Legal Implications of Using National Identity Number

(Nomor Induk Kependudukan - NIK) as Taxpayer ID

(Nomor Pokok Wajib Pajak - NPWP) in the Indonesian Tax System

Yustinus Lambang Setyo Putro and Rio Christiawan

Program S3 Ilmu Hukum, Universitas 17 Agustus 1945 Jakarta, Indonesia

Keywords: National Identity Number, Taxpayer Identification Number, Tax Obligations, Indonesia Tax Law.

Abstract: Starting from January 1, 2024, Indonesian residents must use their National Identity Number (Nomor Induk

Kependudukan - NIK) for tax-related transactions instead of their Taxpayer Identification Number (Nomor

Pokok Wajib Pajak - NPWP). This new regulation is due to the ongoing data integration process between NIK

and NPWP. The Minister of Finance Regulation has outlined this rule for individual taxpayers, and the Director

General of Taxes (DGT) has confirmed it. This paper aims to explore the legal implications of the

implementation, focusing on the responsibilities of residents, and the government's objectives in implementing

NIK as an NPWP.

INTRODUCTION

Every Indonesian resident is assigned a unique

national identification number called NIK under the

Population Administration Law, which is valid for

their entire lifetime. Upon registration with the

population administration, such as at birth, every

Indonesian citizen will be provided with their own

NIK.

As per the Law on General Provisions and Tax

Procedures (UU KUP), it is mandatory for individuals

and organizations, who meet the requirements set by

the tax laws and regulations, to register as taxpayers at

the Directorate General of Taxes office. The

registration process includes providing information on

the taxpayer's place of residence or domicile. Once the

registration is complete, a Taxpayer Identification

Number (NPWP) is issued. The NPWP serves as a

personal identification number for taxpayers and is

used to manage their tax rights and obligations.

According to the revised Law 7/2021, Article 2

number 1, Indonesian residents are now required to

use their National Identity Number (Nomor Induk

Kependudukan - NIK) as their Taxpayer

Identification Number (Nomor Pokok Wajib Pajak -

NPWP). The Ministry of Finance has confirmed that

starting from January 1, 2024, NIK will be the

Badan Pusat Statistik, Statistik Perdagangan Luar Negeri

Indonesia: Ekspor 2021, diakses pada

primary identifier for tax-related transactions. The

Director General of Taxes (DGT) has explained that

this decision was made as a part of the ongoing data

integration process between NIK and NPWP. So far,

19 million NIK data have been consolidated out of

the targeted 42 million. Individual taxpayers can

find detailed information on

this rule in the Minister

of Finance Regulation Number

112/PMK.03/2022.

In Indonesia, using NIK as an individual taxpayer

identity requires the integration of the population

database with the taxation database. This integration is

crucial for creating taxpayers' profiles, which enable

them to exercise their rights and meet their tax

obligations. This paper will also address the challenges

faced by Indonesian residents regarding taxation,

especially since most business transactions are

monitored by the tax authorities. To conduct most

business transactions, a copy of the national identity

card (KTP) indicating the NIK is required.

In this paper, we will analyze the Government's

objectives for implementing the National Identity

Number (NIK) as a Taxpayer Identification Number

(NPWP). The government believes that combining

NIK and NPWP will help support Indonesia's one -data

policy. By having a standardized single identity

number that can be integrated into tax administration

services, the government aims to optimize the

Putro, Y. and Christiawan, R.

Legal Implications of Using National Identity Number (Nomor Induk Kependudukan - NIK) as Taxpayer ID (Nomor Pokok Wajib Pajak - NPWP) in the Indonesian Tax System.

DOI: 10.5220/0012583300003821

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 4th International Seminar and Call for Paper (ISCP UTA ’45 JAKARTA 2023), pages 517-521

ISBN: 978-989-758-691-0; ISSN: 2828-853X

517

integration of NIK and NPWP. This move is expected

to reduce tax avoidance practices and increase tax

revenues.

LITERATURE REVIEW

The literature review will start by examining the

population administration law that regulates the use of

tanggal 8 Agustus 2022 pada

https://www.bps.go.id/publication/download,

p.19.NIK. At present, two laws regulate the population

administration, namely Law Number 24 of 2013 and

Law Number 23 of 2006.

The second literature review will focus on the Law

on General Provisions and Tax Procedures (UU KUP).

