Certain Types of Taxpayers to Be Exempt from Tax Amnesty

Indonesian Version

 
Marcell Sihombing, Fitri N. Heriani
 

 

Since its effective implementation on July 2016, the tax-amnesty program ushered in under Law No. 11 of 2016 on Tax Amnesty (Tax-Amnesty Law) has become a major source of unease for the general public. Concerns have been voiced across a broad cross-section of Indonesian society, as many believe that the program has expanded from its initial goal of targeting tax offenders in possession of offshore assets to encompass the general public as a whole, including law-abiding taxpayers and low-income sectors of society. This concern prompted several parties to file for a judicial review of the Tax-Amnesty Law at the Constitutional Court (MK) in June of 2016. Moreover, one of the Indonesia’s largest Islamic civil organizations, Muhammadiyah, has also revealed its intention to file for a judicial review after completing its own review of the contents of the Tax-Amnesty Law.
 
Within days of the review request being filed, President Joko Widodo instructed the Directorate General of Tax (Directorate General) to address the negative public perception of the amnesty and to disseminate correct and accurate information as regards the implementation of this piece of legislation. The Directorate General subsequently responded to the president’s instruction on Tuesday, 30 August 2016 by issuing two new regulations, namely Regulation No. PER-11/PJ/2016 on Further Provisions Governing the Implementation of the Tax-Amnesty Law and Regulation No. PER-10/PJ/2016, which amends Director General Regulation No. PER-07/PJ/2016 on Documents and Technical Guidelines for the Filing of Documents Relating to the Implementation of the Tax-Amnesty Program.
 
According to Mr. Dwijugeasteadi, the Director General of Tax, the intention behind the recently issued regulations is to ensure that both the process and the results of the tax-amnesty program conform to a number of predetermined objectives. The most important provision which has been incorporated into these regulations is the exemption of certain types of individual taxpayers from the tax-amnesty program, specifically farmers, retired people, Indonesian workers and the heirs of undivided estates whose total income over the most recent fiscal year (as already reported in their 2015 SPT) is lower than the non-taxable income threshold (PTKP). This threshold is currently set at IDR 54 million per year or IDR 4.5 million per month. Indonesian citizens who are classified as foreign taxpayers have also been exempt, provided that they only live in Indonesia for fewer than 183 days per year and do not generate any income here.
 
“Thus, the sanction set out under Article 18 (2) of the Tax-Amnesty Law which stipulates that, ‘Any unreported assets discovered by the Directorate General will be treated as income under the tax-amnesty program’ will not be imposed upon any such parties,” Mr. Dwijugeasteadi asserted.
 
Mr. Dwijugeasteadi also emphasized the fact that all taxpayers have the absolute right as to whether or not to participate in the tax-amnesty program. Any taxpayers who do not wish to participate in the program are still allowed to enjoy their rights and are also required to meet their various obligations in accordance with all of the applicable laws and regulations for the taxation sector. Furthermore, The Directorate General has also asserted that two measures relating to the reporting of any assets which have not yet been incorporated into the SPPT for Income Tax can be considered as an alternative to the tax-amnesty program.
 
The first measure relates to any SPPT which has already been filed with the Directorate General. In such cases, taxpayers may file a revision to the SPPT in question. Meanwhile, the second measure relates to any SPPT which has yet to be filed with the Directorate General. In such cases, taxpayers may incorporate the abovementioned assets into their SPPT and then file them with the Directorate General.
 
By way of example, Mr. Dwijugeasteadi asserted that any assets obtained prior to the 2011 fiscal year could be incorporated into the revision of any SPPT for the 2011 fiscal year, while an SPPT valid from the 2012 fiscal year onwards should be formulated according to the revised-SPPT for the 2011 fiscal year. Moreover, the recently issued Director General Regulation also stipulates that the value of any assets in hard cash or its equivalent must be reported in an Asset Statement Letter (surat pernyataan harta) and is to be determined by each respective taxpayer. Moreover, any such letter will not become subject to correction or be assessed by the Directorate General.
 
Finally, the newly issued regulations also simplify the form-filling process for taxpayers. Mr. Dwijugeasteadi has stated that the amount of assets and liabilities reported under any Asset Statement Letter no longer need to be specified on a per-item basis. Instead, only the total amount of assets and liabilities need to be stated in any Asset Statement Letter.

(For more information on Directorate General of Tax Regulation No. No. PER-11/PJ/2016, see ILB No. 2951)
 
(rfs/sp)