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CONSOLIDATION OF LAW OF THE REPUBLIC OF INDONESIA NUMBER 6 OF 1983 CONCERNING GENERAL PROVISIONS AND TAX PROCEDURES AS LASTLY AMENDED BY LAW NUMBER 16 OF 2000 CHAPTER I GENERAL PROVISIONS Article 1 For the purpose of this law, the meaning of: 1. Taxpayer is any individual or entity who or which, pursuant to the provisions in the tax law, is required to fulfill tax obligations, including withholding agent of certain taxes. 2. Entity is a group of people and or capital that forms a unity that either conducts business or not, including corporation, limited partnership, state or local-owned enterprise in whatever name and form, firma, kongsi, cooperative, pension fund, partnership, association, foundation, public organization, social and political organization, or any similar organization, institution, permanent establishment, and any other form of entity. 3. Firm is an individual or entity in whatever form which in the course of business or work produces product, imports product, exports product, conducts trade, utilizes intangible goods from outside the Customs Area, renders services, or utilizes services from outside the Customs Area. 4. Taxable Person for Value Added Tax (VAT) purposes is a firm referred to in point 3 (three) supplying Taxable Goods and or rendering Taxable Services as stipulated on the VAT Law of 1984 and its amendment except for Small-sized firm the definition of which is set by a decree of the Minister of Finance, who does not elect to be confirmed as Taxable Person for VAT Purposes. 5. Taxpayer Identity Number is a number issued to a Taxpayer as means of taxation administration which is used as a personal identity or Taxpayer identity in conducting his taxation rights and obligations. 6. Taxable Period is equal to one calendar month or any other period that does not exceed 3 (three) calendar months as stipulated by a decree of the Minister of Finance. 7. Taxable Year is a calendar year unless a Taxpayer adopts an accounting year, which is different from the calendar year. 8. Fraction of a Taxable Year is part of one Taxable Year period. 9. Tax payable is tax, which must be paid at a time, within a Taxable Period, a Taxable Year, or a Fraction of a Taxable Year in accordance with the provisions of the tax laws. 10. Tax Return is a document used by a Taxpayer to report the calculation and or payment of taxes, taxable object and or non-taxable object and or assets and obligations pursuant to the provisions of tax laws. 11. Periodic Tax Return is a Tax Return for a particular Taxable Period. 12. Annual Tax Return is a Tax Return for a particular Taxable Year or Fraction of a Taxable Year. 13. Tax Payment Slip is a document used by a Taxpayer to pay or remit tax payable to the State Treasury through post office and or state-owned bank or local-owned bank or such other place of payment as may be stipulated by a decree of the Minister of Finance. 14. Notice of Tax Assessment is a notice of assessment, which can be Notice of Tax Underpayment Assessment, Notice of an Additional Tax Underpayment Assessment, Notice of Tax Overpayment Assessment, or Notice of Nil Tax Assessment. 15. Notice of Tax Underpayment Assessment is a notice of tax assessment that specifies a principle amount of tax payable, amount of tax credit, a principle amount of underpayment tax payable, amount of administrative penalties, and total of tax indebtedness. 16. Notice of an Additional Tax Underpayment Assessment is a notice of tax assessment that specifies an additional amount of tax payable over previously issued tax assessment. 17. Notice of Tax Overpayment Assessment is a notice of tax assessment that specifies an amount of tax overpayment as a result of higher taxes credit than the tax payable or which should not have been payable. 18. Notice of Nil Tax Assessment is a notice of tax assessment that specifies the principle amount of tax payable is as much as the amount of tax credit or there is no tax payable and no tax credit. 19. Notice of Tax Collection is a notice for the imposition and collection of tax and or administrative penalties in the form of interest and or fines. 20. Coerce Warrant is an order to pay tax payable and tax collection expenses. 21. Tax Credit for VAT Purposes is creditable Input Taxes minus pre-audit refund of overpayment creditable VAT or minus compensated VAT, which may be deducted from the tax payable. 22. Tax Credit for Income Tax purposes is Income Tax paid by the Taxpayer himself plus the principle amount
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Transcript of kup-english1.pdf
CONSOLIDATION OF LAW OF THE REPUBLIC OF INDONESIA NUMBER 6 OF 1983
CONCERNING GENERAL PROVISIONS AND TAX PROCEDURES
AS LASTLY AMENDED BY LAW NUMBER 16 OF 2000
CHAPTER I GENERAL PROVISIONS
Article 1
For the purpose of this law, the meaning of: 1. Taxpayer is any individual or entity who or which, pursuant to the provisions in the tax law, is required to
fulfill tax obligations, including withholding agent of certain taxes. 2. Entity is a group of people and or capital that forms a unity that either conducts business or not, including
corporation, limited partnership, state or local-owned enterprise in whatever name and form, firma, kongsi, cooperative, pension fund, partnership, association, foundation, public organization, social and political organization, or any similar organization, institution, permanent establishment, and any other form of entity.
3. Firm is an individual or entity in whatever form which in the course of business or work produces product, imports product, exports product, conducts trade, utilizes intangible goods from outside the Customs Area, renders services, or utilizes services from outside the Customs Area.
4. Taxable Person for Value Added Tax (VAT) purposes is a firm referred to in point 3 (three) supplying Taxable Goods and or rendering Taxable Services as stipulated on the VAT Law of 1984 and its amendment except for Small-sized firm the definition of which is set by a decree of the Minister of Finance, who does not elect to be confirmed as Taxable Person for VAT Purposes.
5. Taxpayer Identity Number is a number issued to a Taxpayer as means of taxation administration which is used as a personal identity or Taxpayer identity in conducting his taxation rights and obligations.
6. Taxable Period is equal to one calendar month or any other period that does not exceed 3 (three) calendar months as stipulated by a decree of the Minister of Finance.
7. Taxable Year is a calendar year unless a Taxpayer adopts an accounting year, which is different from the calendar year.
8. Fraction of a Taxable Year is part of one Taxable Year period. 9. Tax payable is tax, which must be paid at a time, within a Taxable Period, a Taxable Year, or a Fraction of a
Taxable Year in accordance with the provisions of the tax laws. 10. Tax Return is a document used by a Taxpayer to report the calculation and or payment of taxes, taxable
object and or non-taxable object and or assets and obligations pursuant to the provisions of tax laws. 11. Periodic Tax Return is a Tax Return for a particular Taxable Period. 12. Annual Tax Return is a Tax Return for a particular Taxable Year or Fraction of a Taxable Year. 13. Tax Payment Slip is a document used by a Taxpayer to pay or remit tax payable to the State Treasury
through post office and or state-owned bank or local-owned bank or such other place of payment as may be stipulated by a decree of the Minister of Finance.
14. Notice of Tax Assessment is a notice of assessment, which can be Notice of Tax Underpayment Assessment, Notice of an Additional Tax Underpayment Assessment, Notice of Tax Overpayment Assessment, or Notice of Nil Tax Assessment.
15. Notice of Tax Underpayment Assessment is a notice of tax assessment that specifies a principle amount of tax payable, amount of tax credit, a principle amount of underpayment tax payable, amount of administrative penalties, and total of tax indebtedness.
16. Notice of an Additional Tax Underpayment Assessment is a notice of tax assessment that specifies an additional amount of tax payable over previously issued tax assessment.
17. Notice of Tax Overpayment Assessment is a notice of tax assessment that specifies an amount of tax overpayment as a result of higher taxes credit than the tax payable or which should not have been payable.
18. Notice of Nil Tax Assessment is a notice of tax assessment that specifies the principle amount of tax payable is as much as the amount of tax credit or there is no tax payable and no tax credit.
19. Notice of Tax Collection is a notice for the imposition and collection of tax and or administrative penalties in the form of interest and or fines.
20. Coerce Warrant is an order to pay tax payable and tax collection expenses. 21. Tax Credit for VAT Purposes is creditable Input Taxes minus pre-audit refund of overpayment creditable
VAT or minus compensated VAT, which may be deducted from the tax payable. 22. Tax Credit for Income Tax purposes is Income Tax paid by the Taxpayer himself plus the principle amount
of tax payable as a result of unpaid or under paid Income Tax for effective year as specified in the Notice of Tax Collection plus any Income Tax withheld or collected, plus any tax on income paid or payable abroad, minus pre-audit refund of tax overpayment, which may be deducted from the tax payable.
23. Independent personal services are services performed by an individual having special expertise in order to earn income without any employment relationship.
24. Audit is a series of activities to find, collect, and process data and or other information in order to assess tax compliance and other objectives may necessary for complying with the provisions of the tax laws.
25. Tax Bearer is an individual or entity responsible for tax payment, including a representative who exercises the rights and fulfils the obligations of a Taxpayer pursuant to the provisions of the tax laws.
26. Bookkeeping is a process of orderly recording of financial data and information including assets, liabilities, equity, income and expenses, and acquisition cost and sales of goods or services resulting a financial report in the form of a balance sheet and profit and loss statement at the end of each Taxable Year.
27. Verification is a series of actions undertaken to evaluate completeness of information and attachment of a Tax Return, as well as the writing and calculation accuracy.
28. Investigation on tax crime is a series of activities conducted by Tax Investigator to find and collect evidence in order to uncover a criminal offence in the field of taxation and to find the suspect.
29. Notice of Tax Correction is a notice for correcting errors in writing, calculation, and or errors in the application of particular provisions of the tax laws found in a notice of tax assessment, Notice of Tax Collection, Decision on Objection, Decision on Deduction or Annulment of Administrative Penalties, Decision on Deduction or Cancellation of Inaccurate Tax Assessment, or Decision on Pre-audit Refund of Tax Overpayment.
30. Decision on Objection is a decision on an objection requested by Taxpayer in respect of a notice of tax assessment or withholding by a third party.
31. Decision on Appeal is a decision of a tax court on an appeal against Decision on Objection as requested by a Taxpayer.
32. Decision on Pre-audit Refund of Tax Overpayment is a notice used to determine the amount of a pre-audit refund for particular Taxpayers.
Elucidation of Article 1
Sufficiently clear
CHAPTER II
TAXPAYER IDENTIFICATION NUMBER, CONFIRMATION OF TAXABLE PERSON FOR VAT PURPOSES,
TAX RETURN, AND TAX PAYMENT PROCEDURES
Article 2
(1) Every Taxpayer shall be obliged to register at the office of the Directorate General of Taxes in the district where the Taxpayer resides or domiciles and deserves a Taxpayer Identification Number.
(2) Every Taxpayer as a firm which is taxable under the VAT Law of 1984 and its amendments shall be obliged to report its business activities to the office of the Directorate General of Taxes in the district where the Taxpayer resides or domiciles and where the business activity is carried out, to be confirmed as a Taxable Person for VAT Purposes.
(3) The Director General of Taxes may determine: a. an office for registration and or for reporting a business activity other than those referred to in paragraph
(1) and (2), b. for specific individual Taxpayers, a place of registration at the office of the Directorate General of Taxes
whose jurisdiction covering the location where the business is carried out, in addition to the registration obligation to the tax office referred to in paragraph (1).
(4) The Director General of Taxes may issue a Taxpayer Identification Number and or to confirm a firm as a Taxable Person for VAT Purposes ex-officio in case a Taxpayer or Taxable Person for VAT Purposes does not fulfill the obligations referred to in paragraph (1) and or paragraph (2).
(5) A period for registration and reporting and the procedures for registration and confirmation, referred to in paragraph (1), (2), (3), and (4), including the termination of Taxpayers Identification Number and or the annulment of Confirmation of Taxable Person for VAT Purposes is governed by a decree of Director General of Taxes.
Elucidation of Article 2
Paragraph (1)
Under the “self-assessment” system, every Taxpayer shall register by himself to the office of the Directorate General of Taxes to obtain a Taxpayer Identification Number.
The obligation to register is also applied for a married woman who is taxed individually and separately because she lives apart from her husband pursuant to a court order or the couple wish for the separation of income and wealth.
A Taxpayer Identification Number is an administrative instrument for identifying a Taxpayer; therefore to each Taxpayer shall only be issued single Identification Number. In addition, the Taxpayer Identification Number is also used to ensure orderliness of tax payment and of the tax administration supervision. A Taxpayer must declare his Taxpayer Identification Number related to tax documents. In case a Taxpayer fails to register and obtain a Taxpayer Identification Number he shall be subject to penalties in accordance with the tax law and regulations.
Paragraph (2)
Every Taxpayer qualified as Taxable Person according to the Value Added Tax (VAT) Law of 1984 and its amendment, must report his business activities to be confirmed as a Taxable Person for VAT Purposes.
Individual firm must report his business activities at the office of Directorate General of Taxes whose jurisdiction includes the Taxpayer’s residence and the location where the Taxpayer’s business activity is carried on. Whereas, an entity firm shall report its business activities at the office of the Directorate General of Taxes whose jurisdiction includes the domicile of the firm and the location where the activity of the business is carried on.
In case an individual or an entity whose business activities is located in several jurisdiction, he is obliged to report his activities to be confirmed as a Taxable Person for VAT Purposes not only at the tax office whose jurisdiction covers the Taxpayer’s residence or domicile but also at the tax office whose jurisdiction covers the location where the Taxpayer’s business activities is carried on.
The confirmation as a Taxable Person for VAT Purposes is useful not only for recognizing the correct identification of the Taxpayer but also for fulfilling rights and obligations for Value Added Tax and Sales Tax on Luxury Goods as well as in the supervision of tax administration.
A firm, which qualified as a Taxable Person for VAT Purposes but fails to report his business activities for confirmation as a Taxable Person for VAT Purposes shall be subject to penalties in accordance with the tax laws.
Paragraph (3)
For certain Taxpayers and Taxable Person for VAT Purposes, the Director General of Taxes may stipulate offices of the Directorate General of Taxes other than those referred to in paragraphs (1) and (2) as the place for reporting and obtaining a Taxpayer Identification Number and or confirmation as a Taxable Person for VAT Purposes.
In addition, for a certain individual firm Taxpayer, i.e. an individual Taxpayer whose business spread in several location such as an electronics retailer whose stores located in several shopping centers, he is obliged to report his business activities not only at the office of the Directorate General of Taxes whose jurisdiction includes the location where the business activities are conducted but also at the office of the Directorate General of Taxes whose jurisdiction includes the location where the Taxpayer is resided.
Paragraph (4)
In case a Taxpayer or Taxable Person for VAT Purposes fails to register and or report his business activities, he may be assigned a Taxpayer Identification Number and or confirmed as a Taxable Person for VAT Purposes by the Director General of Taxes ex-officio. The authority may be exercised if the Director General of Taxes possesses or obtains information indicating the individual or the entity in question is qualifying for Taxpayer Identification Number or the firm is qualifying to be confirmed as a Taxable Person for VAT Purposes.
