Sunset Policy Season II
In expanding the fiscal space in the State Budget, the government of Jokowi is very concern about the increase in State Revenue, mainly arise from the Tax Revenue. Jokowi Government announced a high target in the State Budget amendment for fiscal year 2015 amounting to IDR 1,295 trillion.
Directorate General of Taxation (DGT) recorded tax revenue reached IDR 198.23 trillion in the first quarter of 2015 (compared with the first quarter of 2014 which reached IDR 264.4 trillion). From the tax revenue target which stated in accordance with APBN-P 2015 is IDR 1,295 trillion, thus the realization of tax revenue has just reached of 15.32 percent.
One of the efforts to achieve the tax revenue target, the DGT in the remaining months of 2015, plans to issue a policy package in the form of regulations related to the proposed Sunset Policy Season II (Reinventing Policy) in the framework of coaching the taxpayer. Recently, the plans have been accommodated in the Minister of Finance Regulation No. PMK No. 91/PMK.03/2015 which has just been issued on 30 April 2015 and has just been promulgated on 4 May 2015.
In previous Minister of Finance Regulation (PMK) No. 29/PMK.03/2015 dated 13 February 2015 and effective since its promulgation, has issued regulations in the form of administrative sanction in the form of interest as per Article 19 paragraph (1) of the KUP Law for Taxpayers who pay tax arrears examination results before 1 January 2016 will be given the waiver of administrative sanctions such as interest penalty as per Article 19 (1) KUP, provided that the relevant tax payer pay the entire principal arrears in 2015.
Based on socialization conducted by the DGT and last socialization on 5 May 2015 where we attend in the panel discussion organized by IAI Tax Compartment and attended by the DGT, representatives of House of Representatives, practitioners, academics, businessman, etc., the Minister of Finance has issued its regulation No. PMK No. 91/PMK.03/2015 issued on 30 April 2015 and promulgated on 4 May 2015 concerning the reduction or waiver of administration sanction on late in submission of the tax return, amendment of the tax return and late in payment or remittance of tax. The reduction or waiver of administration of sanction represent out of administrative sanctions of Article 19 (1) KUP as explained above, which can be summarized as follows:
Granting the removal of administrative sanctions as follows:
1. Article 7 of KUP Law (about the late submission of tax returns)
a. IDR 500,000 for the periodic VAT return;
b. IDR 100,000 for other periodic tax return;
c. IDR 1,000,000 for Corporate Income Tax Return;
d. IDR 100,000 for Individual Income Tax Return
2. Article 9 paragraph (2a) and (2b) KUP concerning late payments/remittance, which imposed penalties of 2% per month calculated from the due date of payment periodic tax return/submission of Income Tax Return up to the date of payment (in this case interest sanctions are imposed is indefinitely instead of the maximum 48%);
3. Article 8 paragraph (2) and (2a) of the KUP Law regarding delay penalties on SPT correction which imposed penalties of 2% per month calculated from the due date of payment period tax return/submission of Income Tax Return up to the date of payment (in this case interest sanctions are imposed is indefinitely instead of the maximum 48%);
4. Article 14 paragraph 4 of KUP Law (Taxable Entrepreneur which does not make Tax Invoice) where the sanction imposed was 2% of the Basic of Tax Charge (DPP). Is not clear whether the waiver of sanctions is also given to the VAT’able Entrepreneur (PKP) who late in issuing the Tax Invoice.
Active collection action considering to Taxpayer who requesting reduction/waiver of the above sanctions will be suspended/deferred its collection until a decision regarding approval of the reduction/elimination was issued by the DGT.
The scope for the waiver of administrative sanctions provided for the taxpayers who were late in submitting tax returns, taxpayers who late in making payments/remittance and Taxpayer who will submit amendment of tax returns, which include:
1. The Annual Tax Return for Tax Year 2014 and earlier; and/or
2. The Monthly Income Tax Returns and VAT Returns for the tax period in December 2014 and earlier
Which will be implemented in 2015
Based on the above, the granting of waiver or reduction of administration sanction will provided only for the taxpayer who submit the amendment of its tax returns and submit the late tax returns for fiscal years 2014 and earlier as well as making the payment in fiscal year 2015 and it is not clear whether the same reduction or waiver can be provided for the taxpayer who already submitted the application and still waiting for the decision from the DGT, or amend its tax returns in previous years, however the Tax Collection Notice just issued in fiscal year 2015, and other related cases.
Requirements for administrative sanctions removal procedure are as follows:
1. A request for a Tax Collection Notice (STP);
2. Proposed in writing in Indonesian;
3. Signed by the taxpayer for Individual / representative for Corporate Taxpayer;
4. Submitted to the Tax Office where the taxpayer is registered/confirmed as VAT’able Entrepreneur by enclosing:
a. Statement Letter on stamp duty that the late submission/ amendment of the tax return and/or late payment occurred due to an oversight or not because his/her mistake;
b. Copy of Tax Returns (SPT), receipted copy of the tax return, and slip payments and Tax Collection Notices (STP)
Except for the above conditions, the request for waiver or reduction on administration sanction also can be granted as long as the administration sanction which stated in the Tax Collection Notice has not paid yet or has paid but partially by the taxpayer. In this case, also is not clear whether the taxpayer can get the refund should the Tax Collection Notice have been fully paid but the taxpayer request for the waiver or reduction of administration sanction.
Amendment of tax return in sunset policy Season II is mandatory (even though still has many protest from some circles) and not voluntary like cases of Sunset Policy Season I in year 2008. However, we got a verbal explanation from the DGT representative, whether the mandatory can be defined as follow:
1. Taxpayer who is not actually report correctly required to amend its tax return;
2. Taxpayer who get a warning/ suggestion letter from the Tax Office based on DGT’s internal data required to submit amendment of the tax return (it is not clear whether the taxpayer still has rights to submit a response to the Tax Office suggestion letter, since perhaps the DGT data is not entirely true and accurate)
3. However, for the Taxpayer who was already fully reported its Tax Returns correctly and did not get the suggestion letter to amend its tax return from the Tax Office, thus the taxpayer does not need to amend its tax return, however the DGT may conduct an audit to verify the correctness of the tax return.
It is not clearly stated whether the DGT will carry out an audit or not for the taxpayer who has amended its tax returns likewise Sunset Policy Season I in 2008, which the DGT guarantee that it will not conduct an audit for the taxpayer who submit the amendment of the tax return. For more details, the publication of this new MoF Regulation (PMK) in Bahasa can be downloaded in http://www.ortax.org/ortax/?mod=aturan&page=show&id=15766.
In witness whereof this updated information about the development of the Sunset Policy Season II, which in the long run the Government will make amendment pertaining the Tax Law such as amendment of General Provisions and Procedures of Taxation Law (KUP Law) plan will be conducted in year 2015, where one of the issue will be mentioned about the legal basis for the Tax Amnesty. In addition, Law related to the Income Tax; Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPn BM); Land and Building Tax as well as Stamp Duty also will be amended in the upcoming years.
Note: This article is a personal opinion and is not intended for making decision.