PKP, an abbreviation for Pengusaha Kena Pajak (Taxable Entrepreneur), is a term familiar to most business owners, especially those who have been involved in the business world for a long time and have a substantial turnover.
Explore the meaning of PKP in more detail, including its definition, submission requirements, and cancellation procedures here.
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What is PKP?
According to Law Number 16 of 2000, PKP (Pengusaha Kena Pajak) refers to entrepreneurs engaged in the delivery of Taxable Goods and/or Taxable Services subject to taxation under the Value Added Tax Law of 1984 and its amendments. This does not include Small Entrepreneurs, whose limits are determined by the Minister of Finance’s decision.
Submission Requirements for PKP
To obtain tax recognition as a Taxable Entrepreneur from the Directorate General of Taxation, a business or company must meet the following requirements:
- Have gross income (turnover) in one fiscal year reaching IDR 4.8 billion. This excludes businesses with gross income less than IDR 4.8 billion, unless they choose to be recognized as Taxable Entrepreneurs.
- Undergo a survey process conducted by the Tax Office (KPP) or its branch (KP2KP) at the place of registration.
- Complete the required documents and submission requirements for PKP or its recognition.
The application to become a Taxable Entrepreneur is submitted to the Tax Office (KPP) or its branch (KP2KP) within its jurisdiction, covering residence, location, or business activities of the taxpayer.
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Small Entrepreneurs
Small Entrepreneurs are those whose business turnover is below IDR 4,800,000,000 in one year. These entrepreneurs are not required to register as PKP. However, if a business’s turnover exceeds IDR 4,800,000,000, registration becomes mandatory. Small Entrepreneurs are not obliged to register as PKP, and their businesses remain valid without registration.
Is it Necessary for Small Entrepreneurs to Register as PKP?
Small Entrepreneurs are not required to register as PKP. However, those who wish to register are welcome to do so. Many small entrepreneurs choose to register to participate more smoothly in tender projects. This is because one common requirement for tender project participation is the registration of the entrepreneur as a Taxable Entrepreneur. Registering as PKP opens up more opportunities for the entrepreneur to expand their business.
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Obligations when Registered as PKP
Once recognized as a Taxable Entrepreneur, the entrepreneur has several obligations, including:
- Issuing Tax Invoices for each delivery of Taxable Goods and/or Taxable Services.
- Depositing any underpaid VAT using a Tax Payment Letter (SSP) at the Post Office or designated Bank no later than the end of the month before reporting the VAT Periodic Tax Return (SPT Masa PPN).
- Reporting transactions of the delivery of Taxable Goods, Non-Taxable Goods, Taxable Services, and Non-Taxable Services to the Tax Service Office using the VAT Periodic Tax Return (SPT Masa PPN) no later than the end of the following month.
PKP Cancellation
The request for revocation of recognition as a Taxable Entrepreneur can be made if the entrepreneur does not reach a turnover of IDR 4,800,000,000 in one fiscal year.
PKP represents an obligation with additional responsibilities for the recognized entrepreneur. However, behind it lies a broader business opportunity for the entrepreneur to explore. Many choose to register when PKP is an obligation, while others start their businesses and register immediately. In the end, the choice is yours.
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