Paragraph (5)
The obligation to register to obtain a Taxpayer Identification Number and to report a business to be confirmed as a Taxable Person for VAT Purposes is subject to time limit since this is related to the date of the taxes payable and the obligation to impose tax payable. Application for revoking a Taxpayer Identification Number and or to annulling the confirmation of Taxable Person for VAT Purposes shall be concluded within 12 (twelve) months since the date of submission of a complete application.
A regulation concerning the due date for registration and for reporting, the procedures for issuing or revoking a Taxpayer Identification Number and the confirmation as and annulment of a Taxable Person for VAT Purposes, shall be stipulated by a decree of the Director General of Taxes.
Article 3
(1) Every Taxpayer shall be obliged to complete its Tax Return in Indonesia Language, Latin alphabet, Arabic numerals, and Rupiah currency, and to sign and file it to the district tax office where the Taxpayer registers or confirms.
(1a) A Taxpayer which has obtained a permission from the Minister of Finance to use foreign language and non-Rupiah currency in its Tax Return, shall file its Tax Return in Indonesia Language and the currency other than Rupiah as permitted, as regulated by a decree of the Minister of Finance.
(2) A Taxpayer referred to in paragraph (1) and paragraph (1a) shall obtain a Tax Return form by himself, at the locations as specified by the Director General of Taxes.
(3) Due date for filing a Tax Return shall be: a. For a Periodic Tax Return, is 20 (twenty) days after the end of a Taxable Period;
b. For an Annual Tax Return, is 3 (three) months after the end of the Taxable Year. (4) On the request of a Taxpayer, the Director General of Taxes may extend the period for filing an Annual Tax
Return referred to in paragraph (3) subparagraph b for no longer than 6 (six) months. (5) The request referred to in paragraph (4) shall be in writing accompanied by a statement estimating the
amount of tax payable for a Taxable Year and proof of settlement of the tax payable. (5a) In case of failure to file any Tax Return on the due date referred to in paragraph (3) or in case of the Annual
Tax Return having extended filing period on the due date referred to in paragraph (4), Letter of Reprimand shall be issued.
(6) The form and content of the Tax Return and the required information and or documents attachment shall be stipulated by a decree of the Minister of Finance.
(7) A Tax Return shall be considered not filed if it is not signed referred to in paragraph (1), or not fully accompanied by the information and or documents referred to in paragraph (6).
(8) Certain Income Tax of Taxpayers as stipulated by a decree of the Minister of Finance may be exempted from the obligation referred to in paragraph (1).
Elucidation of Article 3
Paragraph (1)
For a Taxpayer for income tax purposes, a Tax Return is functioning as an instrument for reporting and accountability for the calculation of tax payable and for specifying: - payment of tax by the Taxpayer himself and or through withholding by another party in a Taxable Year or a
Fraction of Taxable Year; - income that is taxable object and or non-taxable object; - assets and liabilities; - payment by withholding agent on withholding of tax from other individuals or entities in a Taxable Period,
as stipulated by the applied tax laws.
For a Taxable Person for VAT Purposes, a Tax Return is functioning as an instrument for reporting and justifying for the calculation of Value Added Tax and Sales Tax on Luxury Goods actually payable and for specifying: - crediting of Input Tax against Output Tax; - paying by the Taxable Person for VAT Purposes itself and or withheld by another party in a Taxable
Period, as prescribed by the applied tax law regulation; - for a Withholding Agent, a Tax Return is functioning as an instrument for reporting and justifying for the tax,
which has been withheld, and remitted.
Completing a Tax Return means completing a Tax Return correctly, truthfully, and completely in accordance with prescribed manuals based on the provisions in the applied tax law and regulation.
Completing a Tax Return incorrectly which resulting in underpayment of tax will be subject to penalties in accordance with the tax laws.
Paragraph (1a)
Sufficiently clear.
Paragraph (2)
For the purpose of servicing and facilitating Taxpayers, Tax Return forms are made available at the offices of the Directorate General of Taxes, and in other places, which are readily accessible to Taxpayers as stipulated by the Director General of Taxes.
Paragraph (3)
This paragraph prescribes the due date for filing a Tax Return, which are considered adequate for a Taxpayer to make all preparations necessary connected with tax payment and closing his bookkeeping.
Certain Taxpayers as stipulated by a decree of the Minister of Finance are permitted to file one Periodic Tax Return for several Taxable Periods.
Paragraph (4)
If a Taxpayer, whether an individual or an entity, cannot prepare or complete an annual financial report or a balance sheet and an income statement within the time limit prescribed in paragraph (3) subparagraph b due to the scale of business activities and technical problems in completing the foregoing reports or so that he has difficulties to comply it within the time limit and he needs to extend the due date the Taxpayer may request an extension of the due date for filing an Annual Income Tax Return. The due date for filing an Annual Income Tax Return can be extended for no more than 6 (six) months.
Paragraph (5)
To prevent tax avoidance and or extension of the due date for payment of tax payable within a Taxable Year which is payable before the due date for filing an Annual Tax Return, it is necessary to enact a requirement resulting an administrative penalties in the form of interest for Taxpayer wishing to extend the due date for filing an Annual Income Tax Return.
For the requirement, the Taxpayer has to submit a written statement based on the tentative calculation estimating the tax payable for a Taxable Year, as an attachment of the request for the extension the due date for filing the Annual Income Tax Return.
Paragraph (5a)
In order to build up the character of Taxpayer, for a Taxpayer who fails to file a Tax Return on or before the due date, a Letter of Reprimand shall be issued.
Paragraph (6)
Considering the functions of a Tax Return as an instrument for every Taxpayer to report and justify for the calculation of his tax payable and the payment thereof, in order to standardize and simplify the completion and the administration, the form and contents of a Tax Return shall be stipulated by a decree of the Minister of Finance.
An Annual Income Tax Return at least should contain the amount of turnover, gross income, Taxable Income, tax payable, tax credits, and the amount of tax underpayment or overpayment, as well as assets and liabilities other than those used by business activities or independent personal services for individual Taxpayers.
Taxpayers who is required to maintain bookkeeping shall also be obliged to attach financial statement in the form of balance sheet and income statement, as well as other information required to calculate the amount of Taxable Income.
A Periodic Value Added Tax Return at least should includes the amount of the Tax Base, Output Tax, creditable Input Tax, and the amount of tax underpayment or overpayment.
Certain information and documents, among other things, power of attorney, declaration for separation of wealth and income between married couple, imports or exports document, and Tax Remittance Slips must be attached to the Tax Return.
Paragraph (7)
A signed Tax Return and its attachments constitute a single document that ensures the validity of the Tax Return. Therefore, if a Tax Return is filed without accompanied by a complete set of the required attachments, the Return will be deemed not filed.
Paragraph (8)
In principle, every Income Tax Taxpayer is obliged to file a Tax Return. For the efficiency or other considerations reasons, the Minister of Finance may exempt certain Income Tax Taxpayer from the obligation to file a Tax Return; for instance, an individual Taxpayer who receives or accrues income less than the personal exemptions, yet due to certain matters of interest is obliged to obtain Taxpayer Identification Number.
Article 4
(1) Taxpayers shall fill out, file, and sign a Tax Return correctly, completely, and clearly. (2) In case a Taxpayer is an entity, the Tax Return must be signed by any member of the management or board
of directors. (3) In case a Tax Return is completed and signed by other than the Taxpayer, a power of attorney must be
attached. (4) The Annual Income Tax Return of Taxpayers which are obliged to maintain bookkeeping must be
accompanied by financial statements in the form of balance sheet and income statement as well as other information required to calculate the amount of Taxable Income.
(5) Procedure and administration of Tax Return are regulated under a decree of the Minister of Finance. Elucidation of Article 4
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
The procedures of receiving and administering Tax Return include, among others, examination of completeness, issuance of a receipt, classification of overpayment, underpayment, or nil Tax Returns, recording procedure and the follow-up process, stipulated by a decree of the Minister of Finance.
Article 5
In certain cases, Director General of Taxes may appoint a place for filing Tax Return other than place referred to in paragraph (1) of Article 3. Elucidation of Article 5
Sufficiently clear
Article 6
(1) A Tax Return filed directly by a Taxpayer at the office of the Directorate General of Taxes shall be stamped with the date of receipt by an official designated for that purpose; while for an Annual Tax Return directly filed, an Annual Tax Return filing receipt shall be given.
(2) The filing of a Tax Return may be sent through registered mail of the post office or by such other means as regulated by a decree of the Director General of Taxes.
(3) The registered mail proof and date of dispatch of a Tax Return filed referred to in paragraph (2) as long as the Tax Return has been completed shall be considered as Annual Tax Return filing receipt and date of receipt.
Elucidation of Article 6
Paragraph (1)
Sufficiently clear.
Paragraph (2)
In order to improve services to Taxpayers, and in line with the advancement of information technology, alternative methods to enable Taxpayers to fulfill the obligation of filing Tax Returns other than by registered mail through the post office may be introduced. Such other methods shall be stipulated by a decree of the Director General of Taxes.
Paragraph (3)
The registered mail proof and date dispatch of a Tax Return filed through post office is deemed a receipt, provided that the Return concerned is complete, namely, in compliance with the requirements as stipulated in paragraphs (1), (1a), and (6) of Article 3.
Article 7
(1) In case a Tax Return is not filed within the time limit referred to in paragraph (3) of Article 3 or within the extended filing time limit referred to in paragraph (4) of Article 3, an administrative penalty of Rp50,000.00 (fifty thousand rupiahs) fine for a Periodic Tax Return and Rp100,000.00 (one hundred thousand rupiahs) fine for an Annual Tax Return shall be imposed.
(2) The administrative penalty in the form of fine referred to in paragraph (1) does not apply for certain Taxpayer stipulated by a decree of the Minister of Finance.
Elucidation of Article 7
Paragraph (1)
For the properly tax administration purposes and to persevere discipline of the Taxpayers, any Taxpayer fails to file his Tax Return before or on the due date will be subject to an administrative penalty in the form of Rp50,000.00 (fifty thousand rupiahs) fine for a Periodic Tax Return and Rp100,000.00 (one hundred thousand rupiahs) fine for an Annual Tax Return.
Paragraph (2)
The Minister of Finance has the authority to stipulate certain Taxpayers, such as a Non-Effective Taxpayer and an individual Taxpayer whose net income less than personal exemptions, to be exempted from administrative penalties as prescribed under paragraph (1).
Article 8
(1) A Taxpayer may amend a filed Tax Return voluntarily by submitting written statement, within two years from
the end of a Taxable Period, Fraction of a Taxable Year, or a Taxable Year, provided that the Director
General of Taxes has not commenced an audit. (2) In case a Taxpayer voluntarily amends a filed Tax Return which is resulting an increasing of the tax payable,
the Taxpayer shall be subject to an administrative penalty of 2% (two percent) interest per month, based on the underpaid tax, calculating from the due date for filing the Tax Return up to the date of payment the underpaid tax arising from the correction of the Tax Return.
(3) Even though an audit has been performed, provided an investigation has not been conducted on deficiencies committed by a Taxpayer referred to in Article 38, there shall be no investigation on the erroneous of the Taxpayer as long as the Taxpayer voluntarily discloses the erroneous and pays any underpaid tax along with an administrative penalty in the form of fine as much as twice the amount of the underpaid tax.
(4) Even though the period for correcting a Tax Return referred to in paragraph (1) has been elapsed, provided that the Director General of Taxes has not issued a notice of tax assessment, a Taxpayer may voluntarily disclose any deficiency in its filed Tax Return on a separate report, which causes:
a. increase of the tax payable; or b. decrease of the tax losses; or c. increase of the total assets; or d. increase of the total equity.
(5) Any underpaid tax arising from the disclosure of erroneous in completing a Tax Return referred to in paragraph (4) along with an administrative penalty in the form of increment of 50% (fifty percent) of the amount of tax underpaid shall be paid by the Taxpayer before submission of the above report.
(6) Even though the period for correcting a Tax Return referred to in paragraph (1) has been elapsed, provided that the Director General of Taxes has not conducted an audit, a Taxpayer may amend the filed Annual Income Tax Return within 3 (three) months after Decision on Objection or Decision on Appeal of previously years tax assessment when the Taxpayer accepts the decision stating the amount of fiscal loss is different from the amount in the tax assessment being objected or appealed.
Elucidation of Article 8
Paragraph (1)
Any error in a filed Tax Return done by a Taxpayer may be corrected by the Taxpayer voluntarily within 2 (two) years since the end of a Taxable Period, Fraction of a Taxable Year or a Taxable Year, provided that the Director General of Taxes has not commenced an audit. Commencing an audit means a date when an Audit Notification Letter is given to the Taxpayer, or his representative, or the person having authorization, or the official, or received by the adult member of the Taxpayer’s family.
Stipulation of a due date for the correction of a Tax Return is considered, on the one side, to provide sufficient time for a Taxpayer himself to review and amend a Tax Return that contains error and deficiencies and, on the other side, to give sufficient time for the Director General of Taxes to provide appropriate services and to supervise the correction filed by the Taxpayer before the elapsing of the due date for correcting a Tax Return.
Paragraph (2)
The voluntary correction of a Tax Return may results the calculation of tax payable and tax paid will be different from the original amount.
Any tax underpayment resulting from the above correction will be subject to an administrative penalty of 2% (two-percent) interest for each month.
The interest on the underpayment tax will be calculated since the due date for filing a Tax Return up to the payment of the underpayment due to the correction.
Paragraph (3)
Even though an audit to a Taxpayer has been carried out, so long as an investigation has not been commenced, he will not be investigated provided that he has both disclose his error and paid fully the tax actually payable plus an administrative penalty which is 2 (two) times the amount of tax underpaid.
If, however, an investigation has commenced and has been notified to the Public Prosecutor, the Taxpayer has no opportunity anymore for voluntary amendment.
Paragraph (4)
Although the 2 (two) year period stipulated under paragraph (1) has elapsed and the Director General of Taxes has not issued a notice of tax assessment, a Taxpayer who has or has not amended the Tax Return still has an opportunity to disclose error and or deficiencies in a filed Tax Return, either for an Annual Tax Return or a Periodic Tax Return of the past years or periods. The disclosure of error and or deficiencies in a Tax Return, however, is restricted to the following matters:
a. an increase in the tax payable; or b. a reduction in loss based on the tax provisions; or c. an increase in assets; or d. an increase in capital.
