Generating Wealth Post-Amnesty in Indonesia
Tax Amnesty has ended. Entrepreneurs and investors can look forward to an era of transparency so as to focus on their businesses to generate wealth in Indonesia.
Was the result of Tax Amnesty as the Indonesian Tax Department expected?
30.044.103 (more than 30 million) taxpayers participated (individuals and entities - companies, foundations, firms, CVs, partnerships, joint operations) representing approximately 29,4% of the total number of taxpayers (existing and new). The Indonesian Finance Minister, Sri Mulyani, stated that this proportion was expected to be much higher.
The program only achieved its target for the Declaration of Funds.
What will the Indonesian Tax Department do now?
The Tax Department will be strict in enforcing tax rules and will actively pursue non-participants in Tax Amnesty.
The Tax Department utilizes software applications such as Akasia, Akrab, Facebook, LinkedIn, Instagram, programs and requirements such as AEOI Country-by-Country Report to access bank data and asset information. This data is in turn used to model taxpayers' behavior in terms of income and spending patterns, to estimate the tax amount in arrears.
The Tax Amnesty Law states that the Tax Department will begin to make inquiries to taxpayers on their assets 1 (one) month after the Tax Amnesty program closes, which is 1 May 2017. We expect that many letters and emails will be sent to non-participants in Tax Amnesty.
The Tax Amnesty Law also states that participants in the program, who have declared owning assets in the name of a nominee, have until 31 December 2017 to tidy up their tax statements. This is done by transferring the title / ownership / assignment of the declared assets to the names of the rightful owners. Taxpayers should report their post-Amnesty assets completely in their 2017 Annual Tax Report due on 31 March 2018 for individuals and 30 April 2018 for entities.
How will tax transparency be enforced?
Approweb, Applikasi Profil Berbasis Web (Online Profiling Application) is being applied for all resident taxpayers. It compiles data from various sources to construct taxpayers profiles, containing information such as previous tax reports; projected incomes; spending trends; share / vehicle / land ownership; public and municipal services data; business licenses (SIUP, TDP, izin lokasi, izin usaha pertambangan / perkebunan, hotel licenses, etc.); professional licenses (accountants, advocates, valuers, doctors, etc.), among others.Discrepancies will be investigated.
Approweb will be utilized in many regular business functions, such as property and share transactions. For example, although there are currently no regulations in place to block property transactions, our clients have been queried as to why the transacted property is not listed in the property owner’s Tax Declarations.
Another example is within the Ministry of Law and Human Rights (MLHR) Law Number 1 Year 2016. The law amended several company incorporation rules stated in MLHR Law Number 4 Year 2014, such as requiring the Notary to keep a copy and therefore implicitly be responsible for the existence of such documents as taxpayer ID (NPWP) and receipts issued by the Tax Department for tax report submissions of the company shareholders. This requirement is for ANY change to the Company bylaws, such as, amendments to the Articles of Association and changes to company management / shareholders.
We advise that continued full disclosure of income is the most prudent path for individual and corporate taxpayers.
So how to generate wealth in Indonesia?
Putranto Alliance provides various agile services, including legal and business advisory; company and representative office establishment; tax legitimate ownership of limited liability company shares; application for location permits (ijin lokasi) for large land parcels; among others. For business and individuals, we provide auction house Services for asset disposal, and bridge financing for paid up capital in PMA Limited Liability Companies.
How should I operate my business in a manner that reduces risk?
Putranto Alliance also offers a wide range of services to help your business in every phase of its operation. Please review the matrix below showing a sampling of our services to get an idea how we are able to contribute to your accumulation of wealth in Indonesia. We perform these functions internally, we can help you create a tailored solution as well as develop a roadmap for your investment in Indonesia. For other specific needs, we invite you to visit our office for consultation.
About Putranto Alliance
Putranto Alliance is a synergy of professional services companies, carefully selected to provide comprehensive tailored solutions to meet your legal and corporate requirements. Our experience and expertise come from understanding and applying corporate, finance, accounting and tax laws and regulations, leveraging our strong business network to improve business outcomes and results for you. Navigating Indonesia’s myriad regulations can be confusing, and we are here to listen, guide, advise, clarify and assure – so you can focus on growing your business.
This article is not meant to provide standalone legal and tax advice. Specific situations may vary among individuals and corporations.
Prudenta - Tax Amnesty | Tax Amnesty Submission
Prudenta - Tax Amnesty | Tax Amnesty Seminar
Prudenta - Corporate Services | Local Incorporation
Prudenta - Corporate Services | Accounting Services
Prudenta - Corporate Services | Tax Planning and Reporting
Prudenta - Corporate Services | Documents Services