Indonesian Tax Amnesty Law

Jumat, 22 Juli 2016 | 13:27 WIB oleh Tiara Ika Winarni

After a long debate, Indonesian House of Representatives finally approved the Law No. 11 of 2016 on Tax Amnesty (Tax Amnesty Law) on Tuesday 28th June 2016, and signed by the President on 1st July 2016. Through the said law, Indonesian government will provide incentive in a form of amnesty to indebted tax and not being subject to administrative and criminal sanctions in taxation, by disclosing assets and pay redemption as stipulated in the Tax Amnesty Law.

According to Indonesian Minister of Finance, Bambang Brodjonegoro, the funds circulated overseas that belong to Indonesian citizens has reached the amount of more than IDR 11.400 trillion. Those numbers derived from accumulation or calculation of assets that belong to Indonesian wealthiest businessman who have distributed their money to overseas since 1970. Thus, by repeal the taxpayer debts (tax amnesty) with the hope that the taxpayers will conduct repatriation or return the funds distributed overseas to Indonesia, state revenues are expected to be increased. The resume of Tax Amnesty Law provisions will be explained below:

  1. Subject of Tax Amnesty

    According to Article 3 of Tax Amnesty Law, every taxpayer is entitled to tax amnesty. Taxpayers are required to disclose their assets in the statement letter. Excluded from the subject of tax amnesty are the taxpayers in conditions:

    1. In an investigation process and the investigation papers have been declared complete by the prosecutor;
    2. In a process of trial; or
    3. In a process of criminal sentence due to criminal acts in taxation. One thing that should be emphasized in this Law is not apply as a total amnesty (repeal all kinds of criminal acts), only the offences to taxation field that will be subject for amnesty.

  2. Object of Tax Amnesty

    Tax amnesty encompass the taxation duties until the last fiscal year which are unpaid or not fully paid by the taxpayers. Taxation duties as mentioned above are:

    1. Income tax;
    2. Value added tax or sales tax on luxury goods.

  3. Regulation on Tariff and Method of Redemption Calculation

    Redemption is the amount of money paid to the state treasury in order to obtain tax amnesty. There are several distribution on the amount of redemption tariff as follows:

    1. Domestic assets or overseas assets transferred to Indonesia (repatriation):
      • 2% for the first quarter period
      • 3% for the second quarter period
      • 5% for the third quarter period
    2. Overseas assets not transferred to Indonesia:
      • 4% for the first quarter period
      • 6% for the second quarter period
      • 10% for the third quarter period
    3. For the taxpayers with the turnover up to IDR 4,8 billion (Small and Medium Enterprises):
      • 0.5% for the disclosure of assets up to IDR 10 billion
      • 2% for the disclosure of assets more than IDR 10 billion


      (Taxpayers are required to attach the turnover statement letter)

  4. Regulation on Procedures of Statement Letter Submission, Reference Issuance, and Amnesty for Taxation Duties.

    In order to obtain the tax amnesty, taxpayers must submit the statement letter to the Minister of Finance. The statement letter must at least accommodate the information of taxpayer identity, assets, debts, net assets value, and redemption calculation. The statement letter submitted to the Directorate General of Taxation office where the taxpayer registered or other office appointed by the respective minister. Taxpayers who have submitted the statement letter will be given a receipt as a proof of acceptance. Furthermore, taxpayers will receive a reference that will facilitate them to obtain tax amnesty and other facilities as stipulated in the Article 11 of Tax Amnesty Law.

  5. Regulations on Investment Obligation Over Disclosed Assets and Reporting

    Taxpayers who asserted to redirect and invest their assets within Indonesia must proceed through the receiving banks appointed exclusively. Hereby the form of investments allowed for the taxpayers according to the law:

    1. Commercial paper of the State of Republic of Indonesia;
    2. Bond of state Owned Enterprises;
    3. Bond of government owned financial institution;
    4. Financial investment on receiving bank;
    5. Bond of private enterprises which the trading is being supervised by Financial Services Authority (OJK);
    6. Infrastructure investment through the cooperation between Indonesian government and the enterprises; or
    7. Investment in the goods sector pursuant to the priorities determined by the government; and/or
    8. Other form of lawful investments consistent with the laws.

    Investment forms as mentioned above carried out by the taxpayers for minimum 3 years in Indonesia.

  6. Regulation on Tax Treatment

    For the taxpayers that required to carry out book entry, the calculation or method according to the general provisions and taxation procedures is as follows:

    Recorded value = Net Assets Value in accordance with Statement Letter – Net Assets Value in accordance with the latest tax report.

    In addition for the retained earnings in the balance, the addition may not be amortized.

  7. Land, Buildings and Shares Must Undertake Transfer of Ownership

    The taxpayers who have received the reference letter of tax amnesty, which issued at the latest 10 days since the letter of statement and its enclosure received, must undertake transfer of rights over immovable assets of lands and buildings, and assets in a form of shares which have not carried out transfer of ownership. The said transfer of rights will be exempted from income tax if the transfer of ownership performed at the latest until 31 December 2017.

  8. Regulation on Treatment of Undisclosed Assets.

    In condition that the taxpayers have obtained the reference letter, then data and/or information of undisclosed assets to be found afterwards, therefore the said assets will be treated as an income addition received by the taxpayers. Thus, for the income addition will be subject to income tax according to the regulations in taxation in addition with the administrative sanction for 200% hike from the unpaid or insufficient payment of income tax. Also, it will be the subject for taxes and sanctions according to the regulations in taxation.

  9. Regulation on Lawsuit

    Every dispute arising from the implementation of Tax Amnesty Law must be settled through claim submitted to tax tribunal.

  10. Regulation on Data Confidentiality Guarantee

    Every data and information derived from the statement letter and its enclosure, administered by the Ministry of Finance or other parties related to the implementation of Tax Amnesty Law, shall not be subject to investigation and/or criminal prosecution to the respective taxpayers. Along with the assurance by the Indonesian government to protect the confidentiality of taxpayers’ data in order for continuity of tax amnesty implementation. 

  11. Regulation on Penal Provisions

    Each and everyone who violates the provision on data confidentiality of tax amnesty will be sentenced to prison for maximum 5 years. Claim for the crime as mentioned only executed based on the complaint submitted by the parties who have their confidentiality violated.

     

Further implementing regulation of the Tax Amnesty Law are as follows:

  1. Tax amnesty implementation;
  2. Appointment of receiving banks for transfer of assets;
  3. Investment procedures;
  4. Report submission for transfer of assets within the territory of Indonesia by investment;
  5. Appointment of authorized officials, which later to be regulated by minister regulation,  to exercise the Tax Amnesty Law provisions as follows:
    • Article 10 paragraph (4);
    • Article 10 paragraph (5);
    • Article 10 paragraph (6);
    • Article 11 paragraph (4);
    • Article 13 paragraph (1); and
    • Article 13 paragraph (2).