Paragraph (5)
Sufficiently clear.
Paragraph (6)
In case the Decision on Objection or Decision on Appeal resulting in a different fiscal loss from that of tax decision objected to or of Decision on Objection appealed, a Taxpayer still has an opportunity to correct the following year Annual Income Tax Return although the 2 (two) year-limit from the end of the Taxable Year or Fraction of a Taxable Year has elapsed, provided that the Director General has not initiated an audit of the Taxpayer concerning his Tax Return.
Example: a. Corporation ‘A’ files Annual Income Tax Return of year 2002 dated March 31, 2003, stating a fiscal loss
of Rp100,000,000.00 (without any overpayment).
An audit is conducted on the Tax Return, and on January 6, 2006, a notice of tax assessment stating a fiscal loss of Rp50,000,000.00 is issued.
The Taxpayer files an objection to the assessment on March 16, 2006. On November 10, 2006, the objection is concluded and the decision on objection is issued stipulating Corporation A’s fiscal loss for 2002 shall be Rp110,000,000.00.
Corporation ‘A’ files Annual Income Tax Return of year 2003 dated March 26, 2004, which states that: Net Income Rp 200.000.000,00 Loss carry over based on Annual Income Tax Return of year 2002
Rp 100.000.000,00
Taxable Income Rp 100.000.000,00 On November 21, 2006, the Annual Income Tax Return of 2003 may be corrected based on paragraph
(6) of Article 8, so that becomes: Net Income Rp 200.000.000,00 Loss based on the Objection Decision Rp 110.000.000,00 Taxable Income Rp 90.000.000,00
b. Corporation ‘B’ files Annual Income Tax Return of year 2002 dated March 31, 2003, stating a fiscal loss of Rp150,000,000.00 without any overpayment.
An audit on the Tax Return is conducted and on January 16, 2006, a notice of tax assessment stating a fiscal loss of Rp100,000,000.00 is issued.
The Taxpayer files an objection to the assessment on March 16, 2006.
On November 10, 2006, the decision on the objection is issued stating that the objection of the Taxpayer is disapproved.
The Taxpayer files an appeal on the decision on the objection on December 22, 2006. On May 18, 2007, a Decision on Appeal is issued stating the loss of the Taxpayer shall be Rp160,000,000.00.
Corporation ‘B’ files Annual Income Tax Return of year 2003 on March 26, 2004, which states that: Net Income Rp 250.000.000,00 Loss carry over based on Annual Income Tax Return of year 2002
Rp 150.000.000,00
Taxable Income Rp 100.000.000,00
On July 21, 2007, the Annual Income Tax Return of year 2003 is corrected based on paragraph (6) of Article 8, so that: Net Income Rp 250.000.000,00 Loss based on Decision on Objection Rp 160.000.000,00 Taxable Income Rp 90.000.000,00
Article 9
(1) The Minister of Finance shall stipulate due date for payment and remittance of tax payable at a time or in a Taxable Period for each type of tax, which shall not later than 15 (fifteen) days from the due date of a tax or the end of a Taxable Period.
(2) Any underpaid tax as calculated on an Annual Tax Return shall be fully paid before or on the 25th of the third month after the end of a Taxable Year or Fraction of a Taxable Year, before the Annual Tax Return is filed.
(2a) If a payment or remittance of tax payable referred to in paragraph (1), or paragraph (2) is made after the due date of the payment or remittance, an administrative penalty in the form of 2% (two percent) interest monthly, calculated from the due date of payment up to the date of payment where fraction of the month is treated as a 1 (one) full month shall be imposed.
(3) Any addition to the amount of tax payable arising from the issuance of a Notice of Tax Collection, Notice of Tax Underpayment Assessment, Notice of an Additional Tax Underpayment Assessment, Notice of Tax Correction, Decision on Objection, or Decision on Appeal, shall be paid within one month from the date of the issuance.
(4) On the request of a Taxpayer, the Director General of Taxes may approve the Taxpayer to install or postpone the payment of taxes, including underpayment referred to in paragraph (2) for not more than 12 (twelve) months, the procedures of which shall be stipulated by a decree of the Director General of Taxes.
Elucidation of Article 9
Paragraph (1)
The due date for payment and remittance tax payable for certain period or Taxable Period shall be stipulated by the Minister of Finance, which may not exceed 15 (fifteen) days from the date tax is payable or from the end of a Taxable Period. In case Taxpayer fail to pay or remit on or before the due date an administrative penalty in accordance with the prevailing provisions will be imposed.
Paragraph (2)
If an Annual Income Tax Return shows a tax underpaid, the underpaid tax shall be paid on or before the twenty-fifth of the third month from the end of the Taxable Year or Fraction of a Taxable Year and before the Annual Income Tax Return concerned is filed.
For instance, an Annual Income Tax Return must be filed on March 31; hence any tax underpayment must be paid on or before March 25, prior to filing the Annual Income Tax Return.
Paragraph (2a)
This paragraph regulates the imposition of interest on late payment or late remittance. To clarify the interest calculation, following is an example of the calculation: - the monthly installment of Article 25 of Income Tax for Year 2002 is Rp10,000,000.00 - the installment for the May 2002 is paid on June 18, 2002, and reported on June 19, 2002 - on July 15, 2002 a Notice of Tax Collection is issued - the interest penalty in the Notice of Tax Collection is calculated for 1 (one) month =
1 x 2% x Rp10,000,000.00 = Rp200,000.00
Paragraph (3)
Sufficiently clear.
Paragraph (4)
On the request of a Taxpayer, The Director General of Taxes may issue permission to a Taxpayer to install or postpone tax payment including the underpaid Income Tax, which still must be paid in the Annual Income Tax Return, even though the due date for payment has been stipulated.
This concession will be granted cautiously for a maximum of 12 (twelve) months and limited to Taxpayers genuinely experiencing liquidity problems.
Article 10
(1) Taxpayer is obliged to pay or remit tax payable at state treasury through post office and or state-owned bank or local-owned bank or any other place of payment stipulated by the Minister of Finance.
(2) Procedures of payment, remittance, and reporting of tax payable as well as its installment and postponement are stipulated by a decree of the Minister of Finance.
Elucidation of Article 10
Paragraph (1)
The Director General of Taxes shall not be allowed to receive tax remittance from Taxpayers. All remittances of the State’s taxes must be paid to the State Treasury through places of payment as stipulated by the Minister of Finance, such as a post office or a state-owned bank or a local-owned bank or other places of payment stipulated by the Minister of Finance.
The purposes of the effort to expand the places of payment, which are easily reached by Taxpayers, are to make it easier for the Taxpayers to fulfill their obligation and at the same time to eliminate the hesitation of the Taxpayers to pay their tax payables.
Paragraph (2)
Procedures for tax payment, tax remittance, and its filing as stipulated by a decree of the Minister of Finance as well as the procedures of installment and postponement of tax payment, will hopefully facilitate the Taxpayers in conducting tax payment and its administration.
Article 11
(1) On the request of a Taxpayer, any tax overpayment referred to in Article 17, Article 17B, or Article 17C shall be refunded; however, if the Taxpayer has tax liabilities, the overpayment shall be directly used to settle the tax arrears.
(2) The refund of tax overpayment referred to in paragraph (1) shall be made within a maximum period of 1 (one) month after the acceptance of the request for tax refund as a result of the issuance of a Notice of Tax Overpayment Assessment referred to in Article 17, or after the issuance of a Notice of Tax Overpayment Assessment referred to in Article 17B, or after the issuance of a Decision on Pre-audit Refund of Tax Overpayment referred to in Article 17C.
(3) If the refund of tax overpayment is made after 1 (one) month period, the government shall pay interest of 2% (two percent) per month on any late refund, which is calculated starting from the end of the due date referred to in paragraph (2) to the date when the refund is made.
(4) A procedure for calculating and refunding a tax overpayment shall be stipulated by a decree of the Minister of Finance.
Elucidation of Article 11
Paragraph (1)
If after calculating the actual tax payable and tax credit, a surplus is shown (the tax credit is higher than the tax payable) or after payment of unrightfully tax payable, a Taxpayer is entitled to claim a refund of the overpayment, provided that the Taxpayer has no other outstanding tax payables.
In a case that the Taxpayer has outstanding tax payable, including all kinds of taxes of the head office and the branch offices, the overpayment must be applied first to settle the tax payable and the remaining, if any, can be refunded to the Taxpayer.
Paragraph (2)
To provide legal certainty for the Taxpayer and for orderly administration, the due date for refund by the Director General of Taxes is stipulated at a maximum of 1 (one) month: a. for a Notice of Tax Overpayment Assessment as described in Article 17, calculated starting from the date
of receipt of the written request for a refund; b. for a Notice of Tax Overpayment Assessment as described in Article 17B, calculated starting from the
time of its issuance; c. for Decision on Pre-audit Refund of Tax Overpayment as described in Article 17C, calculated starting
from the date of issuance;
until the issuance of an Order of Tax Overpayment Refund.
Paragraph (3)
In order to maintain a balance between the rights and obligations of a Taxpayer and the efficiency in service provided by the Directorate General of Taxes, this paragraph prescribes that for any delay in the refunding of overpaid tax beyond the time limit provided in paragraph (2), the Taxpayer will be given compensation by the Government of 2% (two percent) interest per month which is calculated starting from the end of the 1 (one) month period to the date when the payment is made; that is, the date of a Notice of Payment of Tax Overpayment is issued.
Paragraph (4)
Sufficiently clear.
CHAPTER III
TAX ASSESSMENT AND NOTICE OF TAX ASSESSMENT
Article 12
(1) Every Taxpayer shall be obliged to pay tax payable pursuant to the provisions of the tax laws without waiting for the issuance of notice of tax assessment.
(2) The amount of tax payable as stated in a Tax Return filed by a Taxpayer is the amount of tax payable pursuant to the provisions of tax laws.
(3) If the Director General of Taxes has a proof that the amount of tax payable according to the Tax Return referred to in paragraph (2) is incorrect, the Director General of Taxes shall determine the correct amount of tax payable.
Elucidation of Article 12
Paragraph (1)
Principally, tax is payable when there is a taxable object, but for the purpose of tax administration, the time of tax payable is:
a. at any time, for Income Tax withheld by a third party; b. at the end of a Taxable Period, for Employment Tax withheld by the employer, or by other party on a
business activity, or by a Taxable Person for VAT Purposes on the withholding of Value Added Tax on Goods and Services and Sales Tax on Luxury Goods;
c. at the end of a Taxable Year, for Income Tax.
The amount of tax payable, which has been withheld as well as which has to be paid by a Taxpayer himself, after the time to be paid as stipulated in Article 9 and paragraph (2) of Article 10, by the Taxpayer, must be remitted to the State Treasury through a post office and or a state-owned bank or a local-owned bank or other places of payment stipulated by the Minister of Finance.
Under this Law, the Director General of Taxes shall no longer be obliged to issue a notice of tax assessment on each Tax Return filed by the Taxpayers. The issuance of the notice of tax assessment is limited only to certain Taxpayers due to the incorrectness in completing the return or because the fiscal data is not fully disclosed by the Taxpayers.
Paragraph (2)
The purpose of this paragraph is that for a Taxpayer who has calculated and paid the amount of tax payable properly under the provisions of the tax law and reported it in a Tax Return, it is no need to be given any notice of tax assessment or any decision letter from the tax administration.
Paragraph (3)
Where, based on the result of audit or other information, the tax calculated and reported in the Tax Return is incorrect, for instance a deduction is overstated, the Director General of Taxes shall determine the amount of tax payable as it should be in accordance with the tax law.
Article 13
(1) Within ten years from the date a tax is payable, or from the end of a Taxable Period, a Fraction of a Taxable Year, or a Taxable Year, the Director General of Taxes may issue a Notice of Tax Underpayment Assessment in the following conditions:
a. based on the result of an audit or other information, a tax payable is unpaid or underpaid; b. a Tax Return is not filed within the period referred to in paragraph (3) of Article 3 and after being warned
in writing, the Tax Return is not filed within the time specified in the Letter of Reprimand; c. based on the result of an audit of VAT and Sales Tax on Luxury Goods, it is found that a tax
overpayment should not have been carried over or that the 0% (zero percent) rate should not have been applied;
d. the obligations referred to in Article 28 and Article 29 have not been met, so that the amount of tax payable cannot be determined.
(2) The amount of tax underpaid in a Notice of Tax Underpayment Assessment referred to in paragraph (1) subparagraph a shall be increased by an administrative penalty of 2% (two percent) interest per month for a maximum of 24 (twenty four) months, calculated from the date a tax is payable or from the end of a Taxable Period, a Fraction of a Taxable Year, or a Taxable Year up to the issuance of the Notice of Tax Underpayment Assessment.
(3) The amount of tax underpaid in a Notice of Tax Underpayment Assessment referred to in paragraph (1) subparagraph b, c, and d shall be increased by an administrative penalty in the form of surcharge of:
a. 50% (fifty percent) of any Income Tax unpaid or underpaid in a Taxable Year; b. 100% (one hundred percent) of any Income Tax which has not been withheld or is under-withheld, not
collected or under-collected, not remitted or under-remitted, and withheld or collected but not remitted or under-remitted;
c. 100% (one hundred percent) of any VAT for Goods and Services and Sales Tax on Luxury Goods unpaid or underpaid.
(4) The amount of tax payable as shown in a Tax Return shall be final under the tax laws if, within ten years from the date the tax is payable or from the end of a Taxable Period, a Fraction of a Taxable Year, or a Taxable Year, no notice of tax assessment is issued.
(5) If the ten year period referred to in paragraph (1) has elapsed, a Notice of Tax Underpayment Assessment may still be issued, along with the imposition of an administrative penalty of 48% (forty eight percent) interest of the amount of tax unpaid or underpaid in the event that a Taxpayer, after the ten year period, is convicted of a tax crime under a definite court verdict.
Elucidation of Article 13
Paragraph (1)
The provisions in this paragraph grant authority to the Director General of Taxes to issue a Notice of Tax Underpayment Assessment which, in fact, applies only to particular cases such as those referred to in this paragraph, or in other words, applies only to Taxpayers who evidently, or based on the results of an audit, have not fulfilled their formal and or material obligations. The authority given to the Director General of Taxes to make fiscal corrections is limited to a period of 10 (ten) years.
Under the provisions of paragraph (1) subparagraph a, a Notice of Tax Underpayment Assessment for Income Tax is only issued if a Taxpayer fails to pay taxes in accordance with the provisions of the tax laws.
