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Tax Amnesty

Tax Amnesty Program Ended, What are the results?

Indonesia’s tax amnesty program ended on 31 March 2017, so now it is time to take a look at the results. Although Indonesia’s amnesty program has been labelled as one of the most – if not the most – successful amnesty programs ever around the globe (in terms of asset declarations), there is plenty of room for disappointment. Based on data from Indonesia’s Tax Office, less than one million Indonesians joined the program. For many nations this would be a great number. For Indonesia this number means tax evasion remains rampant, implying the government misses out on much-needed tax revenue.

A total of 965,983 people joined Indonesia’s ambitious tax amnesty program that ran between July 2016 and 31 March 2017 (while less than 200,000 participants out of this total are “brand new” taxpayers, meaning they have never filed annual tax returns before, the remainder are registered taxpayers who had failed to declare all their assets). However, considering only about 35 million Indonesians – out of an adult population that numbers more than 165 million people – are registered taxpayers, there is a huge pool of people who fail to fulfill their tax obligations. Moreover, being a registered taxpayer does not mean they actually fulfill their tax obligations. It is estimated only a mere 12 million Indonesians pay their annual taxes in line with their incomes and assets.

Credit: KSP.GO.ID

Credit: KSP.GO.ID

Indonesian Finance Minister Sri Muyani Indrawati responded to the tax amnesty results as follows: “I find the number of participants in the amnesty program small – both regarding taxable objects in the nation’s small and medium sized enterprises (SMEs) sector and non-SMEs sector. Hence, too many people have not joined the amnesty program.”

So what are the results, money-wise? A total of IDR 4,865.7 trillion (approx. USD $366 billion) worth of assets have been declared to Indonesia’s Tax Office under the program, surpassing the government’s target (set at IDR 4,000.0 trillion). The figure equals nearly 40 percent of Indonesia’s gross domestic product (GDP). About 75 percent of these funds involve assets that were stashed domestically, the remainder are assets that were secretly stored abroad (mostly in Singapore). This result was positive, although one could claim that the government set its target too low.

Indonesia

In terms of asset repatriations, the program was disappointing. Only IDR 147 trillion worth of assets were repatriated into the specific investment instruments that were prepared by Indonesian authorities (the government’s target was set at IDR 1,000.0 trillion). Again, Singapore accounted for the largest part of declared and repatriated funds by Indonesians under the tax amnesty program. Nearly IDR 85 trillion of fund repatriations originated from Singapore. However, it is estimated Indonesians keep about IDR 2,600 trillion worth of assets in Singapore (around IDR 650 trillion of which are in “non-investable assets”, such as property). Most of these repatriated assets went to onshore deposit accounts, bonds and wealth management funds. Reluctance of Indonesians to repatriate their wealth to Indonesia indicates that Indonesia is not attractive enough. This can be related to Indonesia’s relatively high tax tariffs (compared to tariffs in tax havens) and perhaps some people are still traumatized by the Asian Financial Crisis and therefore prefer to keep assets abroad.

It is believed many of those who joined the amnesty program did so out of concern being caught in 2018 when the Organization for Economic Co-operation and Development’s (OECD) Automatic Exchange of Information initiative is implemented. This will make it easier for tax authorities to access data regarding overseas assets.

In terms of redemption payments the Indonesian government collected IDR 114 trillion, below its target of IDR 165 trillion, but it will somewhat help to plug a yawning gap in the government’s projected tax revenue.

Tax Amnesty Program Indonesia – Score So Far:

     Target
(in IDR trillion)
Per 31 Mar ’17
 (in IDR trillion)
Achieved
Redemption Payments
      165.0        114.0    69.1%
Declaration of Funds      4,000.0      4,865.7   121.6%
Repatriation of Funds      1,000.0        147.0    14.7%

Source: www.pajak.go.id/statistik-amnesti

But there is positive news. Many of Indonesia’s corporate elite joined the program, declaring their previously undeclared assets stored abroad in the so-called tax havens or at home, and this means a significant amount of wealth has been declared because it is the top that controls the nation’s wealth. Based on the seventh Global Wealth Report, made by Credit Suisse Research Institute, the top 1 percent of Indonesian society controls about half of the country’s wealth (indicating a high degree of income distribution inequality).

