Accounting and Bookkeeping in Indonesia: The Standard Has Changed and Most Companies Have Not Caught Up

Since 1 January 2025, private companies in Indonesia are required to apply Financial Accounting Standards for Private Entities (Standar Akuntansi Keuangan Entitas Privat or SAK EP), which replaced the previous SAK ETAP framework. SAK EP introduces deferred tax recognition, fair value measurement for investment property, and financial statements structured for comparability with international counterparts. At the same time, the Coretax system connects your bookkeeping data directly to the national tax administration in real time. XPND produces financial statements and maintains bookkeeping records that meet both standards simultaneously.

The Situations That Bring Companies to XPND

Accounting and bookkeeping gaps rarely surface during routine operations. They surface when a bank requests audited financials, when a tax audit is triggered, or when a company prepares for an investment transaction and the numbers do not hold up to scrutiny.

Your company has been preparing financial statements under SAK ETAP, which was replaced by SAK EP effective 1 January 2025. The transition is not a renaming exercise. SAK EP requires retrospective restatement of comparative periods, recognition of deferred tax assets and liabilities that SAK ETAP did not require, and fair value measurement for investment property and biological assets where applicable. A company that continues using SAK ETAP-based records after 2025 is preparing financial statements that do not conform to the current Indonesian accounting standard.

Your bookkeeping records and your Coretax data are not reconciled. Under the Core Tax Administration System governed by Minister of Finance Regulation (Peraturan Menteri Keuangan or PMK) No. 81 of 2024, every tax invoice, withholding certificate, and payment record sits in the government’s Taxpayer Account Management ledger. When the figures in your general ledger do not match what Coretax has recorded from counterparties, the discrepancy shows up as an anomaly in the DJP’s risk engine before your next filing.

Your company is a PT PMA (Perseroan Terbatas Penanaman Modal Asing) with reporting obligations to a foreign parent. The financial statements prepared for Indonesian statutory purposes follow SAK EP. The consolidated statements required by the parent follow IFRS or local GAAP from the parent’s jurisdiction. Reconciling the two frameworks, converting functional currency presentations, and managing intercompany transactions correctly across both sets of records requires a dual-framework accounting approach that most internal finance teams are not structured to provide.

Your company is approaching a bank loan application and your financial statements show equity significantly below the market value of your assets. Under SAK EP, investment property may be measured at fair value if it can be determined without undue cost or effort. Continuing to carry investment property at historical cost when fair value would substantially improve the balance sheet is a policy choice, but it may not be the right one for your financing objectives.

Your books have been maintained by an individual bookkeeper without a structured chart of accounts or review process. The records are not audit-ready, the VAT reconciliation has not been performed, and the year-end closing has never produced a complete set of financial statements including a statement of comprehensive income, a balance sheet, a statement of changes in equity, and a statement of cash flows as required under SAK EP.

Tell us what your current accounting setup looks like and what you need it to do. We will assess whether it is fit for purpose.

What Changed Under SAK EP and Why It Affects Your Financial Statements Now

Financial Accounting Standards for Private Entities or SAK EP, issued by the Financial Accounting Standards Board of the Indonesian Institute of Accountants (Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia or DSAK IAI), became effective on 1 January 2025 and replaced SAK ETAP. It is based on the International Financial Reporting Standard for Small and Medium Enterprises or IFRS for SMEs, adapted for Indonesian conditions.

The change is not cosmetic. SAK EP introduced several accounting treatments that SAK ETAP either prohibited or did not address.

Deferred tax is now required. SAK ETAP did not require deferred tax recognition. SAK EP mandates the recognition of deferred tax assets and liabilities arising from temporary differences between the carrying amount of assets or liabilities in the financial statements and their tax base. For companies with significant fixed assets, provisions, or employee benefit obligations, the deferred tax position can materially affect reported equity and profit.

Fair value measurement for investment property. Under SAK ETAP, investment property was carried at historical cost. SAK EP permits measurement at fair value when this can be determined without undue cost or effort. For companies holding commercial property, this change can significantly alter the balance sheet presentation and affect both equity and income recognition.

Consolidated financial statements. SAK ETAP required parent companies to use the equity method for subsidiaries. SAK EP requires the preparation of consolidated financial statements when a parent-subsidiary relationship exists. This is a structural change, not an adjustment, and it changes how the group’s financial position is presented to external users.

Other comprehensive income. SAK EP introduces the concept of other comprehensive income, meaning that certain items including revaluation surpluses and foreign currency translation differences bypass the income statement and are recognized directly in equity. The income statement becomes a statement of comprehensive income.

Retrospective restatement. First-time adopters of SAK EP are required to restate comparative period figures as if SAK EP had always been applied, subject to certain permitted exceptions. This means the 2024 comparative figures in a 2025 SAK EP financial statement will differ from the figures that appeared in the 2024 SAK ETAP financial statement.

Not sure what the SAK EP transition means for your company’s specific asset and liability structure? XPND can walk you through it.

Coretax-Ready Bookkeeping: What It Actually Requires

The Core Tax Administration System or Coretax changed the relationship between bookkeeping and tax compliance. Under the previous system, bookkeeping and tax reporting were largely separate processes that were reconciled at filing time. Under Coretax, tax data flows in real time.

Every tax invoice issued and received is recorded in the Taxpayer Account Management ledger maintained by the Directorate General of Taxes (Direktorat Jenderal Pajak or DJP). Every withholding tax certificate is logged against the payer and recipient. Every payment is matched against the outstanding obligation.