A Taxpayer has not paid or underpaid his tax is known by conducting audit to the Taxpayer and from the results of the audit, it is known the amount of the tax unpaid or underpaid. An audit can be conducted at the residence, place of domicile, and or location of business activity of the Taxpayer. A Notice of Tax Underpayment Assessment can also be issued if the Director General of Taxes has data other than that submitted by the Taxpayer and from those data it can be ascertained that the Taxpayer has not properly fulfilled his tax obligations. To confirm the correctness of the data, the Taxpayer can be subjected to an audit.
Under the provisions of paragraph (1) subparagraph b, a Tax Return, which is not filed on time and after being advised in writing, the Tax Return is not filed within the time specified in the Letter of Reprimand, bears the consequence that a Notice of Tax Underpayment Assessment may be issued by the Director General of Taxes ex-officio. The amount of tax in this notice of tax assessment will be increased by an administrative penalty in the form of a surcharge as stipulated under paragraph (3).
A reprimand is also intended, among other things, to give a good faith Taxpayer an opportunity to explain the reasons or causes for not filing a Tax Return if it is due to matters outside his control (force majeur).
A Taxpayer who deliberately violates tax obligations involving Value Added Tax and Sales Tax on Luxury Goods, which causes tax payable to be unpaid or underpaid referred to in paragraph (1) subparagraph c, will be subject to an administrative penalty by the issuance of a Notice of Tax Underpayment Assessment with a surcharge of 100% (one hundred percent).
If a Taxpayer fails to maintain a bookkeeping referred to in Article 28 or upon auditing fails to comply with the requirements of Article 29, so that the Director General of Taxes is unable to ascertain the amount of the tax payable as described in paragraph (1) subparagraph d, then the Director General of Taxes is authorized to issue a Notice of Tax Underpayment Assessment ex-officio which is calculated based on the data not only that provided by the Taxpayer.
The burden of proof for the basis of calculation ex-officio made by the Director General of Taxes is in the Taxpayer. For examples: 1. bookkeeping as stipulated in Article 28 are incomplete, so that the calculation of profit and loss or
turnover is not clear; 2. documents for bookkeeping are incomplete, so that figures in the accounts cannot be verified; 3. based on a series of auditing and or facts obtained, there is a strong suspicion that documents or other
evidence are concealed somewhere, reflecting an absence of Taxpayer’s goodwill in assisting the audit process.
The burden of proof applies also for notice of assessment issued based on the provisions of paragraph (1) subparagraph b above.
Paragraph (2)
This paragraph regulates administrative penalties imposed on a Taxpayer for violation of tax obligations as described in paragraph (1) subparagraph a. The administrative penalty in the form of interest of 2% (two percent) is laid down in a Notice of Tax Underpayment Assessment.
Administrative penalty in the form of interest is calculated on the basis of the amount of tax unpaid or underpaid; a fraction of a month is treated as one month.
Example: Notice of Tax Underpayment Assessment with respect to Income Tax
A Taxpayer with respect to Income Tax whose accounting year is same as a calendar year, files his annual Tax Return year 1995 on time along with the final payment. In April 1998 a Notice of Tax Underpayment Assessment is issued showing a tax underpayment of Rp1,000,000.00 (one million rupiahs). Under the provisions of this paragraph, an administrative penalty of interest of 2% (two percent) per month will be added to the tax underpaid. Although the Notice of Tax Underpayment Assessment is issued more than two years after the end of the Taxable Year, the interest imposed is limited for a period of two years only and calculated as follows: 1. Tax payable Rp.1.725.000,00 2. Tax credit: a. Tax withheld by employer Rp. 150.000,00
b. Tax paid by Taxpayer (periodic remittance) Rp. 400.000,00 c. Tax collected in Notice of Tax Collection
(excluding interest and fines) Rp. 75.000,00
d. Tax collected abroad Rp.100.000,00 (+) Total tax credited Rp. 725.000,00 3. Tax underpaid Rp.1.000.000,00 4. Interest for two years = 2% x 2 x 12 x Rp1,000,000.00 Rp. 480.000,00 5. Tax still payable Rp.1.480.000,00
If the Notice of Tax Underpayment Assessment is issued in May 1997, the calculation would be as follows: 1. Tax underpaid Rp.1.000.000,00 2. Interest for 17 months = 2% x17 x Rp1,000,000.00 Rp. 340.000,00 3. Tax still payable Rp.1.340.000,00
Paragraph (3)
This paragraph regulates administrative penalties in a notice of tax assessment for violation of tax obligations as described in paragraph (1) subparagraph b, c, and d. The penalties take the form of surcharges, namely the proportional amounts that must be added to the total taxes to be collected.
The amount of penalties in form of surcharges is as follows. For Income Tax paid by a Taxpayer himself, the surcharge is 50% (fifty percent); for Income Tax withheld by other parties, it is 100% (one hundred percent); and for Value Added Tax and Sales Tax on Luxury Goods, it is 100% (one hundred percent).
Paragraph (4)
To provide legal certainty and legal guarantee to a Taxpayer in connection with the implementation of tax collection under "self-assessment" system, if within a period of 10 (ten) years from the time tax is payable, the end of a Taxable Period, Fraction of a Taxable Year, or the end of a Taxable Year, the Director General of Taxes has not issued a notice of tax assessment, the amount of tax payment as reported in a Periodic Tax Return or an Annual Tax Return becomes final and finite in accordance with the provisions of the tax laws.
Therefore, the Taxpayer’s Tax Return becomes a final notice of tax assessment and unchangeable.
Paragraph (5)
In the case of a Taxpayer being convicted of a tax crime under a definite court verdict, a Notice of Tax Underpayment Assessment may still be issued together with a penalty in form of interest of 48% (forty-eight percent) of the total tax unpaid or underpaid even though the time limit of 10 (ten) years described in paragraph (1) has elapsed.
The definite court verdict discloses the existence of fiscal data deliberately concealed by the Taxpayer.
Article 14
(1) The Director General of Taxes may issue a Notice of Tax Collection if: a. Income Tax in the current year is unpaid or underpaid;
b. Based on a verification of a Tax Return, there is a tax underpayment arising from errors in writing and or calculation;
c. A Taxpayer is subject to an administrative penalty in form of a fine and or interest; d. A firm which is subject to tax under the VAT Law of 1984 and its amendments does not report its
business for registration and confirmation as Taxable Person for VAT Purposes; e. A firm which is not confirmed as a Taxable Person for VAT Purposes issues a tax invoice; f. A firm which is already confirmed as a Taxable Person for VAT Purposes fails to issue a tax invoice, or
issues a tax invoice but fails to meet the due date or does not fill out the invoice completely. (2) The Notice of Tax Collection referred to in paragraph (1) has an equal legal stand as a notice of tax
assessment. (3) The total amount of tax unpaid as stated in the Notice of Tax Collection referred to in paragraph (1)
subparagraph a and b shall be increased by an administrative penalty in the form of 2% (two percent) interest per month for a maximum of 24 (twenty four) months, calculated starting from the date when the tax is payable or from a Fraction of a Taxable Year or a Taxable Year to the date when the Notice of Tax
Collection is issued. (4) For a Firm or Taxable Person for VAT Purposes referred to in paragraph (1) subparagraph d, e, and f shall
respectively be subject to an administrative penalty in the form of fine of 2% (two percent) of the tax base. Elucidation of Article 14
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Under the provisions of this paragraph, a Notice of Tax Collection has an equal legal stand as a notice of tax assessment, so that the collection can be implemented through a Coerce Warrant.
Paragraph (3)
This paragraph regulates administrative penalties in the form of interest on a Notice of Tax Collection being issued because of: - a verification of a Tax Return which reveals tax arrears due to errors in writing and or calculation; - Income Tax in the current year which is unpaid or underpaid.
The following examples illustrate the method of calculation: 1. Result of Tax Return verification
An Annual Income Tax Return year 2002, which is submitted on March 31, 2003, reveals, after verification, miscalculation resulting in underpaid Income Tax of Rp1,000,000.00 On the underpayment, A Notice of Tax Collection dated June 13, 2003, is issued with the following calculation: - Underpaid Income Tax = Rp 1.000.000,00 - Interest = 3 x 2% x Rp1,000,000.00 = Rp 60.000,00 (+) - Amount to be paid = Rp 1.060.000,00
2. Income Tax in the current year which is unpaid or underpaid Income Tax under Article 25 for year 2002 is Rp100,000,000.00 per month. The due date is, for instance, the 15th of each month. In June 2002, Rp40,000,000.00 was paid on time.
For that underpaid Income Tax, a Notice of Tax Collection is issued on September 18, 2002, with the following calculation: - Underpaid Article 25 Income Tax of June, 2002 = Rp 60.000.000,00 - Interest = 3 x 2% x Rp60,000,000.00 = Rp 3.600.000,00 (+) - Amount to be paid = Rp 63.600.000,00
Paragraph (4)
If a Taxable Person for VAT Purposes does not report its business activities for registration as a Taxable Person for VAT Purposes, it has violated its obligation through bad faith and neglect of the trust placed in it. Consequently, in addition that he has to remit tax payable without being allowed to credit any Input Tax, the Taxable Person for VAT Purposes is also subject to an administrative penalty in form of fine of 2% (two percent) of the tax base which arose before the entity registered as a Taxable Person for VAT Purposes. Apart from that, under the provisions of the tax laws, it is stipulated that a tax-invoice can only be issued by a Taxable Person for VAT Purposes. The prohibition on the issue of a tax invoice by a Non-Taxable Person for VAT Purposes is intended to protect buyers from improper tax collection; for this reason, a non-Taxable Person for VAT Purposes which makes a tax invoice will be penalized in the form of an administrative fine. Similarly, a Taxable Person for VAT Purposes, which is obliged to issue a tax invoice but fails to do so, does not fill out an invoice completely, or makes an invoice but not on time will be subject to the same penalty.
Article 15
(1) The Director General of Taxes may issue a Notice of an Additional Tax Underpayment Assessment within 10 (ten) years from the date a tax is payable, the end of a Taxable Period, Fraction of a Taxable Period, or a Taxable Year if new data and or data previously undisclosed are found resulting in an increase in the amount of tax payable.
(2) The amount of tax underpaid, which is stated in a Notice of an Additional Tax Underpayment Assessment, shall be increased by an administrative penalty in form of surcharge of 100% (one hundred percent) of the
amount of underpaid tax. (3) A surcharge referred to in paragraph (2) shall not be imposed if an Notice of an Additional Tax
Underpayment Assessment is issued based on a written statement submitted by a Taxpayer on his own initiative, provided the Director General of Taxes has not commenced an audit.
(4) If the 10 (ten) years period referred to in paragraph (1) has elapsed, a Notice of an Additional Tax Underpayment Assessment may still be issued, plus the imposition of an administrative penalty in form of interest of 48% (forty-eight percent) of the amount of tax unpaid or underpaid, in the event that the Taxpayer, after the 10 (ten) years period has elapsed, is convicted of a tax crime under a definite court verdict.
Elucidation of Article 15
Paragraph (1)
To cover the possibility of that a Notice of Tax Underpayment Assessment may be under-stated or that a tax refund as a consequence of the issuance of a Notice of Tax Overpayment Assessment is mistakenly given or that the amount of tax payable as stated in a Notice of Nil Tax Assessment is understated, the Director General of Taxes is authorized to issue a Notice of an Additional Tax Underpayment Assessment within 10 (ten) years from the time the tax is payable, the end of a Taxable Period, Fraction of a Taxable Year, or a Taxable Year.
A Notice of an Additional Tax Underpayment Assessment is a correction for a previous notice of assessment. The Notice of an Additional Tax Underpayment Assessment is only issued when a notice of tax assessment has already been issued. In other words, the Notice of an Additional Tax Underpayment Assessment will not in any way be issued prior to the issuance of a notice of tax assessment. The issuance of a Notice of an Additional Tax Underpayment Assessment is carried out if new data (novum) and or data hitherto undisclosed result in the amount of tax payable to be greater than that stated in the preceding notice of tax assessment. In line with this, if a Notice of Tax Overpayment Assessment is issued as a consequence of the 12 (twelve) month period having elapsed as described in Article 17B, a Notice of an Additional Tax Underpayment Assessment will only be issued if new data and or data previously undisclosed is discovered. Should further undisclosed data come to light at the time of issuance of a Notice of an Additional Tax Underpayment Assessment, or new data is later discovered by the Director General of Taxes, another Notice of an Additional Tax Underpayment Assessment can be issued.
The meaning of new data is data or information about everything which is needed to calculate the amount of tax payable which is not disclosed by the Taxpayer at the time of issuance of previous notice of assessment in the Tax Return and its attachments as well as in the bookkeeping of the company submitted upon audit.
While previously undisclosed data mean data or other information pertaining to everything which is needed to calculate the amount of tax payable that is: a. not fully disclosed in a Tax Return as well as its attachments (including balance sheet); and or b. upon audit for initial assessment, Taxpayers fail to disclose data and or fail to provide with other rightful,
complete and detailed information so as to allow the official to exercise the calculation of the amount of tax payable in accordance with the tax laws.
Although a Taxpayer has disclosed it clearly in his Tax Return or upon audit but if the information or disclosure is in such ways that makes it impossible for the tax official to calculate the amount of tax payable properly so that the amount of tax payable is under-stated, then those include in the meaning of initially undisclosed data, for example:
1. In the Tax Return and or balance sheet it is written that advertisement cost is Rp10,000,000.00 while actually that cost comprises an advertisement in a mass media of Rp5,000,000.00 and the rest of Rp5,000,000.00 constitutes donation or present.
If at the time of initial assessment notice the Taxpayer fails to disclose such details so that the tax official cannot make any correction on the donation or present expenditure which results in the tax payable is miscalculated, such data on expenditures on donation or present are deemed as previously undisclosed data.
2. In the Tax Return and or balance sheet it is stated that the classification of amortized fixed assets is not attached by detailed information on the assets of each specified class, and at the time of audit for initial notice of assessment the Taxpayer fails to disclose such details, so that the tax official is unable to make sure the validity of the specified classification.
Actually, there is an error in the classification, for example, what should be classified as tangible asset non-building of class 3 is classified as class 2.
Since at the time of initial notice of assessment the Taxpayer fails to disclose the detailed information, no correction imposed on misclassification of the assets and accordingly the tax payable is not calculated properly. If later on some errors are found, the data on the assets classification is the data initially undisclosed.
3. A Taxable Person for VAT Purposes commences a purchase on several items from other Taxable Person for VAT Purposes and on the purchase the selling Taxable Person for VAT Purposes issues a tax invoice. Some of the items are used in activities directly related to the business activity and some are indirectly. All the tax invoices is credited as Input Tax by the purchasing Taxable Person for VAT Purposes.