With the tax amnesty program Indonesia’s tax revenue may grow up to 10 percent (year-on-year) in 2017. Without the program tax revenue growth may only have been 7 percent (y/y). Indonesian authorities will now study the results of the tax amnesty program and determine the next steps for the reformation of Indonesia’s tax sector. Indonesia’s tax-to-GDP ratio is currently at a very low 11 percent. Authorities want to raise this figure to 15 percent in the next couple of years. However, this will require some serious reformation.

It is also important for the government to set a good example and limit scandalous corruption cases. For example, the ongoing trial of an alleged graft case related to the introduction of the electronic identity card (e-KTP) in Indonesia comes at a problematic time. This project caused IDR 2.3 trillion in state losses and prosecutors have mentioned names of figures with strong political influences in Indonesia. Indonesians will not be enthusiastically fulfilling their tax obligations when media are frequently reporting about government funds that go missing in government projects (about 75 percent of state funds originate from taxation).

This article originally written and published by Indonesia Investments.

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2 Kewajiban Tambahan bagi Wajib Pajak yang Sudah Ikut “Tax Amnesty”

Direktorat Jenderal Pajak (Ditjen Pajak) Kementerian Keuangan (Kemenkeu) menilai, keikutsertaan dalam program Amnesti Pajak atau “tax amnesty” menandakan Wajib Pajak bersedia membangun budaya baru kepatuhan pajak.

Yakni, ditandai dengan membayar dan melaporkan pajak dengan baik dan benar.

Dalam keterangan persnya, Ditjen Pajak menyebutkan, bagi seluruh Wajib Pajak yang telah ikut program Amnesti Pajak, ada dua kewajiban tambahan yang harus dilaksanakan sebagai bagian dari keikutsertaan dari program tersebut:

Credit: KSP.GO.ID

Credit: KSP.GO.ID

1.     Pengalihan dan/atau Investasi Harta

·        Bagi Wajib Pajak yang menyatakan repatriasi, terdapat kewajiban untuk mengalihkan harta dari luar negeri ke Indonesia dan menempatkan dana tersebut dalam instrumen investasi sesuai ketentuan yang berlaku. Penempatan dana dalam instrument investasi di Indonesia ini berlaku paling kurang tiga tahun sejak harta dialihkan ke Indonesia.

·        Bagi Wajib Pajak yang melakukan deklarasi harta dalam negeri, terdapat kewajiban untuk tidak mengalihkan harta tersebut keluar dari Indonesia untuk jangka waktu paling singkat tiga tahun sejak menerima Surat Keterangan Pengampunan Pajak.

2.     Pelaporan Berkala Harta Tambahan

·        Wajib Pajak yang telah ikut Amnesti Pajak diwajibkan melaporkan status penempatan harta tambahan yang dialihkan ke dan/atau yang berada di Indonesia

·        Laporan disampaikan paling lambat pada batas waktu penyampaian SPT Tahunan Pajak Penghasilan setiap tahun hingga tiga tahun

·        Laporan disampaikan dalam bentuk hardcopy dan softcopy ke KPP tempat Wajib Pajak terdaftar dengan cara secara langsung, melalui pos dengan tanda bukti pengiriman surat, perusahaan jasa pengiriman dengan bukti pengiriman surat; atau saluran lain yang ditetapkan oleh Direktur Jenderal Pajak (Dirjen Pajak).

Peserta Amnesti Pajak yang menolak melaksanakan kewajiban tersebut di atas menghadapi risiko pengenaan pajak dengan tarif normal hingga 30 persen atas harta bersih tambahan yang telah diungkapkan dalam Surat Pernyataan Harta, beserta sanksi administrasi 2 persen per bulan, dengan maksimal 24 bulan.