UU KUP is a law that governs the registration of

Taxpayer Identification Number (NPWP) and the use

of National Identification Number (NIK) as an NPWP

identifier. The latest amendments to the Law on

General Provisions and Tax Procedures (UU KUP) are

Law Number 7 of 2021 on the Harmonization of Tax

Regulations and Law No. 6 of 2023. These laws were

enacted on March 31, 2023.

As part of our evaluation, we will be examining the

impact of using NIK as an NPWP for residents. This

implementation will require additional administrative

tasks, and the most important aspect of it is the need to

fulfill tax obligations for every business transaction.

We will be discussing the investigation of business

transactions that required the use of NIK.

One of the objectives of implementing NIK as an

NPWP is to prevent tax evasion. The government aims

to expand the taxpayers' basic data and ultimately

increase tax revenue.

The conclusions and recommendations will be

determined in the last part of the paper after reviewing

the four subjects mentioned above.

METHODS

Sociological or empirical legal research involves

studying legal identification and evaluating legal

effectiveness. The normative legal approach is

typically used in this type of research. It involves

analyzing secondary data sources such as laws,

regulations, books, and articles that are relevant to the

issues being studied.

The data used in primary legal materials is data on

applicable laws and regulations and related literature

that can help answer this research. The following is the

primary legal material that the author uses, including:

Law Number 23 of 2006 governing population

administration,

Law Number 24 of 2013 governing population

administration,

Law Number 7 of 2021 concerning the

Harmonization of Tax Regulations,

Law No. 6 of 2023 concerning Job Creation.

Minister of Finance Regulation Number

112/PMK.03/2022 of 2022 concerning Taxpayer

Identification Numbers for Individual Taxpayers,

Corporate Taxpayers and Government Agency

Taxpayers.

Secondary legal materials are materials that convey

explanations of previous legal materials, namely

primary legal materials. Some secondary legal

materials can be sourced from literature, theses,

journals, or lecture legal materials that are related to

this research.

Tertiary legal materials are materials that can

provide complementary information or information

from the two previous legal materials, namely primary

and secondary legal materials. Sources of tertiary legal

materials can come from websites, Indonesian legal

dictionaries, Indonesian legal encyclopedias, and

others that can support this research.

The analysis is an explanation of all materials and

data that have been collected and explained previously

systematically. The explanation is described logically

according to the author's thoughts. There are several

types of data analysis techniques, but in this research,

the author used qualitative data analysis techniques.

Qualitative data analysis techniques, namely data

analysis methods by grouping and selecting data

obtained from field research according to their quality

and truth, then arranged systematically, which is then

studied using deductive thinking methods connected

with theories from library studies (secondary data),

Then a useful conclusion is made to answer the

problem formulation in this research.

RESULTS AND DISCUSSION

The following topics will be covered in this paper:

NIK as a Single Identity Number for

Population Administration

According to Law Number 23 of 2006, Article 1, Point

12, a National Identification Number (NIK) is a unique

and singular number assigned to an Indonesian resident

for identification. Articles 13.1 and 13.2 states that

every resident must possess a NIK, which is issued by

the government through the implementing agency after

recording their biodata. The NIK is valid for the

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resident's entire life.

NIK as a Single Identity Number for Population

Administration must be possessed by every single

Indonesian Citizen.

Taxpayer Identity Number/NPWP as an

Obligation for Indonesian Residents

Taxpayer Identification Number is a number given to

Taxpayers as a means in tax administration that is used

as personal identification or the identity of the

Taxpayer in carrying out his tax rights and obligations.

NPWP is a number given to taxpayers as a means

of tax administration which is used as personal

identification or identity of taxpayers in carrying out

their tax rights and obligations.

Every Taxpayer who has fulfilled the subjective

and objective requirements by the provisions of tax

laws and regulations is obliged to register at the office

of the Directorate General of Taxes whose working

area includes the Taxpayer's place of residence or

domicile and to whom a Taxpayer Identification

Number ("NPWP") is issued.

Implementation of NIK as an NPWP

Indonesian law provides a legal basis for Indonesian

residents who have a personal identification number

(NIK) to obtain a tax identification number (NPWP).

This is established in Article 2 number 1 of Law

7/2021, which introduces a new provision in Article 2

paragraph (1a) of Law 6/1983. The NPWP is

specifically intended for individual taxpayers residing

in Indonesia and using their NIK for tax purposes.