If at the time of initial notice of assessment the Taxable Person for VAT Purposes fails to disclose the detail use of the items which results in the absence of correction on the crediting of Input Tax, and as a result, the Value Added Tax payable is miscalculated, then if later on any mistakes on the data or other information on the credit of Input Tax which has no relation whatsoever directly with the specified activities are discovered, the data or information is the data initially undisclosed.
Paragraph (2)
If, following the issuance of a notice of tax assessment, new or previously undisclosed data are discovered which is not taken into account as the base for the assessment, the underpaid tax will be collected under a Notice of an Additional Tax Underpayment Assessment together with administrate penalty of 100% (one hundred percent) of the underpaid tax.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
In the case a Taxpayer convicted of a criminal tax offence under a definite court verdict, a Notice of an Additional Tax Underpayment Assessment can be issued together with an administrative penalty of interest of 48% (forty-eight percent) of the total tax unpaid or underpaid, even though the period of 10 (ten) years as prescribed in paragraph (1) has elapsed .
Article 16
(1) The Director General of Taxes on his own authority, or at the request of a Taxpayer, may correct a Notice of Tax Assessment, a Notice of Tax Collection, Decision on Objection, Decision on Deduction or Annulment of Administrative Penalties, Decision on Deduction or Cancellation of Inaccurate Tax Assessment, or Pre-audit Refund of Tax Overpayment containing errors in writing or calculation and or mistakes in the application of a particular provisions in the tax laws.
(2) The Director General of Taxes, within 12 (twelve) months since the date of the request obtained, shall be obliged to issue a decision on the correction request proposed.
(3) If the due date referred to in paragraph (2) has elapsed and the Director General of Taxes fails to issue the decision, the correction request shall be deemed to be granted.
Elucidation of Article 16
Paragraph (1)
Correction on a notice of tax assessment under this paragraph may be carried out in the context of good governance, so that if there is a mistake or human error in a notice of tax assessment, it should be corrected accordingly. The nature of the mistake or error does not constitute a dispute between the tax authorities and a Taxpayer.
If the mistake or error is detected by a tax official or is brought to light through a submission by a Taxpayer, then it must be corrected. A wrong or inaccurate notice of tax assessment which can be corrected is: - any notice of tax assessment including, among others, a Notice of Tax Underpayment Assessment, a
Notice of an Additional Tax Underpayment Assessment, a Notice of Tax Overpayment Assessment, and a
Notice of Nil Tax Assessment; - Notice of Tax Collection; - Decision on Pre-audit Refund of Tax Overpayment; - Decision on Objection; - Decision on Deduction or Annulment of Administrative Penalties; - Decision on Deduction or Cancellation of Inaccurate Tax Assessment.
The scope of any correction regulated under this paragraph is restricted to mistakes or misdemeanor because of: a. written mistakes which include, among others, a mistake on a name, address, Taxpayer Identification
Number, Taxable Person for VAT Purposes Confirmation Number, type of tax, Taxable Period or Taxable Year, and due date;
b. miscalculation, namely a mistake originating from addition and or subtraction and or multiplication and or division of figures;
c. errors in applying certain provisions of the tax laws, those are errors in the application of the rates, the percentage of Net Deemed Profit, the administrative penalties, personal exemptions, the calculating of Income Tax in current year, and tax credits.
The meaning of correction under this paragraph can be an addition or subtraction or deletion, depending on the nature of the mistake or misdemeanor.
If written mistakes, calculation errors, and or errors in the application of tax provisions still exist in a notice of correction, a Taxpayer can resubmit a request for correction to the Director General of Taxes, or the Director General of Taxes may make further correction officially.
Paragraph (2)
In order to give legal certainty, request on correction from Taxpayer must be decided upon within the limitation of 12 (twelve) months from the time the request is received.
Paragraph (3)
If the 12 (twelve)-month periods has elapsed and the Director General of Taxes has not made any decision, the request deemed to be granted for the things proposed.
By the consideration that the request has been granted, the Director General of Taxes shall issue a Notice of Correction Decision in accordance with the request. On any article deemed granted, a correction cannot be re-requested.
Article 17
After conducting an audit, the Director General of Taxes shall issue a Notice of Tax Overpayment Assessment if the amount of tax credit or the amount of tax paid exceeds the tax payable or if the tax payment, which has been made, should not have been payable. Elucidation of Article 17
Under the provisions of this Article, a Notice of Tax Overpayment Assessment is issued where: a. for Income Tax, the amount of tax credit exceeds tax payable or if the tax payment which has been made
should not have been payable. b. for Value Added Tax, the amount of tax credit exceeds tax payable or if the tax payment which has been
made should not have been payable. For a VAT Withholding Agent, the amount of tax payable equals to Output Tax deducted by the tax withheld by him;
c. for Sales Tax on Luxury Goods, the tax paid exceeds the tax payable or if the tax payment which has been made should not have been payable.
The Notice of Tax Overpayment Assessment is issued after conducting an audit on a Tax Return filed by a Taxpayer declaring underpaid, nil, or overpaid tax, which is not accompanied by a request for refund of overpayment.
A Taxpayer who, after receiving a Notice of Tax Overpayment Assessment, wishes a refund of the tax overpayment must submit a written request referred to in paragraph (2) of Article 11.
A Notice of Tax Overpayment Assessment may be reissued if, based on the results of an audit, the amount of overpaid tax is greater than the tax already assessed.
Article 17A After conducting an audit, the Director General of Taxes shall issue a Notice of Nil Tax Assessment if the amount of tax credit or the amount of tax paid is equal to the amount of tax payable, or if no tax is payable and there is no tax credit or no tax payment. Elucidation of Article 17A
Under the provisions of this Article, a Notice of Nil Tax Assessment will be issued where: a. for Income Tax, the amount of tax credit equals to the amount of tax payable or there is no tax credit; b. for Value Added Tax, the amount of tax credit equals to the amount of tax payable or there is no tax credit.
For a VAT Withholding Agent, the amount of tax payable equals to Output Tax deducted by the tax withheld by him;
c. for Sales Tax on Luxury Goods, the amount of tax paid equals to the amount of tax payable or where there is no tax payable and tax paid.
Article 17B
(1) After conducting an audit on a request for refund of tax overpayment, other than a request for refund of tax overpayment from Taxpayer having particular criteria as referred to in Article 17C, the Director General of Taxes shall issue a notice of tax assessment at the latest of 12 (twelve) months since the acceptance of the request except for certain activities as otherwise stipulated by a decree of the Director General of Taxes.
(2) If the period of time referred to in paragraph (1) has elapsed and the Director General of Taxes fails to issue a decision, a request for refund of tax overpayment shall be deemed to be granted and a Notice of Tax Overpayment Assessment shall be issued at the latest within one month from the end of the period.
(3) If a Notice of Tax Overpayment Assessment is issued after the time referred to in paragraph (2), a Taxpayer shall be given compensation of 2% (two percent) interest per month calculated starting from the end of the period referred to in paragraph (2) up to the date of issuance of the Notice of Tax Overpayment Assessment.
Elucidation of Article 17B
Paragraph (1)
A claim to refund of overpaid tax, other than the claim of tax overpayment refund by a Taxpayer with certain criteria as described in Article 17C, a notice of tax assessment must be issued at the latest of 12 (twelve) months after the receipt of a fully completed request as stipulated in Article 3.
For certain activities, namely an export and the supply of taxable goods and or rendering taxable services to a VAT Withholding Agent, the due date may be reduced by a decision of the Director General of Taxes. The claim may be submitted by completing the appropriate column in the Tax Return or in a separate letter.
A notice of tax assessment may be in the form of a Notice of Tax Underpayment Assessment or a Notice of Tax Overpayment Assessment or a Notice of Nil Tax Assessment.
Paragraph (2)
The due date stipulated in paragraph (1) is intended to give legal certainty to the request of a Taxpayer or a Taxable Person for VAT Purposes, whereby if the due date is elapsed and the Director General of Taxes has not issued a decision, the request is considered approved. The due date is also stipulated in the interest of orderly tax administration.
Paragraph (3)
If the Director General of Taxes fails to issue a Notice of Tax overpayment Assessment on time, the Government will provide compensation of 2% (two percent) interest per month to the Taxpayer, calculated starting from the end of the period as stipulated in paragraph (2) to the time the Notice of Tax Overpayment Assessment is issued, fraction of a month counted as one whole month.
Article 17C
(1) Director General of Taxes, after verifying request for refund from Taxpayers with certain criteria, shall issue Decision on Pre-audit Refund of Tax Overpayment not more than 3 (three) months from the date of receipt of the request for Income Tax Refunds, and not more than 1 (one) month from the date of receipt of the request for VAT Refunds.
(2) The Minister of Finance stipulates a decree to determine certain criteria referred to in paragraph (1). (3) The Director General of Taxes stipulates a decree to determine Taxpayers with certain criteria referred to in
paragraph (2). (4) After the pre-audit refund, the Director General of Taxes may conduct audit to Taxpayers referred to in
paragraph (1) and issue a notice of tax assessment. (5) The Director General of Taxes issues a Notice of Tax Underpayment Assessment if the audit referred to in
paragraph (4) results in tax underpayments, the tax deficiencies are subject to administrative penalty in the form of surcharge of 100% (one hundred percent) of the amount of tax underpaid.
Elucidation of Article 17C
Paragraph (1)
Upon the request for tax overpayment refund from Taxpayers having certain criteria, after an investigation, a Notice of Initial Tax Overpayment Refund must be issued not later than: a. 3 (three) months for Income Tax; b. 1 (one) month for Value Added Tax;
after the complete request is received, which means that the Tax Return is thoroughly completed as provided for in Article 3 paragraph (1), paragraph (1a), and paragraph (6). The request can be submitted by way of completing the columns in the Return or by a separate form.
Paragraph (2)
Certain criteria mean: 1. Taxpayers with high compliance, covering the filing of the Return and no tax payable; 2. Financial statement audited by a Public Accountant with unqualified opinion; 3. The calculation of the turnover and the tax easily observed due to its connection with other Government
regulations, such as the turnover and Value Added Tax of cigarette producers can be assessed from the duty conducted.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
The Director General of Taxes shall issue a notice of tax assessment within 10 (ten) years after conducting investigation on a Taxpayer who receives initial refund as provided for in paragraph (1). The notice may be in the form of Notice of Tax Underpayment Assessment or Notice of Tax Overpayment Assessment or Notice of Tax Nil Assessment.
Paragraph (5)
To encourage Taxpayers in reporting the amount of tax payable as provided for in the provisions of the valid tax law regulation, if the investigation as prescribed in paragraph (4) resulting in the issuance of a Notice of Tax Underpayment Assessment together with an administration penalty of 100% (a hundred percent) surcharge of the amount of tax underpaid.
For a clearer understanding of calculating the Notice of Tax Underpayment Assessment and the imposing of an administration penalty of surcharge as such, the following are some examples:
1) Income Tax - Taxpayer has obtained Pre-audit Tax Overpayment Refund of Rp 80,000,000.00 - An audit shows the following facts:
a. Income Tax payable Rp100,000,000.00 b. Tax credits are as follows: - Article 22 Income Tax Rp 20.000.000,00 - Article 23 Income Tax Rp 40.000.000,00
- Article 25 Income Tax Rp 90.000.000,00 Based on the audit, a Notice of Tax Underpayment Assessment is issued with the calculation follows:
- Income Tax payable Rp100.000.000,00 Tax Credits: - Article 22 Income Tax Rp 20.000.000,00 - Article 23 Income Tax Rp 40.000.000,00 - Article 25 Income Tax Rp 90.000.000,00(+) Rp 150.000.000,00 - Initial tax overpayment refund Rp 80.000.000,00(-) Tax that can be credited Rp 70.000.000,00 (-) Unpaid/underpaid tax Rp 30.000.000,00 Administrative penalty of 100% increment Rp 30.000.000,00(+) Amount to be paid Rp 60,000,000.00
2) Value Added Tax - A Taxable Person for VAT Purposes has obtained Pre-audit Tax Overpayment Refund of
Rp60,000,000.00 - The audit shows:
a. Output Tax Rp100.000.000,00 b. Tax Credits are as follows: - Input Tax Rp150.000.000,00
- Based on the audit, a Notice of Tax Underpayment Assessment is issued with the calculation as follows: - Output Tax Rp100.000.000,00 Tax Credits: - Input Tax Rp150.000.000,00 - Pre-audit Tax Overpayment Rp 60.000.000,00(-) Tax that can be credited Rp 90.000.000,00(-) Unpaid/underpaid tax Rp 10.000.000,00 Administrative penalty of 100% increment Rp 10.000.000,00(+) Amount to be paid Rp 20.000.000,00
CHAPTER IV TAX COLLECTION
Article 18
(1) A Notice of Tax Collection, Notice of Tax Underpayment Assessment, Notice of an Additional Tax
Underpayment Assessment, Notice of Tax Correction, Decision on Objection, or Decision on Appeal that increase the amount of tax payable shall be the basis of tax collection.
(2) Deleted. Elucidation of Article 18
Paragraph (1)
A Notice of Tax Collection, a Notice of Tax Underpayment Assessment, a Notice of an Additional Tax Underpayment Assessment, a Notice of Tax Correction, a Decision on Objection, or Decision on Appeal, which causes the amount of tax payable to increase, are administrative instrument for the Director General of Taxes to collect tax.
Paragraph (2)
Deleted.
Article 19
(1) If tax payable under a Notice of Tax Underpayment Assessment or Notice of an Additional Tax
Underpayment Assessment, and additional tax payable under a Notice Tax Correction, Decision on Objection, or Decision on Appeal, are not paid or underpaid upon the due date, the amounts of underpaid or unpaid tax are subject to an administrative penalty in the form of interest of 2% (two percent) per month calculated from the due date up to the date of payment or the date of issuance of the Notice of Tax Collection, and fraction of a month is deemed as a 1 (one) month period.
(2) If a Taxpayer is allowed for installments or postponements to pay tax, an interest of 2% (two percent) per month is also applied, and fraction of the month is deemed as a 1 (one) month period.
(3) If a Taxpayer is allowed to postpone for filing Tax Returns and the tentative calculations of tax payable referred to in paragraph (5) of Article 3 turn out to be less than the actual tax payable, the shortages are subject to 2% (two percent) interest per month, calculated from the end of the period of obligation to file Tax Return referred to in paragraph (3) subparagraph (b) of Article 3 up to the date of payment of the shortages, and fraction of the month is deemed as a 1 (one) month period.