A bookkeeping system that is Coretax-ready maintains records that can be reconciled against the Taxpayer Account Management ledger at any point, not just at filing time. This means the chart of accounts must be structured to capture the data dimensions that Coretax tracks: counterparty Tax Identification Number (Nomor Pokok Wajib Pajak or NPWP) and National Identification Number (Nomor Induk Kependudukan or NIK) for individuals, transaction dates aligned with the tax invoice date, and VAT treatment correctly classified at the transaction level.

When the ledger and Coretax data diverge, the discrepancy does not wait for the next filing. It appears in the DJP’s risk scoring system and can trigger an SP2DK, the Letter of Request for Explanation of Data or Information (Surat Permintaan Penjelasan atas Data dan/atau Keterangan), before the company is even aware there is a gap.

XPND structures the chart of accounts and bookkeeping process from the beginning to produce records that are reconcilable against Coretax at any point, so that divergences are identified and corrected in the monthly cycle rather than discovered during a supervisory process.

Intercompany Accounting for PT PMA and Group Structures

For foreign-owned companies in Indonesia, bookkeeping serves two masters simultaneously: the Indonesian statutory reporting requirement and the group consolidation requirement of the foreign parent.

Indonesian statutory financial statements must conform to SAK EP from 2025. Group consolidated financial statements typically follow IFRS or the parent’s home country GAAP. The two frameworks differ in specific areas including lease accounting, financial instrument classification, employee benefit provisions, and deferred tax.

XPND manages the dual-framework requirement by maintaining bookkeeping records that satisfy the Indonesian SAK EP requirement while producing the adjustment schedules and reconciliation documentation needed for the parent’s consolidation process. Transfer pricing documentation requirements, which determine the arm’s length basis for intercompany transactions, sit alongside the bookkeeping function and must be consistent with the recorded transaction values.

For companies that receive management fee charges, royalty flows, or intercompany loans from the parent entity, the bookkeeping treatment must be consistent with the documented basis for those charges and must hold up to scrutiny from both the Indonesian tax authority and the parent’s auditors.

Financial Statements as a Business Tool, Not Just a Compliance Output

Under Law No. 40 of 2007 on Limited Liability Companies (Undang-Undang Perseroan Terbatas), the directors of a PT are legally required to maintain proper books and produce annual financial statements for shareholder approval. This is a legal obligation, not a choice.

Beyond the legal minimum, the quality of financial statements directly affects a company’s ability to access bank financing, attract investment, and defend its tax position. A balance sheet that accurately reflects asset values under SAK EP fair value provisions, a statement of cash flows that correctly classifies operating and investing activities, and a notes disclosure that addresses related party transactions and contingent liabilities in accordance with SAK EP requirements is a materially different document from one produced under the old SAK ETAP standard.

For companies that are preparing for an equity transaction, an acquisition, or a loan facility, the financial statements are the primary due diligence document. XPND prepares financial statements as documents built to withstand external scrutiny from banks, investors, and tax authorities, not merely to satisfy the annual closing requirement.

Need financial statements that will hold up in a bank application or investor due diligence process? Talk to XPND.

What XPND Manages in the Accounting and Bookkeeping Program

Chart of accounts design and Coretax alignment

XPND designs or reviews the company’s chart of accounts to ensure it captures the data dimensions required for Coretax reconciliation, SAK EP financial statement presentation, and any group reporting requirements. A well-structured chart of accounts is the foundation that makes all downstream reporting faster and more reliable.

Monthly bookkeeping and transaction recording

XPND records all commercial transactions including sales, purchases, expenses, fixed asset movements, and bank reconciliations on a monthly cycle. Transaction coding is consistent with the SAK EP classification framework and the Coretax data structure simultaneously.

SAK EP financial statement preparation

XPND prepares the complete set of financial statements required under SAK EP: statement of financial position or balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes to the financial statements. For first-time adopters, XPND manages the retrospective restatement process for comparative periods.

Deferred tax calculation and recognition

XPND calculates and recognizes deferred tax assets and liabilities arising from temporary differences under SAK EP, ensuring that the balance sheet reflects the company’s future tax position accurately and that the deferred tax movement is correctly presented in the statement of comprehensive income.

Intercompany reconciliation and group reporting support

For PT PMA entities with group reporting obligations, XPND prepares the adjustment schedules, reconciliation documentation, and IFRS conversion notes needed for the parent company’s consolidation process.

Coretax reconciliation and pre-filing review

XPND reconciles the bookkeeping records against the Taxpayer Account Management ledger monthly, identifying and resolving discrepancies before they appear as anomalies in the DJP’s risk engine.

Ready to move to a structured accounting program that works for both Indonesian compliance and group reporting? Start with a consultation.

Why Accounting and Bookkeeping

For a company operating in Indonesia, the financial statements are simultaneously a legal compliance output, a tax reconciliation foundation, a financing instrument, and a governance record. The accounting framework that underlies them changed materially in 2025 with the introduction of SAK EP. The tax environment changed in the same year with the full implementation of Coretax.

A bookkeeping program that was adequate under SAK ETAP and the previous tax administration system may not be adequate now. The question is not whether the books are being maintained. It is whether they are being maintained in a way that satisfies both the current accounting standard and the current tax system, and produces financial statements that serve the company’s actual business objectives.