Hot Subject 2016 Sept - Tax Amnesty

[Smallworld]

Try to keep in mind it is a pack of thieves you are discussing. They are not tax payers, but rather tax evaders. The government's ace in the hole are the pending changes in the international movement and holding of assets which will make it difficult to hide income, ill gotten or otherwise, by spiriting assets out of the country. One way or another, burning is in order.

Do you prefer to be a thief or to pay money to thieves?

 

[mauricio]

Try to keep in mind it is a pack of thieves you are discussing. They are not tax payers, but rather tax evaders. The government's ace in the hole are the pending changes in the international movement and holding of assets which will make it difficult to hide income, ill gotten or otherwise, by spiriting assets out of the country. One way or another, burning is in order.

Not all are tax evaders, most are not, so it’s not fair to call them “thieves”. For example, some have had kids studying overseas, so it was fund remitted from their personal savings in Indonesia. It was not income or proceeds earned from outside Indonesia. Indeed, some bought houses for their kids to stay while they study. It was still money from their pocket (tax duly paid), not undeclared income.

 

[waarmstrong]

Not all are tax evaders, most are not, so it’s not fair to call them “thieves”. For example, some have had kids studying overseas, so it was fund remitted from their personal savings in Indonesia. It was not income or proceeds earned from outside Indonesia. Indeed, some bought houses for their kids to stay while they study. It was still money from their pocket (tax duly paid), not undeclared income.

Sorry, but your view does not comport with reality. Thus the term "amnesty" aimed at Indonesians hiding income abroad to evade taxation. The amounts involved are huge. Money openly transferred to Singapore and elsewhere for the education of offspring is a pittance by comparison.

 

[Davita]

Sorry, but your view does not comport with reality. Thus the term "amnesty" aimed at Indonesians hiding income abroad to evade taxation. The amounts involved are huge. Money openly transferred to Singapore and elsewhere for the education of offspring is a pittance by comparison.

I agree with Waarmie that the amnesty program is not intended for those with genuine savings in a foreign bank account...it would be ridiculous to conceive this program to capture that drop in the ocean. The new Finance Minister (Sri Mulyani) has said to the banks and institutions to not bother her unless they find remittances in the trillions of IDR.

Typically, however, the legislators haven't drafted a bill that is totally understood and needs amendments at best, or a total flip-flop at worst.

It is an incentive to remit assets, producing income which has not been declared, as the owners were afraid that the origin of the asset itself would be investigated. IMO if the RI gov't officials can be trusted to not interfere this incentive (carrot) will be a huge benefit to the Indonesian economy. BUT...it should be strongly specified that non-compliance will be a dis-incentive (stick) by a certain date, when investigation of the offshore assets WILL be pursued and, by that time, the offshore Financial Institutions will be obliged to comply.

I believe the days of hiding money for tax-evasion is in decline. I constantly receive documents from Global Financial Institutions requesting my tax-residency status.

 

[mauricio]

The Indonesian government should not have used the word “amnesty” as anyone who avails of it are assumed to be guilty. It will be like stamping “Tax Evader” on their forehead, and they will be watched forever by tax officials as there’s a saying “once a thief, always a thief”. So I feel sorry for those who took up the “amnesty” but were actually not tax evader, however small the number. Maybe renaming the “Tax Amnesty” with something like “Sunshine Policy” would be better (“Sunset Policy” already used before).

 

[Imagem]

My friend is currently at a meeting at Novotel in Lombok, which she was summoned to. She has a company here. There are locals and bule at the meeting and they have been told that taxes are due every year on all assets, including, land, buildings, cars, jewellery. They have been told they have to pay by the end of 2015. If they go to the tax office by end of September will pay 2% if not it will go up every month till 5%. Before she went to the meeting I said I thought it was all about getting back money from tax havens overseas but the content of this meeting seems not. Does anyone else have more feedback about this? Thanks

 

[Davita]

My friend is currently at a meeting at Novotel in Lombok, which she was summoned to. She has a company here. There are locals and bule at the meeting and they have been told that taxes are due every year on all assets, including, land, buildings, cars, jewellery. They have been told they have to pay by the end of 2015. If they go to the tax office by end of September will pay 2% if not it will go up every month till 5%. Before she went to the meeting I said I thought it was all about getting back money from tax havens overseas but the content of this meeting seems not. Does anyone else have more feedback about this? Thanks

I think most members would be delighted if your friend could give us a break down of what was determined at the meeting...and if there will be any legislative changes made.
It has always been that residents (Citizens and Foreigners) if so qualified, need to file taxes and declare income and assets. Assets are not taxed.... only the income derived from them...the reason Indonesia requires asset disclosure is so Tax Authorities can investigate, if very little taxes are declared, but valuable assets are disclosed. N.B. This could be an issue for those using Indonesian Citizens as nominee's for Hak Milik property.