Elucidation of Article 19
Paragraph (1)
This paragraph prescribes the imposition of interest of collection on the amount that still has to be paid pursuant to the Notice of Tax Underpayment Assessment or Notice of an Additional Tax Underpayment Assessment, and additional amount of tax that still has to be paid under the Notice of Tax Correction, Decision on Objection, or Decision on Appeal which is unpaid or under paid at due date or paid not in time. The following are examples of calculating interest:
1. Upon the underpaid tax
Notice of Income Tax Assessment
Tax payable or collected (deemed there is no amount of tax credited) is Rp100,000.00. A notice of tax assessment is issued on October 10, 2002. It must be paid in full at the least on November 9, 2002, but is only paid the sum of Rp60,000.00 on November 1, 2002. Until due date ends (November 9, 2002), the remaining underpaid amount is not paid by the Taxpayer.
On November 18, 2002, a Notice of Tax Collection is issued by the Director General of Taxes with the following calculation: Tax payable Rp100.000,00 Paid in time Rp 60.000,00 Underpaid Rp 40.000,00 Interest calculated of a month = 1 x 2% x Rp40.000,00 = Rp 800,00
Bunga tersebut ditagih dengan Surat Tagihan Pajak.
2. Upon overdue tax amount.
The basis is similar to example 1.
Paid in full but not in time, for example paid on November 20, 2002. On November 24, 2002, a Notice of Tax Collection is issued.
Interest payable in the Notice of Tax Collection is calculated of a month = 1 x 2% x Rp100.000,00 = Rp2.000,00.
3. Upon underpaid or overdue tax amount.
The basis is similar to example 1.
Paid a sum of Rp60,000.00 on November 20, 2002. On November 24, 2002, a Notice of Tax Collection is issued.
Interest payable calculated for month = 1 x 2% x Rp100.000,00 = Rp2.000,00.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Article 20
(1) The amounts of tax payable under a Notice of Tax Collection, Notice of Tax Underpayment Assessment, Notice of an Additional Tax Underpayment Assessment, and Notice of Tax Correction, Decision on Objection, or Decision on Appeals resulting an increase to the amounts of tax payable, which is unpaid by the Tax Bearers in accordance with the due date referred to in paragraph (3) of Article 9, shall be collected by Coerce Warrant.
(2) Notwithstanding the provisions referred to in paragraph (1), the Prompt and Outright Collection is conducted where:
a. Tax Bearers are about to leave Indonesia permanently or intend to do so; b. Tax Bearers transfer movable or immovable goods owned or controlled in order to terminate or
significantly reduce business activities or employment in Indonesia; c. there are indications that Tax Bearers are going to dissolve their business entities, or merger, or expand
their business, or transfer the company they own or control, or execute other forms of changes; d. the business entities is to be dissolved by the Government; or e. Third parties confiscate movable or immovable goods owned by the Tax Bearers or there are indications
of bankruptcy. (3) The collection of tax by a Coerce Warrant shall be executed in accordance with the provisions of law. Elucidation of Article 20
Paragraph (1)
Where the amount of tax payable is unpaid or underpaid by the due date, or by the postponement of payment due date, or tax installments are not fulfilled, the collection shall be conducted by a Coerce Warrant. The collection using a Coerce Warrant is conducted on the Tax Bearer.
Paragraph (2)
Referred as Prompt and Outright Collection is the act of collecting tax by a Tax Confiscator to the Tax Bearer without waiting for the payment due date, covering all types of taxes, Taxable Period, and Taxable Year.
Paragraph (3)
Sufficiently clear.
Article 21
(1) The State has preemptive rights over the assets owned by Tax Bearers for the purpose of collecting tax. (2) The provision on the preemptive rights referred to in paragraph (1) covers principal tax, administrative
penalty in the form of interest, fines, and surcharges, and tax collection expenses. (3) The preemptive right of priority for the purpose of tax collection supercedes all other priorities, except for: a. legal expenses arising solely from a court order to auction movable and or immovable goods;
b. expenses incurred for securing the goods; c. legal expenses, arising solely from the auction and settlement of inheritance.
(4) The preemptive rights shall be elapsed after 2 (two) years from the date of issuance of a Notice of Tax Collection, Notice of Tax Underpayment Assessment, Notice of an Additional Tax Underpayment Assessment, Notice of Tax Correction, Decision on Objection, or Decision on Appeal which result in an increase in tax payable unless, during the two years period, a Coerce Warrant for paying is officially issued, or postponement of payments is granted.
(5) If a Coerce Warrant for paying is officially issued, the 2 (two) years period referred to in paragraph (4) shall be calculated from the date of issuance of the Coerce Warrant; or, if postponement of payments are granted, the 2 (two) years period shall be extended with the due date of granted for postponement of payment.
Elucidation of Article 21
Paragraph (1)
This paragraph stipulates the status of the state as a preferential creditor having pre-emptive right over goods belonging to a Tax Bearer, which are to be publicly auctioned.
Only after tax payable has been paid can payment be made to other creditors.
The purpose of this paragraph is to give the Government priority over other creditors in obtaining a share of the proceeds from the public auction of goods belonging to a Tax Bearer to defray or pay tax debts.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Sufficiently clear.
Article 22
(1) The right to collect taxes, including interest, fines, surcharges and tax collection expenses shall elapsed after 10 (ten) years from the date the tax is payable, or from the end of the Taxable Period, Fraction of the Taxable Year, or Taxable Year.
(2) The elapsing of tax collection rights referred to in paragraph (1) may be deferred as a result of: a. the issuance of a Letter of Reprimand or Coerce Warrant;
b. Taxpayers admits directly or indirectly of the tax payables; c. the issuance of a Notice of Tax Underpayment Assessment referred to in paragraph (5) of Article 13 or
Notice of an Additional Tax Underpayment Assessment referred to in paragraph (4) of Article 15. Elucidation of Article 22
Paragraph (1)
There shall be determined an elapsing date for the Directorate General of Taxes to collect taxes in order to provide legal certainty as to when tax payable is no longer collectible.
Paragraph (2)
The 10 (ten) year limitation can be extended where: a. The Director General of Taxes issues a Letter of Reprimand and a Coerce Warrant to a Tax Bearer who
fails to pay tax payable by the due date. In such a case, the ten-year limitation period starts from the time the Coerce Warrant received.
b. A Taxpayer acquiesces the tax payable by: - submitting a request to pay by installments or for postponement of payment of tax payable before the
due date of payment. In such case, the period of limitation begins from the day the request is received by the Director General of Taxes;
- lodging an objection; in this case, the limitation period begins from the day the objection is received by the Director General of Taxes;
- making partial payment of tax payable, in which case the statue of limitation is began from the day that part of the tax payable is paid.
c. Notice of Tax Underpayment Assessment or Notice of an Additional Tax Underpayment Assessment is issued to a Taxpayer due to a criminal tax offence under a definite court verdict. In such case, the period of limitation begins from the day the notice of tax assessment is issued.
Article 23
(1) Deleted.
(2) Lawsuits of Taxpayers or Tax Bearers against: a. execution of a Coerce Warrant, Notice of Seizure or Notices of Auction;
b. decisions that relate to the execution of tax decisions, other than those stipulated in paragraph (1) of Article 25 and Article 26;
c. correction decision referred to in Article 16 that relate to a Notice of Tax Collection; d. decisions referred to in Article 36 that relate to Notice of Tax Collection,
shall only be filed to a tax court. (3) Deleted. Elucidation of Article 23
Paragraph (1)
Deleted
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Deleted
Article 24
Procedures for writing-off of tax payable and a stipulation of an amount written-off shall be regulated by a decree of the Minister of Finance. Elucidation of Article 24
The Minister of Finance shall regulate the procedures of elimination and determine the amount of non-performing loans due to the reasons that, among other, an individual Taxpayer has died and has no inheritance or assets, an entity has completed the insolvency process, a Taxpayer fails to meet the requirements as Taxable Person and the right to collect tax is elapsed. By doing so, the amount of debts possible to be collected or liquidated can be estimated effectively.
CHAPTER V OBJECTION AND APPEAL
Article 25
(1) Taxpayers shall only file objections to the Director General of Taxes for the following matters: a. Notice of Tax Underpayment Assessment;
b. Notice of an Additional Tax Underpayment Assessment; c. Notice of Tax Overpayment Assessment; d. Notice of Nil Tax Assessment; e. withholding by third parties under the provisions of the tax laws.
(2) Objections shall be submitted in writing in Indonesia Language by stating the amounts of tax payable or the amounts of tax withheld, or the amounts of losses as calculated by the Taxpayers, supported by clear reasons.
(3) Objections shall be filed within 3 (three) months as from the date of issuance of assessments, or the date of withholding referred to in paragraph (1), unless the Taxpayers can demonstrate that the period cannot be fulfilled due to circumstances beyond their control.
(4) Objections that do not meet the requirements referred to in paragraphs (1), (2), and (3) shall not constitute valid objections, and as such will not be taken under consideration.
(5) A receipt of objection request given by appointed officials of the Directorate General of Taxes or a dispatch of objection request sent by registered mail shall constitute evidence of receipt of the objection request.
(6) If requested by Taxpayers for the purpose of submitting objections, the Director General of Taxes shall be obliged to provide written information on matters, which constitute the basis for imposition of tax, calculation of losses, withholding of tax.
(7) The submission of objections shall not defer the obligation to pay tax and collect tax. Elucidation of Article 25
Paragraph (1)
If a Taxpayer believes the amount of loss or the tax payable or the withholding tax by a third party is incorrect, the Taxpayer may lodge an objection only to the Director General of Taxes.
An objection can only be made against the substance or content of a notice of tax assessment, namely the amount of loss, the amount of tax, or the amount of tax withheld based on provisions in the tax laws.
In other words, a separate objection must be lodged for each type of tax and for each Taxable Year. For example, Income Tax for the 1995 and 1996 Taxable Years, an objection must be lodged for each in separate objection letters. For the 2 (two) Taxable Years, 2 (two) objection letters must be lodged.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
The due date for lodging an objection is 3 (three) months from the issuance notice of a tax assessment as provided in paragraph (1), in order to give the Taxpayer sufficient time to prepare an objection letter together with the reasons for objection.
In the event that a Taxpayer is unable to meet the time limit for reasons beyond his control (force majeur), the period of 3 (three) months may be considered and extended by the Director General of Taxes.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Proof of receipt provided by the official of the Directorate General of Taxes or the post office serves as the receipt of objection letter if the letter meets the requirements as such. Thus, the due date for objection is calculated from the date the letter received.
If the letter of the Taxpayer fails to comply with the requirements as objection letter and is corrected by the Taxpayer, the period of completion for the objection is began since the time of the receipt of the next letter that complies with the requirement as an objection letter.
Paragraph (6)
To enable a Taxpayer preparing an objection with sound reasons, the Taxpayer is given the right to request for the bases for assessing tax imposed, withheld, and the Director General of Taxes is obliged to meet such a request.
Paragraph (7)
To prevent attempts to avoid or postpone tax payment through an objection, lodgment of the objection does not impede collection being carried out up to point of holding an auction.
This provision is required in order that a Taxpayer shall not use the filing of an objection as an excuse for not paying tax assessed, and thus avoids interference with the state revenue.
Article 26
(1) The Director General of Taxes within 12 (twelve) months as from the date of receipt of the objection applications shall decides the submitted objections.
(2) Taxpayers may submit additional reasons or written explanations before objection decisions are issued. (3) The decisions of Director General of Taxes on the objections can be in the form of total or partial
acceptance, refusal, or increasing the amounts of tax payable. (4) If Taxpayers propose objections on tax assessments referred to in paragraph (1) subparagraph b and d of
Article 13, the Taxpayers shall prove incorrectness in the tax assessments. (5) Where the period referred to in paragraph (1) has elapsed and the Director General of Taxes has not made
any decision, the requested objections are considered granted. Elucidation of Article 26
Paragraph (1)
The Director General of Taxes is authorized to settle an objection requested by a Taxpayer on the first level and required to grant a decision no later than twelve months after the receipt of the letter.
By determining the due date to settle a tax objection, this law provides law certainty for Taxpayers in addition to the completion of tax administration.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
The provisions in this paragraph provides that a Taxpayer has burden of proof to demonstrate the incorrectness of a notice of tax assessment in the case that the Taxpayer files an objection upon taxes assessed ex-officio, the Notice is issued due to the facts that the Taxpayer does not file the Annual Tax Return after a written warning, or does not fulfill the obligation to maintain bookkeeping, or refuse to allow tax auditors enter certain places necessary in order to assess the amount of tax payable. In the event that the Taxpayer fails to demonstrate the incorrectness of the notice, the objection is refused.
Paragraph (5)
Sufficiently clear.
Article 27
(1) Taxpayers can only submit a request for appeals to the tax court against Decision on Objection stipulated by the Director General of Taxes.
(2) The decisions of the tax court shall not constitute decisions of the State Administration Court. (3) The applications referred to in paragraph (1) shall be submitted in writing in Indonesian Language along with
clearly stated reasons not later than 3 (three) months after the date of receipt of Decision on Objection, attached with copies of the Decision.
(4) Deleted. (5) The submission of applications for appeals shall not postpone the obligations to pay and collect taxes. (6) A tax court referred to in paragraph (1) of this Article and paragraph (2) of Article 23 shall be regulated by
law. Elucidation of Article 27
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Deleted
Paragraph (5)
Sufficiently clear.
Paragraph (6)
Sufficiently clear.
Article 27A
(1) If the submissions objections or request for appeals are accepted partly or fully, as long as the tax payable prescribed in the Notice of Tax Underpayment Assessment and or Notice of an Additional Tax Underpayment Assessment has already been paid that results in overpaid tax, the tax overpayment shall be refunded plus compensation of 2% (two percent) interest per month for a maximum of 24 (twenty-four) months calculated from the date of payment resulting in the tax overpayment up to the date of the issuance of Decision on Objection or Decision on Appeal.
(2) The Interest compensation referred to in paragraph (1) shall also be granted to overpayment of fines of administrative penalty referred to in paragraph (4) of Article 14 and or interest referred to in paragraph (1) Article 19 based on the Decision on Deduction or Annulment of Administrative Penalties, as a result of the issuance of Decision on Objection or Decision on Appeal that partly or fully accepting applications from Taxpayers.
(3) The procedure of calculating the overpayment refund and granting the interest is regulated by a decree of the Minister of Finance.
Elucidation of Article 27A
Paragraph (1)
Compensation on interest is given in relation to Decision on Objection or Decision on Appeal that relates to Notice of Tax Underpayment Assessment or Notice of an Additional Tax Underpayment Assessment.