The Indonesian government has regulated the use

of NIK (Nomor Induk Kependudukan) as an NPWP

(Nomor Pokok Wajib Pajak) for individual taxpayers

(WP) (OP) under the Law No. 7 of 2021 concerning

Harmonization of Tax Regulations (HPP). This means

that every OP taxpayer who satisfies the subjective and

objective requirements specified in the tax laws and

regulations is obligated to register at the office of the

Directorate General of Taxes of the Ministry of

Finance situated in the taxpayer's residence or domicile

to obtain an NPWP. This initiative aims to streamline

tax regulations and facilitate the process of taxation for

individual taxpayers in Indonesia. MOF Regulation

No. 112/2022's consideration letter c explains that NIK

is used as an NPWP to support Indonesia's one-data

policy. The policy aims to streamline tax

administration services by mandating the use of a

standardized and integrated single identity number.

As of July 14th, 2022, there are changes to the way

individual taxpayers who are residents in Indonesia

will be identified. Going forward, the NIK (Nomor

Induk Kependudukan) will be used as the NPWP

(Nomor Pokok Wajib Pajak) for all individual

taxpayers who are residents. This includes those who

did not previously have an NPWP and those who had

a 15-digit format NPWP before the enactment of this

new provision. However, for those who previously had

an NPWP, there will be a prior matching process to

ensure that their NIK is used as their new NPWP.

It is important to note that starting January 1, 2024,

NIK (Nomor Induk Kependudukan) will be converted

into NPWP (Nomor Pokok Wajib Pajak) and will

become the only identifier for taxpayers. This means

that all tax administration services and other

administrative services that currently require NPWP

will accept NIK or NPWP in the new format. To put it

simply, in 2024, NIK will completely replace NPWP,

and taxpayers will need to use it for all related services.

Government's Objectives Regarding the

Implementation of NIK.

After the issuance of Law Number 7 of 2021

concerning Harmonization of Tax Regulations, the

NPWP of Indonesian residents now uses the NIK

(Education Identification Number). The objectives of

this policy are:

To provide justice and legal certainty in the use

of NPWP in connection with the provisions on the

use of NIK as NPWP for individual taxpayers.

To provide equality and realize effective and

efficient tax administration for individual taxpayers

who are Indonesian residents who use NIK as

NPWP.

To support Indonesia's one data policy by

regulating the inclusion of a single, standardized,

and integrated identity number in tax

administration services.

Validation of NIK as NPWP, it was stated that NIK

is now an NPWP to better integrate the two systems

and prevent tax avoidance practices. This will help to

optimize tax revenues and ensure fair taxation for all.

Legal Implications of Implementing NIK as

NPWP

Under the HPP Law, when using NIK as an NPWP, the

minister responsible for domestic government affairs

will share population data and user feedback with the

Minister of Finance for integration into the tax

database. To use NIK as an individual taxpayer

identity, there needs to be integration between the

population database and the taxation database. This

integration creates a taxpayer profile, which taxpayers

can utilize to fulfill their tax obligations and exercise

Legal Implications of Using National Identity Number (Nomor Induk Kependudukan - NIK) as Taxpayer ID (Nomor Pokok Wajib Pajak -

NPWP) in the Indonesian Tax System

519

their rights. The NIK to NPWP matching results are

categorized into valid data, which represents taxpayer

identity data matched with population data, and invalid

data, which represents taxpayer identity data not

matched with population data.

Because of the National Identification Number

(NIK) becoming an NPWP, the number of Individual

Taxpayers (WP OP) will increase, and so will the

amount of data on property ownership. Property

ownership data from third parties, such as ILAP

(agencies, institutions, associations, and other parties),

which was originally NPWP- based, has become NIK-

based so that assets that previously did not exist

become available because they have an NIK.

Under the mandate of Law Number 7 of 2021

concerning Harmonization of Tax Regulations (HPP),

the Ministry of Finance through the Directorate

General of Taxes (DJP) has implemented the Taxpayer

Voluntary Disclosure Program (PPS) from 1 January

2022 to 2022. 30 June 2022. This was marked by the

stipulation of Minister of Finance Regulation Number

196/PMK.03/2021 concerning Procedures for

Implementing the Voluntary Taxpayer Disclosure

Program.

PPS is a program that provides an opportunity for

Taxpayers (WP) to disclose tax obligations that have

not been fulfilled voluntarily through the payment of

Income Tax based on asset disclosure, so the aim is to

increase voluntary taxpayer compliance. This program

is organized based on the principles of simplicity, legal

certainty, and expediency.