“Selain kewajiban sebagai peserta Amnesti Pajak, para Wajib Pajak juga diimbau untuk melaksanakan kewajiban perpajakan rutin dengan benar dan teratur termasuk membayar dan melaporkan pajak melalui penyampaian SPT Tahunan PPh,” tulis Ditjen Pajak.

Termasuk yang harus dilaporkan dalam SPT Tahunan PPh adalah seluruh penghasilan yang diperoleh Wajib Pajak baik dari dalam maupun dari luar negeri dan juga informasi harta yang dimiliki Wajib Pajak pada akhir tahun pajak bersangkutan.

Era Keterbukaan

Ditjen Pajak juga mengingatkan seluruh masyarakat/Wajib Pajak bahwa era keterbukaan informasi sudah di depan mata dengan akan berlakunya Automatic Exchange of Information.

Di era ini, data keuangan dari 100 negara di seluruh dunia akan dibuka untuk tujuan perpajakan termasuk data perbankan, pasar modal dan industri keuangan lainnya di Indonesia.

“Dengan demikian tidak akan ada lagi tempat untuk bersembunyi dan menghindari pajak yang seharusnya dibayar,” lanjut Ditjen Pajak.

Untuk itu Ditjen Pajak mengingatkan bahwa sesuai Pasal 18 Undang-Undang Pengampunan Pajak, Wajib Pajak yang menolak membereskan catatan perpajakan masa lalu dengan mengikuti program Amnesti Pajak akan menghadapi risiko pengenaan pajak dengan tarif hingga 30 persen, beserta sanksi, atas harta yang tidak diungkapkan dan kemudian ditemukan Ditjen Pajak.

Demikian juga Wajib Pajak yang telah ikut Amnesti Pajak namun masih menyembunyikan harta lainnya, maka apabila harta tersebut ditemukan akan dikenakan pajak dengan tarif hingga 30 persen dan denda 200 persen.

Untuk melaksanakan amanat Pasal 18 tersebut, Ditjen Pajak akan melanjutkan pengumpulan dan analisis data pihak ketiga serta menambah jumlah pegawai yang akan melakukan pemeriksaan terkait pelaksanaan Pasal 18 UU Pengampunan Pajak.

Oleh karena itu, diharapkan masyarakat/Wajib Pajak untuk segera memanfaatkan Amnesti Pajak sebelum program ini berakhir pada 31 Maret 2017.

Ditjen Pajak menyiapkan layanan Amnesti Pajak pada setiap hari kerja hingga pukul 16.00, pada hari Sabtu hingga pukul 14.00, dan pada hari Minggu hingga pukul 12.00.

Pada tanggal 28 Maret layanan tidak diberikan (libur nasional). Tanggal 27, 29, dan 30 Maret layanan diberikan minimal hingga pukul 19.00 waktu setempat sedangkan tanggal 31 Maret, layanan diberikan hingga pukul 24.00 waktu setempat.

Informasi lebih lanjut mengenai Amnesti Pajak hubungi Tax Amnesty Service di 1500 745. Informasi seputar perpajakan dan berbagai program dan layanan yang disediakan Ditjen Pajak dapat dilihat pada www.pajak.go.id atau hubungi Kring Pajak di 1500 200.

Sumber: Kompas

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Electronic Filling for Annual Tax Forms Revamped

In the hope of assisting taxpayers in the country, the Directorate General of Taxation has altered the system for the electronic filing (e-filing) of annual tax forms. The new system will be a simpler one called an electronic form (e-form).

As taxpayers are required to file annual tax forms by March 31, the tax authority has launched the new method via a computer app compatible for Windows and MacOS operating systems.

Taxpayers will be able to file the documents electronically without having to worry about the reliability of the internet connection.

Electronic filing for annual tax forms revampedDirectorate General of Taxation spokesman Hestu Yoga Saksama speaks to journalists. (tribunnews.com/Seno)

Tax office spokesperson Hestu Yoga Saksama said taxpayers could download the “e-form” app and fill out their annual tax forms offline before then uploading their documents. It is hoped this way of doing things will be quicker and more reliable. The previous method of e-filing resulted in “crashes”.

