Understanding NPWP Requirements Under Indonesia’s New KSO Rules
Many business owners forming a kerja sama operasi (KSO) still aren’t aware that their entity might now be required to register for a Nomor Pokok Wajib Pajak (NPWP)under the new rules. With the recent issuance of PMK 79/2024 regulating taxation for KSO arrangements, the Directorate General of Taxes now clearly defines when a KSO is obligated to obtain an NPWP and when it isn’t. For foreign-invested companies (PT PMA) or joint operations in Bali, this clarification is a timely opportunity to avoid registration errors and unexpected tax exposure.
Yet the finer details can catch many off-guard. For example, a KSO must register for an NPWP if it either (i) makes deliveries of goods or services in the name of the KSO, (ii) receives income in the name of the KSO, or (iii) incurs costs or pays others in the name of the KSO. If none of these apply, then each member of the KSO carries the tax burden individually and the KSO itself may not need a separate NPWP. As mentioned in [PMK 79/2024] this distinction can affect whether the KSO also needs to become a Pengusaha Kena Pajak (PKP) and manage VAT/PPnBM obligations.
The good news? This rule brings clearer guidance and legal certainty. By checking whether your KSO meets any of the defined criteria, you can decide if registration, NPWP transfer, or even NPWP deletion is required — all within timelines set by the taxing authority. Timely action now helps maintain compliance and supports smoother tax management for your joint-operation structure.
If you are part of a KSO, now is the moment to review your contractual arrangements, check the flow of billing and income, and confirm whether your structure triggers NPWP registration. Doing so will help align with Indonesia’s tax regime, reduce administrative surprises, and give your team confidence for the year ahead.
Table of Contents
- When Does a KSO Need to Register for an NPWP?
- Key Highlights of PMK 79/2024 for Joint Operations
- Understanding NPWP Obligations for Foreign PT PMA Firms
- How to Determine Whether Your KSO Must Have an NPWP
- KSO vs Member NPWP Responsibility – Who Pays the Tax?
- Impact of NPWP Registration on VAT (PKP) Status in Indonesia
- Step-by-Step: How to Register or Delete a KSO NPWP
- Real Story – How a Bali KSO Avoided Double Taxation
- FAQs About NPWP Requirements for KSO Entities in Indonesia
When Does a KSO Need to Register for an NPWP?
A KSO (Kerja Sama Operasi) is a joint operation between two or more parties working together on a specific project, often in construction or oil and gas sectors. Under PMK 79/2024, a KSO must register for a Nomor Pokok Wajib Pajak (NPWP) if it conducts taxable activities under its own name.
That means the KSO needs its own NPWP if it issues invoices, receives payments, or makes expenses in the KSO’s name. If these actions are performed by each member individually, the KSO itself might not need separate registration.
For example, a construction KSO that directly bills clients must have its own NPWP, while one that merely pools resources without client-facing transactions may not. This new rule helps clarify long-standing confusion about tax responsibility and simplifies compliance for business owners.
PMK 79/2024 gives clearer definitions on how KSOs are taxed in Indonesia. The regulation emphasizes the independence of a KSO as a tax subject if it acts in its own name, especially in cases of income, cost, and transaction reporting.
One of the biggest updates is that KSOs now have a defined timeline for NPWP registration once qualifying criteria are met. Businesses have 30 days from the start of taxable activity to register. Late registration can lead to administrative penalties.
The new policy also sets out when a KSO can apply for NPWP deletion — typically once the joint project ends and all tax obligations are settled. This structured process ensures smoother tax audits and less confusion during project completion.
For foreign investors with PT PMA structures participating in a KSO, the NPWP rules apply differently depending on who receives or pays income. If the KSO collects income directly, it needs its own NPWP. If payments go to individual PT PMA members, they handle the taxes separately.
This distinction is crucial for foreign companies in Bali involved in construction, energy, or hospitality projects. Having clear tax identity separation prevents overlapping obligations between the PT PMA and its joint operation partner.
Foreign participants must also ensure that invoices, expense receipts, and contracts clearly state who the taxpayer is — either the KSO or the member company — to prevent audits or double taxation later. Transparency and documentation remain key.
The simplest way to determine NPWP requirements is to ask: Does the KSO act in its own name? If yes — it’s time to register.
✅ You need an NPWP if your KSO:
- Issues tax invoices or receipts.
- Receives payments for goods or services.
- Pays third parties using KSO funds.
❌ You don’t need an NPWP if:
- Each member handles income and expenses individually.
- The KSO has no bank account or legal standing of its own.
Using a decision checklist can help avoid mistakes. Many companies in Bali, especially joint ventures between local and foreign firms, conduct self-assessments before submitting tax forms. Consulting with tax professionals ensures compliance while minimizing penalties or late filings.
Understanding who pays what is the heart of KSO taxation. When the KSO holds its own NPWP, it must report income tax, VAT, and withholding taxes independently. However, when each member company uses their own NPWP, they share tax responsibility based on their contract share.
For example, if PT A and PT B form a KSO where PT A owns 60% and PT B 40%, each will report that percentage of profit under their NPWP if no central KSO NPWP exists.
The key is consistent reporting. Mismatched declarations between partners and the KSO can trigger red flags during Directorate General of Taxes checks. Keep accounting aligned with contractual profit-sharing ratios.
When a KSO registers for NPWP, it might also need to register as a Pengusaha Kena Pajak (PKP) if its annual turnover exceeds IDR 500 million. Being a PKP means the KSO can issue tax invoices (Faktur Pajak) and must charge 11% VAT on taxable sales.
However, not all KSOs automatically qualify. Some operate under non-VAT categories, such as project coordination or cost-sharing agreements. In such cases, VAT is handled by the member firms instead.
Before applying, review the KSO’s transaction scope — does it involve sales of goods, rental of assets, or provision of taxable services? If yes, VAT registration is necessary. Having a clear understanding avoids surprise VAT bills later.
✅ To Register:
- Prepare KSO contract, ID, and tax details of each member.
- Fill out the NPWP application via DJP Online or visit your local tax office.
- Submit supporting documents: notarial deed, project contract, and member tax info.
- Wait for verification and NPWP issuance (usually within 5–7 days).
✅ To Delete:
- Ensure the KSO project is completed.
- File final tax returns and settle all dues.
- Submit an NPWP deletion request to the tax office with a closure report.
Digital systems now make registration easier. Keeping all documents in order helps ensure smooth approval, especially for joint ventures operating in multiple provinces or under foreign investment structures.
Meet Daniel Fischer, a German engineer collaborating with PT Maju Energi Bali on a solar project in Gianyar. Their KSO initially didn’t register for an NPWP because all payments went to the Indonesian partner. However, confusion arose when both parties filed different tax reports for the same project income.
After consulting a tax advisor, Daniel’s team realized the KSO was considered an independent tax entity under PMK 79/2024. They promptly registered for an NPWP and aligned their bookkeeping. Within two months, the KSO received clearance and avoided double reporting penalties.
This real-life case shows how clear tax documentation and proactive compliance build trust with the Directorate General of Taxes. The KSO later secured a government renewable energy permit — proof that correct NPWP handling supports both compliance and long-term credibility.
It’s a joint operation between two or more parties working together on a specific project.
When it earns income, incurs costs, or transacts under its own name.
Yes, if all transactions are recorded under each member company, not the KSO itself.
Yes, if the KSO meets turnover thresholds, it may also need PKP registration.
Absolutely — once taxes are settled and closure reports are submitted.
Need help with KSO NPWP registration or tax setup in Bali? Chat with our team on WhatsApp!