The Directorate General of Taxes (DJP) has

changed their identification system, replacing the NIP

with NPWP. This change has allowed for a

comprehensive comparison of taxpayer asset data

based on SPT and DJP internal data, as well as

facilitating automatic exchange of information

(AEOI), /or ILAP, and even the State Officials' Wealth

Report (LHKPN). However, the legal implications of

this change on both participants and non-participants

of the Voluntary Disclosure Program (PPS), as well as

for the DJP itself, are as follows:

As per the Government Regulation (PP)

Number 31 of 2012 and Minister of Finance

Regulation (PMK) Number 228 of 2017, 69 ILAPs

are responsible for submitting tax-related

information to the Directorate General of Taxes

(DJP). These ILAPs include agencies, institutions,

associations, and other parties. For instance, Bank

Indonesia (BI) provides information on debtors,

such as their identity, collateral/guarantor, and

financial reports.

It should be noted that not all debtor data

includes NPWP information, but it has been

confirmed that NIK data is available. Similarly,

other data such as cash transactions for purchasing

motor vehicles may not always include the NPWP,

but the NIK is present. As a result, the property

ownership data submitted to the DJP will likely

increase as the NIK is used in place of the NPWP.

Regarding the Directorate General of Taxes

(DJP), if there is any property ownership

information that has not been reported in the Asset

Notification Letter (SPH) or the Annual Tax Report

(SPT), it can be used as a basis for further research

or examination. In the case of assets that have not

been reported in the SPH while participating in the

Annual Tax Report (PPS), a Tax Payment Letter

(SKP) can be issued to collect a final income tax of

30%.

CONCLUSIONS

Based on the above discussion, we can draw several

conclusions, as outlined below:

a. Merely possessing a NIK does not

automatically qualify an individual as a taxpayer.

Specific criteria must be satisfied to be recognized

as a taxpayer.

b. The implementation of NIK as NPWP will

increase the amount of property ownership data.

This increase in data will affect PPS participants,

non-PPS participants, and DGT. In the case of PPS

participants, if any assets have not been reported,

they will be subject to a Final Income Tax of 30%

of the unreported assets.

c. Non-disclosure of property ownership

information in the SPT or SPH will result in an

investigation or examination by the authorities. It

should be noted that in these instances, a Tax

Assessment Letter (SKP) will be issued promptly.

d. If the source of a taxpayer's assets cannot be

proven to have been taxed, and the DJP fails to

carry out necessary research or audits, this could

potentially result in a loss of income tax revenue.

It is imperative that both residents/taxpayers, as well as

the DGT, adhere to the following recommendations to

ensure optimal outcomes:

a. Individual Indonesian taxpayers must

Identification Number (NPWP) upon meeting

subjective and objective requirements.

b. Taxpayers are required to submit their

Annual SPT form to the Tax Office every year, in

which they must report their income, assets, and

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liabilities. If there is an underpayment of taxes, the

taxpayer must settle the payment through a bank

before the March 31st deadline.

c. To ensure fair treatment for all taxpayers, the

Indonesian Tax Authority (DJP) may initiate an

investigation or examination and issue a Tax

Assessment Letter (SKP) if there is evidence of

property ownership that has not been reported in

the SPT or Asset Notification Letter (SPH).

ACKNOWLEDGEMENTS

This paper solely pertains to property and wealth that

is domestically stored and registered with NIK.

Researching assets without an identity card or NIK

can prove to be challenging, especially when it comes

to cash or tangible assets that are stored domestically.

In addition, further efforts are necessary when

researching assets that are stored outside of Indonesia

by the DJP.

REFERENCES

Law Number 23 of 2006 governing population

administration

Law Number 24 of 2013 governing population

administration

Law Number 7 of 2021 concerning the Harmonization of Tax

Regulations

Law No. 6 of 2023 concerning Job Creation.

Minister of Finance Regulation Number 112/PMK.03/2022

of 2022 concerning Taxpayer Identification Numbers for

Individual Taxpayers, Corporate Taxpayers and

Government Agency Taxpayers.

Badan Pusat Statistik, Statistik Perdagangan Luar Negeri

Indonesia: Ekspor 2021,

https://www.bps.go.id/publication/download

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NPWP) in the Indonesian Tax System

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