Paragraph (2)
Compensation on interest is also given to overpayment of Notice of Tax Collection issued under paragraph (4) of Article 14 and paragraph (1) of Article 19 pertaining to the issuance of Notice of Tax Underpayment Assessment or Notice of an Additional Tax Underpayment Assessment, of which the administrative penalty of fine or interest is deducted or revoked.
Such deduction or revoke is the result of Decision on Objection or Decision on Appeal on the Notice of Tax Underpayment Assessment or Notice of an Additional Tax Underpayment Assessment concerned, which grants in part or in full Taxpayer’s request.
Paragraph (3)
Sufficiently clear.
CHAPTER VI BOOKKEEPING AND AUDITING
Article 28
(1) Individual Taxpayers conducting business activities or independent personal services, and entity Taxpayers
in Indonesia shall be obliged to maintain bookkeeping. (2) Taxpayers exempted from the obligation to maintain bookkeeping referred to in paragraph (1) but obliged
to keep records are individual Taxpayers engaged in businesses or independent personal services, and who according to the provisions of the tax laws are permitted to calculate net income by using the Net Deemed Profit and individual Taxpayers who are not engaged in businesses or independent personal services.
(3) The bookkeeping or recording shall be conducted in good intention and shall reflect the real conditions or business activities.
(4) The bookkeeping or recording shall be conducted in Indonesia by using Latin alphabet, Arabic numeral, and Rupiah currency, and shall be written in Indonesian Language or in any foreign language approved by the Minister of Finance.
(5) The bookkeeping shall be maintained consistently in either accrual or cash basis.
(6) Any change in the method of bookkeeping and or book year shall secure approval from the Director General of Taxes.
(7) The bookkeeping shall at least consist of records of assets, liabilities, equity, income, and expenses as well as sales and purchases, so that the amounts of tax payable can be calculated.
(8) Taxpayers may perform their bookkeeping in foreign languages and currencies after securing approval from the Minister of Finance.
(9) The recording referred to in paragraph (2) shall consist of data collected regularly on gross turnover or revenue and or gross income as the basis for calculating amounts of tax payable, including income that is not classified as non-taxable object and or final taxable income.
(10) Taxpayers not required to submit Annual Income Tax Returns are exempted from the obligation to maintain bookkeeping and recording.
(11) Books, records, and documents upon which the bookkeeping or recording is based and other documents shall be kept for 10 (ten) years in Indonesia, at the place of business activities or residences, for individual Taxpayers, or at the place of domiciles for entity Taxpayers.
(12) The procedures of recording referred to in paragraph (2) shall be stipulated by a decree of the Director General of Taxes.
Elucidation of Article 28
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
A consistency principle provides the same accounting principles shall be used from year to year, to prevent any shifting of profit or loss. The principle, for example, applies to: a. income recognition; b. the accounting year; c. the inventory valuation method; d. the depreciation and amortization method.
The accrual basis method is one method of calculating income and expenses in the sense that income is recognized at the time of accrual and expenses at the time they are incurred. Thus, the method is not dependent on when income is received and when expenses are paid in cash.
Included in the definition of accrual basis method is the recognition of income based on the percentage method for staged completion of a job, which is generally used in the construction sector, and other methods used in particular fields of business, for instance, Build, Operate, and Transfer (BOT), Real Estate, and others.
A cash basis method is a method whereby calculations are based on income received and expenses paid in cash.
Under this method, income shall be accrued if actually received in cash within a specific period, and expenses are only shall be accrued if actually paid in cash within a specific period.
Cash basis is normally used by individuals, small businesses, or service companies, such as transportation and entertainment businesses and restaurants, having a short time span between the delivery of service and receipt of payment. In a pure cash basis, income from the delivery of goods or services is determined at the time payment is received from a customer, and expenses assessed at the time of payment for goods, services, and other operational outlays.
Under this method, the use of a cash system can result in a unclear calculation of income, that is, the amount of income from year to year can be adjusted by arranging cash receipts and cash payments. Hence, in the calculation of Income Tax based on a cash basis, attention needs to be paid to the following:
1) Calculation of the amount of sales within one period should include all sales, whether it is made in cash or not. In calculating cost of goods sold, all purchasing and inventories must be counted;
2) In acquiring assets and rights that are subject to depreciation or amortization, expenses deducted from income can only be effected through depreciation and amortization;
3) The use of cash basis must be consistent.
Thus, the use of a cash basis for taxation purposes can also be termed as a mixed system.
Paragraph (6)
Basically, bookkeeping methods must be consistent, namely, they must be the same as in previous years, for instance, in the determination of income and costs (cash or accrual basis), the method of depreciation of fixed assets, the method of inventories valuation and so on. Nevertheless, changing the bookkeeping method is still possible subject to prior consent from the Director General of Taxes. Any proposed change must be submitted to the Director General of Taxes prior to the relevant accounting year, giving logical and acceptable reasons and the possible consequences of such a change.
Change of the bookkeeping method may result in changing in the consistency principle by, for example, a change from the cash to accrual method or conversely; or a change to the income and cost recognition method itself, for instance, a change in the method of cost recognition in relation to the depreciation of fixed assets.
Example: In 2002, a Taxpayer uses the straight-line depreciation method. In 2003, the Taxpayer wishes a change to the declining balance method.
For this purpose, the Taxpayer must obtain prior approval from the Director General of Taxes before the commencement of the 2003 accounting year, stating the reasons for the change and its consequences.
In addition, a change in the accounting year may also change the total income or losses of the Taxpayer; hence, such a change must obtain the approval of the Director General of Taxes.
A Taxable Year is the same as a calendar year, except where a Taxpayer uses an accounting year that differs from a calendar year.
Where the Taxpayer uses an accounting year different from a calendar year, a reference to the taxable year concerned shall be determined based on the year of which the first 6 (six) months or more fall into.
Example: a. Accounting year covering July 1, 2002 to June 30, 2003, shall be the Taxable Year of 2002. b. Accounting year covering October 1, 2002 to September 30, 2003, shall be the Taxable Year of 2003.
Paragraph (7)
The meaning of bookkeeping is already referred to in Article 1 point 26. The provisions of this paragraph are intended to enable the amount of tax payable to be calculated from the accounts.
In addition to the calculation of Income Tax payable, the accounts should enable the calculation of other taxes payable. In order that Value Added Tax and Sales Tax on Luxury Goods can be calculated correctly, the accounts must also record the amount of the acquisition or import value, the sale price or export value, the sale price of goods subject to Sales Tax on Luxury Goods, the payment for utilization of Intangible Taxable Goods from outside the Customs Area within the Customs Area and or the utilization of Taxable Services from outside the Customs Area within the Customs Area, Input Tax that can or can not be credited.
Hence, the bookkeeping must be conducted using a method or system commonly used in Indonesia, for instance, based on the Indonesian Accounting Principles, unless stipulated otherwise in the tax laws.
Paragraph (8)
Sufficiently clear.
Paragraph (9)
Accounting records required to be kept by a Taxpayer engaged in business and or independent personal services shall include gross or income turnover and other income received, whereas for those primarily receiving income from other than a business and independent personal services, the accounting records shall only pertain to gross income, deductible, and net income that is subject to Income Tax.
In addition, the accounting records include income that is classified as non-taxable object and or income subjected to a final tax.
Paragraph (10)
Sufficiently clear.
Paragraph (11)
Accounts, records, and documents, including the output of electronic data processing, which form the basis of accounts or records, must be retained in Indonesia for 10 (ten) years, so that if the Director General of Taxes needs to issue a notice of tax assessment, the necessary accounts or records will be available and can be readily presented. Such period of 10 (ten) years of retaining accounts, records, and documents, including the results of electronic data processing, which form the basis of accounts or records, conforms to the regulations on the Statute of Limitations for a tax assessment.
Paragraph (12)
Sufficiently clear.
Article 29
(1) The Director General of Taxes is authorized to conduct audits to test Taxpayers’ compliance and for other purposes in respect to the implementation of the tax laws.
(2) For audit purposes, a tax auditor must posses an auditor identity card and an Audit Warrant, and must show them to the audited Taxpayer.
(3) A Taxpayer under audit is obliged to: a. show and or lend books, records, or documents upon which the tax is based, and other documents
related to income received, business activities, independent personal services of the Taxpayer, or taxable object;
b. grant access to places or offices as deemed necessary and assist tax auditors in carrying out the audit; c. provide information requested.
(4) If, in disclosing books, records or documents and information requested, a Taxpayer is bound by duty to maintain confidentiality, such duty shall be negated upon request for audit purposes referred to in paragraph (1).
Elucidation of Article 29
Paragraph (1)
In the framework of exercising administrative supervision, the Director General of Taxes shall undertake tax audit: a. to test Taxpayers’ compliance in fulfilling tax duties; and b. for other purposes in the framework of implementing regulations in the tax laws;
An audit may be carried out at a tax office (for office audit) or at the place of a Taxpayer (for field audit), and may cover previous years as well as the current year.
An audit may be conducted on any Taxpayer, including any government agency and other bodies acting as Withholding Agent
The audit to test compliance in fulfilling tax duties will include proving the truth of a Tax Return, the bookkeeping or accounting methods, and fulfillment of other tax obligations, by analyzing the actual conditions or business activities of the Taxpayer, and will be carried out by: a. applying audit techniques normally used in an audit in general, which is called a Complete Audit; b. applying audit techniques that are simple in terms of degree and depth in accordance with the scope of
examination conducted in either the office or field, which is called a Simple Audit.
In addition, a Simple Audit may be conducted for other purposes, including:
- designating one or more places where Value Added Tax and or Income Tax under Article 21 is payable; - confirming or revoking the registration of a Taxable Person for VAT Purposes; - issuing the Taxpayer Identification Number of a Taxpayer and or the Registration Number of a Taxable
Person for VAT Purposes ex-officio.
Paragraph (2)
The audit is conducted by a tax auditor with a clear identity, who is able to show an audit identity card and attached with Audit Warrant to the Taxpayer to be examined. The official shall be obliged to state his purpose for conducting such act on the Taxpayer.
The auditor is obliged to have undergone sufficient technical training as well as skills as an examiner. In conducting his duty, the auditor shall be obliged to uphold honesty, responsibility, understanding, attitude, and objectivity as well as to avoid any wrong doing or misdeed.
Opinion and conclusion of the auditor shall be based on solid evidence and the valid tax laws.
The auditor shall be obliged to build up the Taxpayers in fulfilling taxation obligation in accordance with the provisions of tax laws.
Paragraph (3)
A Taxpayer under an audit to assess his compliance to tax duties or other purposes as prescribed in paragraph (1) is obliged to show and submit books, records, documents, and such other necessary information pertaining to income received or business activity.
If the Taxpayer avoids providing the necessary books, records, or documents, based on this paragraph, the auditor shall be entitled to enter a place or room which the auditor suspects is used to store books, records, and other such documents.
Paragraph (4)
To prevent misuses of the obligation to confidentiality as a reason for not providing books, records, documents, or other necessary information by the Taxpayer, this paragraph provides that the obligation can be eliminated.
Article 30
The Director General of Taxes is authorized to seal certain places or rooms, in the case that a Taxpayer does not fulfill his obligation referred to in paragraph (3) subparagraph b of Article 29. Elucidation of Article 30
Individual or corporate taxpayers who during tax audits is not willing to giving tax auditors opportunities to enter certain places/rooms suspected to be places to store books of accounts, documents, and records, so that necessary books of accounts, documents, and records can not be obtained, shall be deemed to obstruct the implementation of tax collection. In that case, the Director General of Taxes is authorized to seal certain places places or rooms suspected to be places to store books of accounts, records, and documents in order to secure or prevent the loss of those of accounts, records, and documents.
Article 31
A procedure of an audit shall be stipulated by the Minister of Finance. Elucidation of Article 31
Sufficiently clear.
CHAPTER VII SPECIAL PROVISIONS
Article 32
(1) In exercising rights and fulfilling obligations in accordance with the provisions of the tax laws, a Taxpayer
shall be represented, in the case of: a. an entity, by the management;
b. an entity in dissolution or bankruptcy, by the individual or entity assigned to execute settlement; c. an estate, by one of the beneficiaries, the executor or the administrator of the estate; d. a minor or person under guardianship, by the guardian or custodian.
(2) A representative referred to in paragraph (1) shall be responsible individually and or severally for payment of tax payable, except where he can prove to and convince the Director General of Taxes that it is not in his capacity to rightfully assume such responsibility.
(3) An individual or entity may appoint a proxy by a power of attorney to exercise rights and fulfill responsibilities of the individual or entity in accordance with the provisions of the tax laws.
(3a) A proxy referred to in paragraph (3) shall have to meet the requirements stipulated by the Minister of Finance.
(4) There shall be included in the definition of executive board referred to in paragraph (1) subparagraph a any individual who factually has the authority to participate in setting policies and or making decisions in the management of an enterprise.
Elucidation of Article 32
Paragraph (1)
This law stipulates the person who shall represent a Taxpayer in exercising his tax rights and responsibilities in relation to an entity, an entity in dissolution, unsettled inheritance, minors, or a person placed under guardianship. The Taxpayer must decide who shall be the representative or authorized person by reason of his inability to perform such legal actions on his own.
Paragraph (2)
This paragraph provides that the representative of a Taxpayer as prescribed in this law shall be individually or collectively responsible for the payment of taxes payable.
Exceptions may be considered by the Director General of Taxes if the representative of the Taxpayer can convincingly demonstrate that in his position, and under normal and reasonable circumstances, it is impossible for his to bear the responsibility individually or collectively.
Paragraph (3)
This paragraph provides scope and opportunity to a Taxpayer to seek assistance from another party who understands taxation issues to become the Taxpayer’s legal representative and on his behalf assist in exercising his taxation rights and responsibilities.
Such assistance shall include performing formal and material duties as well as securing the rights of a Taxpayer as stipulated under the rules in the taxation laws.
Paragraph (3a)
Sufficiently clear.
Paragraph (4)
A person who is actually authorized to decide policies and or make decisions in the context of managing the activities of a company, such as the authority to sign contracts with third parties, sign cheques and so on, even though his name is not listed among the board of directors in the company’s article of incorporation or in any revised article, is nevertheless included in the definition of management. This provision is also applied for the Commissioners (Board of Directors) and the major or controlling shareholders.
Article 33
The buyer of taxable goods or the receiver of taxable services referred to under the VAT Law of 1984 has full responsibility upon the tax payment, so long as no proof of any sort can be produced that the tax is paid.