During a press conference on Monday, Yoga said it only needs a short amount of time to submit the documents, unlike last year when taxpayers needed hours to fill in their annual tax forms because of an unreliable internet connection.

Last year, the tax office’s online system for e-filing suffered technical glitches due to overcapacity. This forced the authority to extend the submission deadline for tax documents until April 30 without penalties.

According to Yoga, the e-filing system last year crashed because millions of people tried to access the system at the same time to fill in their tax forms. The new e-form app enables taxpayers to fill out their tax forms offline.

 

Source: Jakarta Post

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Thanks to Tax Amnesty, Indonesia’s Budget Deficit is Under Control

Indonesia’s budget deficit in 2016 is estimated to have reached 2.46 percent of the nation’s gross domestic product (GDP), below the government’s forecast of 2.7 percent of GDP and at a safe distance from the legal cap of 3.0 percent of GDP that is stipulated by Indonesian law. This is a positive matter that is supported by modestly growing tax revenue. In full-year 2016 tax revenue realization reached IDR 1,105.2 trillion (approx. USD $83 billion), only 81.6 percent of the target that was set in the Revised 2016 State Budget (APBN-P 2016) but slightly higher than tax revenue realization in the preceding year.

Credit: Strait Times

Credit: Strait Times

Indonesia’s tax amnesty program played a big role in 2016 in terms of tax revenue realization. In the first two phases of the program (covering the months July-December) the government collected an additional IDR 107 trillion (approx. USD $8 billion) worth of tax revenue through the tax amnesty program, nearly 10 percent of total tax revenue in 2016. This would therefore also imply that without the tax amnesty program, Indonesia’s tax revenue realization would have been very weak last year, and, pushing the government’s budget deficit above the 3 percent of GDP cap (provided the government would not adjust its spending programs).

As such, the tax amnesty program has been a savior that added the necessary government funds and led to the larger taxpayer database in Indonesia. Around 612,000 taxpayers joined the program declaring a total of IDR 4,295.9 trillion (approx. USD $321 billion) in previously unreported wealth in the July-December 2016 period. Although tax compliance remains low in Indonesia, the tax amnesty program can therefore be labelled a success (but it needs to be mentioned that asset repatriations into Indonesia have been very weak).

Will the tax amnesty program have long-term effects? The answer to this question we will learn in 2017. The larger taxpayer database should lead to structurally higher tax revenue for the government. In a few months time we can see the first signs whether this is indeed the case. Only if the tax amnesty program, which runs until 31 March 2017, has long-term impact on tax revenue, then we can really label it a success. However, if it only leads to a temporary surge in revenue collection then it would have had limited value.

Prior to the tax amnesty program, there were only 27.6 million registered taxpayers in Indonesia, while the nation’s workforce numbers 115 million (and the total population numbers 255 million). This explains why Indonesia has a very low tax-to-GDP ratio at around 11 percent (this is a major problem as tax revenue is the largest source for total government revenue).

Currently, most of Indonesia’s tax revenue originates from a relatively small group of big corporations. The degree of tax compliance is highly related to the degree of monitoring: if the tax office is carefully watching, then corporations (or individual taxpayers) will make sure that they take care of their tax obligations. In Indonesia, the “big fish” (consisting of big local companies as well as foreign owned companies, known as PT PMA) are carefully monitored, while millions of “small and medium fish” are neglected. This implies there exists both a challenge and opportunity for Indonesian authorities: there is great potential to raise the nation’s tax revenue but authorities will need to enhance tax monitoring (including the monitoring of tax officials who may try to gain advantage through corrupt behavior).

 

This article originally posted Indonesia-Investments.

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Does she love me? Does she love me not?

Pada kuartal 2017, kita akan masuk periode III amnesti pajak. Terdapat total potensi pembayar amnesti pajak sebanyak 32 juta wajib pajak, dengan rasio kepatuhan membayar pajak hanya sebesar 65% atau sekitar 20 juta wajib pajak dari jumlah total potensi. Berarti masih ada 8 juta wajib pajak yang belum melaporkan Surat Pemberitahuan Tahunan (SPT) Pajak.