Property taxes are deemed from those owning property and helps pay for the maintenance of the local area, parks, ditches, road cleaning, tree pruning...all those things that are hardly ever done!!! and salaries of the civil servants that administer this doing nothing.
Car taxes are paid to upkeep the road system and help pay the police who administer licencing etc...although IMO that duty should be carried out by civil servants and the police should get back to maintaining Law and Order.
Tax on assets such as jewelry etc. are only applied if sold for profit.

The Tax Amnesty program is different and is intended to allow those who have kept money off-shore, and not declared the income generated, to bring back by that account by applying a small penalty initially and, if not repatriated in a reasonable time, the penalty will increase. It clearly signals also that after the amnesty is concluded, assuming it doesn't get the results expected, the Indonesian Tax Authorities will go after those moneys held offshore in a much more rigorous manner and identify the source to see if a criminal charge can be applied....at least that's what I'd do.

There isn't anything wrong with those who wish to keep an off-shore account but declare income from that account, on their SPT, to the RI Tax authorities.

 

[dafluff]

So I did some digging around, and found out the following information (all of which is contained in UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 11 TAHUN 2016 TENTANG PENGAMPUNAN PAJAK)

Who can participate
All persons and Indonesian legal entities. Including foreigners and PT PMA. The only exceptions are those who are currently under investigation *and* their file is already accepted by prosecutors.

What is taxed.
They have made it really simple. Retrieve your SPT 2015, and see the section on where you reported your assets. Now find out what your actual assets are. Find the difference and this is your amount to be taxed via amnesty. You may subtract liabilities, up to 50% of the values of assets if you are a person, or 75% if you are a company. You may want to separate this into two categories, namely assets in Indonesia and outside of Indonesia.

Tax rate.
There are 3 different rate categories, and are graded by when you report:
Assets already in Indonesia are taxed at 2% if you report within the first 3 months of amnesty (the law was effective 18 July 2016), 3% if you report after the first 3 months, but before 31 Dec 2016, 5% if you report between 1 January 2017 to 31 March 2017.
Assets outside of Indonesia are taxed at 4% if you report within the first 3 months of amnesty, 6% if you report after the first 3 months, but before 31 Dec 2016, 10% if you report between 1 January 2017 to 31 March 2017.
Assets abroad that is repatriated to Indonesia receive the same rate as assets in Indonesia (ie. 2%, 3% and 5% as above), but have to be invested for at least 3 years in approved vehicles.

Benefits
The law spells out 6 benefits of obtaining amnesty
1) Forgiveness on all outstanding taxes that should have been paid.
2) Forgiveness on all outstanding penalties that should have been paid.
3) No investigation or prosecution on any reported items.
4) Stopping of all current investigations, provided they have not progressed beyond the investigation stage (ie. hasn't been sent to prosecutors, or further)
5) Guarantee of privacy. Tax amnesty data may not be used for any investigation or prosecution, including criminal investigations.
6) Registering assets not currently in your name will be exempt from PPh.

 

[Banana72]

OK I have no assets in Indonesia. I assume the banks already paying my 20% interests income. The company already pays for my income tax through their NPWP. I have no vehicles/property under my name. What do I have to report?

 

[Bad_azz]

Aha! that lightbulb moment...
" 4) Stopping of all current investigations, provided they have not progressed beyond the investigation stage (ie. hasn't been sent to prosecutors, or further)
5) Guarantee of privacy. Tax amnesty data may not be used for any investigation or prosecution, including criminal investigations."


So maybe, just maybe, there is someone very high up the political ladder with a vested interest in this... and wants some legislation in place before any investigation gets its teeth into him/her

 

[Bad_azz]

... & to be honest it will likely be the only thing in Indonesia with any degree of privacy whatsoever lol

 

[Jamu]

OK I have no assets in Indonesia. I assume the banks already paying my 20% interests income. The company already pays for my income tax through their NPWP. I have no vehicles/property under my name. What do I have to report?

If you have any, income from assets held outside Indonesia (or any capital gain from the sale of assets), on which you will be liable for income tax in Indonesia.

 

[dafluff]

Aha! that lightbulb moment...
" 4) Stopping of all current investigations, provided they have not progressed beyond the investigation stage (ie. hasn't been sent to prosecutors, or further)
5) Guarantee of privacy. Tax amnesty data may not be used for any investigation or prosecution, including criminal investigations."


