go.id

Additionally, the company must appoint and submit in writing to BKPM a responsible person for coordinating the LKPM.

Companies that fail to submit LKPM are subject to administrative sanctions that can result in a revoked investment license or investment facility.