Untuk itu, Menteri Sri Mulyani pastikan semua wajib pajak akan mendapat ‘surat cinta’ darinya dan Direktorat Jenderal Pajak (DJP) Kemenkeu di periode III amnesti pajak. Kepada wajib pajak yang belum menunaikan kewajibannya pada periode I dan II, yuk ikut selagi masih ada kesempatan!

Infografis Tidak Ikut Amnesti Pajak

Guna mendukung program pemerintah tersebut, FMB Consultant menyediakan jasa pelaporan amnesti pajak dan perencanaan pajak. Kami telah berpengalaman membantu pelaporan amnesti pajak baik untuk perseorangan maupun badan pada periode I dan II lalu. Didukung dengan tim yang kompeten, kami dapat membantu proses perencanaan pajak Anda agar efektif dan efisien. Untuk informasi lebih lanjut, kunjungi website kami atau hubungi kami di ivan@fmbconsultant.com.

Official LinkedIn | FMBconsultant.com

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How Indonesia Hunts their Hidden Assets with Tax Revenue

Hidden assets sought in pursuit of cash to fund infrastructure development.

Indonesia have embarked on big, bold and historic hunts for hidden assets. The moves come amid a global shift in attitude toward tax avoidance and offshore holdings but the emerging economies have singular reasons for seeking undeclared riches. Each wants fresh cash for much-needed infrastructure projects and a chance for a fairer distribution of wealth.

Indonesians fill the waiting room at a Jakarta tax office to apply for an amnesty program aimed at offshore accounts. © AP

Indonesians fill the waiting room at a Jakarta tax office to apply for an amnesty program aimed at offshore accounts. © AP

JAKARTA In the last days of September, in the dark of 3 a.m., people began queuing outside a single government building in central Jakarta. They were clutching financial papers that in some cases exposed offshore accounts worth billions of rupiah. Two months earlier, President Joko Widodo had launched a massive tax amnesty campaign to repatriate hidden assets to Indonesia. As the first reporting deadline loomed, crowds swelled into the office that handles the tax affairs of the country’s wealthiest individuals and companies.

More than 10,000 people a day answered the president’s pitch in September: declare assets now and take advantage of a discounted tax rate — as little as 2% compared to 25% — and, in turn, be part of Indonesia’s future. Revenue from the nine-month amnesty, continuing through March, is promised to build railway networks, ports and airports in a country whose prospects, politically and economically, have been on the ascent.

Joko Widodo, who was elected in 2014, has cast the program as good for business — and pivotal to the next generation. Twice before Indonesia tried amnesties to lure money back home but those efforts in 1964-65 and in 1984 failed, in part, due to poor incentives. Now Indonesia has calculated that political stability and a dramatic drop in the tax rate could help to bring in an estimated 11,400 trillion rupiah ($851 billion) parked overseas.

“We have a large amount of money outside,” Widodo told a group of businessmen in Jakarta this summer. “What is most important now is to bring this money back to our country. We need your participation right now to build the nation.”

Indonesia’s call for revenue echoes across many countries in Asia where private wealth has risen steeply in the past decade. New wealth accounts for about 60% of the total wealth growth in the Asia-Pacific region excluding Japan and, by 2019, the region is expected to account for 26% of all global financial wealth, according to a recent Boston Consulting Group report. It is those potential taxpayers that emerging economies want to rein in as partners in their next phase of development.

Indonesia’s hunt for revenue is spurred by ambition for this country of 20 million taxpayers. It has enjoyed 5% annual growth for the past few years. In order to keep this growth momentum, the country needs to build and improve its infrastructure such as airports and power grids. The government has estimated 5,500 trillion rupiah is needed through 2019 for infrastructure; the state budget can likely cover a quarter of that.

