Tax-Law Regime to Be Reformed after Completion of Tax-Amnesty Program

Indonesian Version

 

 Ricky Pratomo, Fitri Novia Heriani

 

 
Following the huge success of the tax-amnesty program’s first period, the Ministry of Finance (Ministry) is now preparing to reform the regulation and administration of the current tax-law regime. Such reformation is being undertaken in a bid to improve tax enforcement after the tax-amnesty period draws to a close.
 
Commenting on this matter, John Hutagaol, Director of International Taxation at the Directorate General of Tax (Directorate General), stated that the revisions involved the enhancement of various tax sanctions which fall under the following five tax-regulation frameworks: Law No. 36 of 2008 on Income Tax, Law No. 13 of 1985 on Stamp Duty, Law No. 42 of 2009 on Value-Added Tax, Law No. 12 of 1994 on Land-and-Building Tax and Law No. 16 of 2009 on General Tax-Provisions.
 
“These five Laws will be deliberated after the tax-amnesty program has ended. In the meantime, the House of Representatives is currently awaiting discussion of the amendment of the Law on General Tax-Provisions,” Hutagaol added.
 
Mr. Hutagaol also asserted that the Directorate General will, in addition, be reforming the tax-administration sector. To date, the Directorate General has established the Directorate of Intelligence and the Directorate of International Taxation, as well as preparing amendments to various tax-related regulations, such as the Banking Law.
 
The Tax Amnesty Rolls on
 
The first period of the tax amnesty managed to successfully raise a remarkable IDR 92.7 trillion in ransom fees, a new tax-amnesty world record. The Ministry is therefore optimistic that the ultimate tax-amnesty target of IDR 165 trillion will have been achieved by the time that the program ends in April of 2017. The tax-amnesty’s second period got underway at the beginning of October 2016, and ransom fees tariffs now vary from 3% to 6%.
 
Commenting upon the implementation of the tax amnesty’s second period, Irman A. Zahiruddin, Head of the Permanent Committee for Banking, State-Owned Enterprises and Regionally Owned Enterprises at the Indonesian Chamber of Commerce (Kadin), reminded the Directorate General to maintain its focus upon repatriation, as opposed to micro-, small- and medium-scale enterprises (UMKM), as he believes that the chances for repatriation remain high.
 
Mr. Zahiruddin also asserted the importance of publicizing and disseminating information relating to the amnesty in order to achieve success during the tax-amnesty program’s second period. Zahiruddin believes that the success of the first period of the tax-amnesty program was primarily down to a comprehensive dissemination of information relating to the tax amnesty. Zahiruddin is also urging the government to swiftly clarify its tax policy upon the tax-amnesty program ending.
 
“The government should inform the public what exactly will happen on 1 April 2017 [when the tax-amnesty program ends]. The government should be firm,” Zahiruddin stressed.
 
(For more information on Tax Amnesty Program, see ILB No. 2973, No. 2971, No. 2958, 2957, 2951, 2949, 2947, 2932, 2928, 2922, 2912 and ILD No. 475, 462)
 
(rfs/sp)