Since the tax amnesty program announced by President Joko Widodo last July, we often heard the term mentioned in many discussions. As the government’s flagship program to repatriate Indonesian assets parked overseas and increase tax revenues, it is not something to be taken for granted.
“As we are approaching the automatic exchange of information in 2018, there will be a bilateral agreement that will reveal financial information. That way, those who used to avoid taxes by parking their assets overseas will be identified by the government,” says Dian Puspa Wahono, Marketing Communication Specialistat PT Achilles Advanced Systems, the company behind Online Pajak, an online tax software which aims to help tax reporting activities by individuals and companies.
By declaring assets that have been out of reach from the Taxation Directorate General, the Indonesian government hopes to get the information of asset ownership without force.
Tax amnesty program will run for nine months, until 31 March 2017, so it is not too late to know some of these things:
1. It is aiming at tax evaders and avoiders
Tax amnesty provides an opportunity for taxpayers to break away from past tax liabilities that could potentially be charged and get sanctioned in the form of interest and penalties in the future. Moreover, this program will eliminate tax crime sanctions. This means it would enable taxpayers to start with a clean slate.
2. Redemption Money = Tariff x Net Asset Value
Until the end of March next year, the government is giving a low redemption money rates based on the Asset Declaration Letter for Tax Amnesty (SPHPP) submission period, which is 2%-5% for onshore assets declaration, 4%-10% for offshore assets declaration, and 0.5%-2% for SME with assets declaration up to Rp 10 billion. The first period of this program with lowest redemption rate will end by 30 September 2016. The net asset is a total of assets minus liabilities.
3. There won’t be any tax-related examinations
Through this program, the government will ensure that taxpayer who has obtained SPHPP will not go through a tax audit, preliminary evidence examination, or investigation of tax crimes for the tax period up to 31 December 2015. All data and information contained in SPHPP cannot be used as the the basis of an investigation, criminal investigation or prosecution against the taxpayer.
This also means that net asset value declared on SPHPP is fully based on the taxpayer’s valuation and will not be corrected or tested by the Taxation Directorate General.
4. With tax amnesty, tax return revision cannot be done
One of the requirements of tax amnesty is the revocation of all applications for reductions, cancellations, tax objections, revisions, lawsuit, and appeals.
"If the taxpayer has submitted a tax return but made an error, it is possible to file a revised return correcting the error,” Dian suggests, especially for employees who earn all of their income from one company and have their income taxes paid by the company.
Acoording to the Genral Taxation System (KUP) Law, if a taxpayer made a tax return revision by declaring an asset that has been taxed, the taxpayer will not have to pay taxes. If the asset is not yet taxed, the taxation Directorate General has the right to conduct tax examinations.