Amnesty became appealing first to trade associations, law firms and major developers that liked the lower tax rate — and possibly saw future government contracts for big construction. Wealth managers said tax rates were locked in depending on how early declarations were made. That sparked the September rush. “Just with 2% or 4%, you can bring the ‘dark’ money under the sun,” said a private banker in Singapore. “Once you declare amnesty, the money is no longer ‘dark.'”

Hariyadi Sukamdani, chairman of the Indonesian Employers Association, said nearly all 15,000 members of his group joined, in part because of important assurances. Beyond the new low rates, amnesty doesn’t require tax officials to trace the origins of the assets and it prohibits the disclosure of information, even to law enforcement.

Sukamdani said amnesty also prepares Indonesia for new global transparency standards, including regulations by the Organization for Economic Cooperation and Development known as the “automatic exchange of information.” More than 100 countries, including Indonesia, Singapore and Switzerland, are committed to the regimen that goes into effect in January, with bilateral reporting following in 2018. “Of course, those who have bad intentions to hide things illegitimately, they will always find a way,” said Sukamdani. “But they realize that one day the [AEOI] will be established. … It will keep improving.”

 20161221participants_large_580

Lawyer Hotman Paris Hutapea said he had a personal reason for declaring his hidden income. He no longer wanted to play hide-and-seek with tax officers for dozens of properties he owns. “What I hid was cash,” he said in a televised interview. He used the cash to buy properties but would mask the money, in required filings, as a loan from a bank. “Now we don’t have to do all the tiring work of pretending to use loans.”

An entrepreneur in his 20s who asked to remain anonymous said that his family had secret assets in Singapore. Many families sent their wealth there after the 1998 financial crisis, when tensions in Jakarta prompted the burning of Chinese-Indonesian businesses, he said. But now, he and his father, who run a large family business, agreed such risks had eased. The middle class had grown; so had business opportunities. He and his family were declaring accounts and would gradually bring back funds. “There will not be a complete exodus [from Singapore] but in reality, people will bring back money to Indonesia,” he said.

The efforts to corral big assets unsettled Singapore, one of Asia’s leading financial centers that is estimated to hold more than $200 billion in assets from Indonesians. Account holders who notified financial institutions in Singapore that they would apply for amnesty suddenly found the financial police involved. Singapore police and the Monetary Authority of Singapore, the financial industry watchdog, had informed banks there to file suspicious transaction reports whenever anyone sought to participate in tax amnesty.

Singapore’s regulations require an STR whenever there is a prospective amnesty case. A spokesman for the Monetary Authority said that an STR did not necessarily trigger a criminal investigation.According to financial sources, Singapore banks offered some of the wealthiest Indonesians better interest rates if they would declare but not repatriate their money. Sukamdani said it was perhaps a “natural reaction” by some banks to try to prevent money flowing out of the country but, as of late, such offers have subsided. “From polite ways to insolent ones, Singapore did it all,” he said. “[But] they no longer do such things because all the big [Indonesian] taxpayers have completed their applications.”

Repatriation itself has been slow but even early critics — including the OECD, which had described the amnesty as rewarding tax cheats — concede that Indonesia’s effort has encouraged transparency. As of Dec. 19, 141 trillion rupiah had been committed for repatriation, just 14% of the target. The number of participants declaring assets, though, has been far more encouraging. From July to mid-December, there were 508,000 participants and a total of 4,035 trillion rupiah of assets declared, equal to 30% of the country’s gross domestic product. The government collected 101 trillion rupiah in revenue as of Dec. 19, about 60% of the target. That could translate — in real terms — into thousands of miles of new highway and two rail projects proposed for underdeveloped regions in eastern Indonesia.

Indonesia’s director general for taxation said that the next phase of the tax amnesty will be challenging. Small and medium-sized businesses — part of the informal sector that had been barely exposed to the tax office — will be encouraged to reveal their accounts. “Compared with other countries, we’re better, in terms of the revenue and the amount of asset declared … [but] we don’t think it has met our hopes,” said Ken Dwijugiasteadi, the director general.

This article is written with sort of changes and originally posted by Asia Nikkei.
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