So maybe, just maybe, there is someone very high up the political ladder with a vested interest in this... and wants some legislation in place before any investigation gets its teeth into him/her

This is pretty much the reason my cynical side sees. They are doing this so they can legally launder all their money before 2018 when common reporting standards kick in and there will be very few places in the world you can hide money.

 

[Davita]

This is pretty much the reason my cynical side sees. They are doing this so they can legally launder all their money before 2018 when common reporting standards kick in and there will be very few places in the world you can hide money.

I agree that is one of the components to this amnesty and what I alluded in my post #55.
However, it's also a good idea for the economy of Indonesia...they had to reduce this year's budget already because expenditure exceeded income ...what better way to get more income NOW by offering a carrot.....and a stick later if non-compliant.
Even when the reporting mechanism becomes transparent it will still require much investigation/court time to actually recover a dime.
Jokowi is eager to get his infrastructure plan going but finance is not yet available...when this amnesty is understood, and investment returns, he will be seen as Indonesian's saviour....and the populace will forgive/forget those that stole the money in the first place.

 

[Bad_azz]

I agree that is one of the components to this amnesty and what I alluded in my post #55.
However, it's also a good idea for the economy of Indonesia...they had to reduce this year's budget already because expenditure exceeded income ...what better way to get more income NOW by offering a carrot.....and a stick later if non-compliant.
Even when the reporting mechanism becomes transparent it will still require much investigation/court time to actually recover a dime.
Jokowi is eager to get his infrastructure plan going but finance is not yet available...when this amnesty is understood, and investment returns, he will be seen as Indonesian's saviour....and the populace will forgive/forget those that stole the money in the first place.

Ah, ok... sorry- I tend to not read big lumpy posts lol...I'm too lazy

 

[Davita]

Ah, ok... sorry- I tend to not read big lumpy posts lol...I'm too lazy

I don't know what you are sorry about. If you are too lazy to read anything constructive containing information....that's your prerogative.

I hear that Facebook and Twitter are probably more suited to casual meaningless remarks....but I really don't know as I'm not a member of either.

 

[Bad_azz]

I don't know what you are sorry about. If you are too lazy to read anything constructive containing information....that's your prerogative.

I hear that Facebook and Twitter are probably more suited to casual meaningless remarks....but I really don't know as I'm not a member of either.

No need to take it personally Davita.
Some things bore me some things don't simple as that.

 

[Davita]

No need to take it personally Davita.
Some things bore me some things don't simple as that.

I would not have bothered to respond personally but you did quote me.
If you just wished to tell the forum about yourself...no need to quote anyone...that's optional.

 

[waarmstrong]

This is pretty much the reason my cynical side sees. They are doing this so they can legally launder all their money before 2018 when common reporting standards kick in and there will be very few places in the world you can hide money.

Bingo!!!

Added later: I understand as Davita said earlier, that there is potential for the Indonesian economy to benefit, especially with the current projected deficit. But the early returns seem to suggest that the benefits will fall far short of expectations. Further, this one hit wonder sets a bad precedent by rewarding rather than prosecuting (I was going to say bastards, but that's too gender exclusive.) the assholes whose crimes have been a brake on the Indonesian economy for decades.

 

[Davita]

Bingo!!!

Added later: I understand as Davita said earlier, that there is potential for the Indonesian economy to benefit, especially with the current projected deficit. But the early returns seem to suggest that the benefits will fall far short of expectations. Further, this one hit wonder sets a bad precedent by rewarding rather than prosecuting (I was going to say bastards, but that's too gender exclusive.) the assholes whose crimes have been a brake on the Indonesian economy for decades.

I agree with you waarmie...it is a bad precedent but sometimes being pragmatic beats ideology.

What is surprising is the low return...as you say. I have a feeling that's because the Tax Amnesty Law still looks like a draft and many just don't trust the words and deeds. It's a pity the returned Finance Minister (Sri Mulyani) was not part of the original drafting as I suspect she would have written a better law or, at least, contributed a more profound input. She has already assumed command by instructing that any returns, for her secretariat to dispense, must be from hi-rollers or Companies, not small donations from frightened individuals.

If I were one of those (B's or A's) you mentioned above I'd be jumping to clean the money and avoid criminal process. That's why I earlier suggested that the 'stick' should be widely advertised as the alternative....if not compliant with this Amnesty all hell should be proclaimed and criminal procedures mandatory.