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Understanding the Differences Between NPWP and NPWPD in Indonesia

Indonesia has various regulatory requirements that individuals and businesses must adhere to. Two essential aspects for both individuals and companies are the NPWP (Nomor Pokok Wajib Pajak) and NPWPD (Nomor Pokok Wajib Pajak Daerah). While these acronyms may sound similar, they represent distinct identification numbers with different purposes and implications. In this article, we will delve into the differences between NPWP and NPWPD in Indonesia.

NPWP (Nomor Pokok Wajib Pajak):

NPWP, or Taxpayer Identification Number, is a unique identification number assigned by the Indonesian tax authorities to individuals and businesses for tax purposes. It is mandatory for anyone engaging in economic activities, including both residents and non-residents. The NPWP is crucial for fulfilling tax obligations and conducting various financial transactions.

Key features of NPWP include:

  • Tax Obligations: Individuals and businesses with an NPWP are required to fulfill their tax obligations, including filing annual tax returns and paying taxes on income.

  • Financial Transactions: Having an NPWP is often a prerequisite for certain financial transactions, such as opening a bank account or conducting property transactions.

  • Employment: Employees are required to have an NPWP, and employers must withhold and remit taxes on behalf of their employees.

  • Business Registration: NPWP is often a prerequisite for business registration and obtaining necessary licenses.

NPWPD (Nomor Pokok Wajib Pajak Daerah):

NPWPD, or Regional Taxpayer Identification Number, is specific to local or regional tax jurisdictions within Indonesia. While NPWP is issued by the central tax authorities, NPWPD is issued by local governments for the purpose of collecting regional taxes. These regional taxes may include property tax, hotel tax, restaurant tax, and other local levies.

Key features of NPWPD include:

  • Local Tax Compliance: NPWPD is essential for businesses operating in specific regions to comply with local tax regulations and fulfill their obligations towards local governments.

  • Sector-Specific: NPWPD may be required for certain sectors or businesses that are subject to regional taxes. The issuance of NPWPD is often tied to the nature of the business and its activities.

  • Varied Application: The requirements and application process for NPWPD may vary across different regions in Indonesia, reflecting the diverse tax structures and policies implemented by local governments.

  • Sectors of NPWPD: NPWPD in Indonesia encompasses various sectors subject to local taxes determined by regional authorities. Common sectors requiring NPWPD include real estate and property development, hospitality and tourism, retail and trading, manufacturing and industry, transportation and logistics, services, and natural resources/agriculture. This regional taxpayer identification number is essential for businesses engaging in activities subject to local levies, ensuring compliance with specific regional tax regulations. The sectors covered may vary between regions, and businesses are advised to consult local tax authorities for precise information and requirements related to NPWPD in their specific locality.

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