Elucidation of Article 33
In accordance with the principles of tax burden for Value Added Tax on Goods and Services and Sales Tax on Luxury Goods is on the buyer or consumer of goods or the service receiver. Therefore, it is appropriate that the buyer or consumer of goods or the service receiver be responsible severally on the payment of tax payable if it turns out that the tax payable is non-collectible to the seller or the service provider, and the buyer or service receiver fails to show proof of tax payment to the seller or the service provider.
Article 34
(1) An official shall be prohibited to give an unauthorized party any information learned or provided to that official by a Taxpayer in the course of his duties or work in implementing the provisions of the tax laws.
(2) The prohibition referred to in paragraph (1) shall also apply to an expert appointed by the Director General of Taxes to give assistance in implementing the provisions of the tax laws.
(2a) There shall be excluded from the provisions of paragraphs (1) and (2): a. officials and experts acting as witnesses or expert witnesses in a court. b. officials and experts giving information to other parties that are stipulated by the Minister of Finance.
(3) For the interest of the state, the Minister of Finance is authorized to give written approval to an official referred to in paragraph (1) and to an expert referred to in paragraph (2) to provide information and present written evidence from or concerning a Taxpayer to a party designated by the Minister.
(4) For the purpose of the court session in a criminal or civil suit, and on the request of the judge pursuant to the Law on criminal Procedures and the Law on Civil procedures, the Minister of Finance may issue a written permit to request from an official referred to in paragraph (1) or an expert as referred to in paragraph (2) written evidence and information in his possession about a Taxpayer.
(5) A request from the judge referred to in paragraph (4) shall identify the name of the suspect or accused, the information requested and the relationship between the criminal or civil suit and the information requested.
Elucidation of Article 34
Paragraph (1)
Any official, either tax official or any one involved in taxation, is prohibited from disclosing Taxpayers confidentiality pertaining to taxation, among others: a. Tax Return, Financial Report, and other related forms reported by a Taxpayer; b. data obtained to conduct an audit; c. documents and or data of classified confidential obtained from a third party; d. documents and or confidential information of a Taxpayer pursuant to the provisions of related law
regulations.
Paragraph (2)
Experts, such as linguists, accountants, lawyers, and so on, who are appointed by the Director General of Taxes to assist in the implementation of the tax laws, have the same obligation as tax official that is prohibited from disclosing confidential information concerning a Taxpayer as prescribed under paragraph (1).
Paragraph (2a)
Referred to as a third party, among others, is the state or government institution having authority to conduct an investigation in the context of state finance. The meaning of any information that is available for disclosure, among others, the Taxpayer’s identity and any information of general nature on taxation.
Paragraph (3)
In the interest of the State, for example, in the framework of investigation, prosecution, or co-operating with other government agencies, information or written evidence from or about a Taxpayer shall be given or shown to specific parties appointed by the Minister of Finance.
The written permission issued by the Minister of Finance shall state the name of the Taxpayer, the party appointed and the officials or experts authorized to give information or show written evidence from or about the Taxpayer. Such permission shall be restricted to matters deemed necessary by the Minister of Finance.
Paragraph (4)
To conduct an audit in a criminal or civil court connected with tax matters, in the interest of justice, the Minister of Finance may exempt tax officials and experts from the obligation to maintain confidentiality as referred to in paragraph (1) and (2), and on a written request of the Judge heading the court.
Paragraph (5)
The purpose of this paragraph is as a restriction and a confirmation, that tax information so requested shall relate only to a criminal or civil case about an act or circumstance in tax matters and shall be restricted only to the accused concerned.
Article 35
(1) If, in implementing the provisions of the tax laws, information or evidence is required from a bank, public accountant, notary public, tax consultant, administrative office or other third party with a relationship to a Taxpayer under audit or investigation, the party concerned shall provide the information or evidence when so requested by the Director General of Taxes.
(2) Where the parties referred to in paragraph (1) has a duty to withhold confidential information, such duty to shall be negated for the purpose of tax audit or investigation, except for a bank for which the duty to maintain confidentiality shall be waived by a written order from the Minister of Finance.
Elucidation of Article 35
Paragraph (1)
To implement the provision of the tax laws, upon a written request from the Director General of Taxes, a third party, namely bank, public accountant, public notary, tax consultant, administrative office, and other third parties related to business activities of Taxpayers audited or investigated, is obliged to provide information or evidence requested by the Directorate General of Taxes’ official.
Paragraph (2)
Sufficiently clear.
Article 36
(1) The Director General of Taxes may: a. reduce or cancel administrative penalty in the form of interest, fine, and surcharge payable pursuant to
the tax regulation in the event that the penalty is exercised due to Taxpayer’s disregard or other than his intentional faults;
b. reduce or cancel incorrect tax assessment. (2) Procedures of reducing, eliminating or canceling tax payable tax referred to in paragraph (1), is stipulated by
the Minister of Finance. Elucidation of Article 36
Paragraph (1)
There may happen in practice, an administrative penalty imposed to a Taxpayer that due to negligence on the part of the official, burdens a Taxpayer who is not guilty or unaware of the tax regulations. In such cases, administrative penalty of interest, fine, and surcharge previously determined may be cancelled or deducted by the Director General of Taxes.
As such with the Director General of Taxes due to his authority and based on justice, may deduct or cancel incorrect notice of tax assessment as in, for instance, the Taxpayer whose petition is denied due to improper fulfillment of the formal requirements (lately in filing the Decision on Objection), despite fulfilling the material requirements.
Paragraph (2)
Sufficiently clear.
Article 36A
If a tax auditor in calculating or determining the tax is not conformant with the tax regulation resulting a loss for the State, the official denoted is liable to penalty as provided by the law. Elucidation of Article 36A
In efforts to enhance services to Taxpayers and capabilities of tax officials, for the tax official counting or determining tax irrelevant with the valid tax laws resulting in the State loss, a penalty shall be imposed in accordance with the provisions of the valid law regulations.
Article 37
The amount of change of compensation interest and administrative penalty in the form of interest, fine, and surcharge shall be stipulated by a Government Regulation. Elucidation of Article 37
In accordance with the monetary condition, the currency value is not at a constant state. Hence, the law allows the Government, whenever necessary, to issue Government Regulation to change and adjust the amount of interest compensation and administrative penalty in the form of interest, fine, and surcharge, in accordance with the monetary condition.
CHAPTER VIII CRIMINAL PROVISIONS
Article 38
Whomsoever, due to his negligence: a. fails to file a Tax Return; or b. files an incorrect or incomplete Tax Return, or attaches incorrect information, which may cause losses to the
revenues of the state, shall be punished by imprisonment for a maximum of 1 (one) year and a maximum fine equal to 2 (two) times the amount of unpaid or underpaid tax.
Elucidation of Article 38
A violation of tax obligations by a Taxpayer, insofar as it concerns a matter of tax administration, shall be subject to an administrative penalty, whereas that connected with a crime in tax matters, is liable to a penalty. An act or deed as referred to under this Article is not an administrative violation, but a criminal act.
By the existence of the criminal penalty concerned, it is hoped that Taxpayers will be aware of the need to comply with their tax obligations as prescribed in the tax law regulation.
In this Article, negligence means unintentional neglect, carelessness or lack of appreciation for tax obligations, so that the act causes a loss to the state revenue.
Article 39
(1) Whomsoever deliberately: a. fails to register, or misuses or uses without authority a Taxpayer Identification Number or a Confirmation
of Taxable Person for VAT Purposes Number referred to in Article 2; or b. fails to file a Tax Return; or c. files a false or incomplete Tax Return and or information; or d. refuses to be audited referred to in Article 29; or e. shows an account, record or other document that is false or forged; or f. fails to keep books of accounts or records, or fails to show or make available accounts, records or other
documents; or g. fails to remit tax already withheld or collected; thus causes losses to the state’s revenue, shall be punished by imprisonment for a maximum of 6 (six) years
and a maximum fine equal to 4 (four) times the amount of unpaid or underpaid tax. (2) The criminal penalties referred to in paragraph (1) shall be multiplied by 2 (two) if an individual commits
another criminal tax offence within 1 (one) year after the completion of the previous prison sentence. (3) Whomsoever, in the course of claiming a tax refund or a tax carryover, attempts to commit a criminal tax
offence by misusing or using without authority a Taxpayer Identification Number or a Confirmation of Taxable Person for VAT Purposes Number referred to in paragraph (1) subparagraph a, or files a Tax Return and or attaches information which is false or incomplete as referred to in paragraph (1) subparagraph c, shall be punished by imprisonment for a maximum of 2 (two) years and a maximum fine equal to 4 (four) times the amount of the refund and or carryover claimed by the Taxpayer.
Elucidation of Article 39
Paragraph (1)
An act or deed as referred to in this paragraph that is carried out intentionally is subject to a heavier penalty in view of the importance of tax receipts to State income.
Paragraph (2)
To prevent the recurrence of a criminal act in tax matters, those who repeat a tax crime before a year has elapsed since serving part of or the full previous prison term shall be liable to a heavier criminal penalty, which is twice the sentence as prescribed in paragraph (1).
Paragraph (3)
Abuse or illegal use of a Taxpayer Identification Number or a Taxable Person for VAT Purposes Registration Number, or the submission of a false or incomplete Tax Return in connection with a false request for an unrightfully tax refund and or tax credit, is extremely harmful to the State. Therefore, any attempt to commit such a crime constitutes a separate litigation.
Article 40 An individual committing a criminal tax offence shall not be prosecuted if 10 (ten) years have elapsed since the date of tax is payable, or the end of the related Taxable Period, the Fraction of the Taxable Year, or the Taxable Year. Elucidation of Article 40
Tax crime statue of limitation is ten years beginning from tax becoming payable, from the end of the related Taxable Period, or Fraction of Taxable Year, or Taxable Year. This will give a legal certainty to Taxpayers, general prosecutor and judge. The ten-year period is in line with the retention of tax documents on which the calculation of tax payable is based.
Article 41
(1) An official who, due to his/her negligence, fails to fulfill the obligation to withhold confidential information as referred to in Article 34, shall be punished by imprisonment for a maximum of 1 (one) year and a maximum fine of Rp4,000,000.00 (four million rupiahs).
(2) An official who deliberately fails to fulfill his duties, or anyone who causes the official to fail in his duties referred to in Article 34, shall be punished by imprisonment for a maximum of 2 (two) years and a maximum fine of Rp10,000,000.00 (ten million rupiahs).
(3) A criminal prosecution referred to in paragraph (1) or (2) shall only be conducted on a suit filed by an individual whose confidentiality has been breached.
Elucidation of Article 41
Paragraph (1)
To ensure that confidential tax matters are not revealed to third parties and in order that a Taxpayer will not be dissuaded from providing data and explanations in the context of implementing the tax laws, it is necessary that criminal penalty be imposed on any official breaching confidentiality.
A breach of confidentiality under this paragraph is done due to negligence in the sense of unintentional neglect, carelessness, or lack of appreciation of duty, such that the legal obligation to keep information or evidence from a Taxpayer confidential, is violated. Because of such negligence, the official is subject to an appropriate penalty.
Paragraph (2)
An act or deed referred to in this paragraph, which is committed intentionally, is subject to a heavier penalty compared to the act or deed committed through negligence, in order that official concerned will be more careful not to breach the confidentiality of a Taxpayer.
Paragraph (3)
A criminal suit against a breach of confidentiality as referred to in paragraph (1) and (2), by its nature affects the private interest of an individual or an entity as a Taxpayer; hence, it can only constitute an alleged criminal offence.
Article 41A
Whomsoever obliged under Article 35 of this law to provide information or evidence as requested, but deliberately fails to do so, or provides information or evidence that is false, shall be punished by imprisonment for a maximum of 1 (one) year and a maximum fine of Rp10,000,000.00 (ten million rupiahs). Elucidation of Article 41A
In order that a third party complies with the request of the Director General of Taxes as prescribed in Article 35, it is necessary to impose a penalty on any third party that commits such acts or deeds as are referred to in this Article.
Article 41B Whomsoever deliberately obstructs or hinders a tax criminal investigation shall be punished by imprisonment for a maximum of 3 (three) years and a maximum fine of Rp10,000,000.00 (ten million rupiahs). Elucidation of Article 41B
Anyone committing an act of obstructing or hindering an investigation of a criminal tax offence, such as by obstructing an investigator from conducting a search, by concealing evidence and so on, shall be liable to a criminal penalty as prescribed in this Article.
Article 42
Deleted (by the Law No. 9 of 1994) Elucidation of Article 42
Deleted (by the Law No. 9 of 1994)
Article 43 (1) The provisions referred to in Article 38 and Article 39 shall also apply to any representative, third party with
power of attorney, or employee of a Taxpayer, who orders, participates in, proposes, or assists in the execution of a criminal tax offence.
(2) The provisions referred to in Article 41A and Article 41B shall also apply to whomsoever orders, proposes, or
assists in the execution of a criminal tax offence. Elucidation of Article 43
Paragraph (1)
Prosecution on a criminal tax offence shall not be limited to Taxpayers, their representatives or employees, but shall also include those who order, participate, propose or assist the tax criminal offence.
Paragraph (2)
Sufficiently clear.
CHAPTER IX INVESTIGATION
Article 44
(1) Particular officials of the Directorate General of Taxes shall be granted special authority as investigators to
investigate criminal tax offences, as provided under the regulating law on Criminal Procedures. (2) An investigator referred to in paragraph (1) is authorized to a. receive, seek, gather, and examine information or reports connected with criminal tax offences, so that
the information or reports shall be made more comprehensive and clearer; b. examine, seek, and gather information on individuals or entities with respect to truth of acts committed in
connection with criminal tax offences; c. request information and evidence from individuals or entities in connection with criminal tax offences; d. examine accounts, records, and other documents in connection with criminal tax offences; e. conduct search in order to obtain evidence such as accounts, records and other documents, and to
confiscate such evidence; f. seek the assistance of experts in the context of conducting an Investigation into criminal tax offences; g. prevent and or prohibit anyone from leaving a room or place while an Investigation is in progress and to
examine the identity of individuals and or confiscated documents as referred to in subparagraph e; h. photograph any individuals connected with tax offences; i. summon an individual to provide information and examine him as a suspect or witness; j. terminate an investigation; k. conduct such other activities as may be necessary to expedite the investigation of a tax offence, in
conformity with and accountable to the law. (3) An investigator referred to in paragraph (1) shall notify the start of an Investigation and submit its results to
the Public Prosecutor through the State Police Investigation Official pursuant to the provisions of the regulating Law on Criminal Procedures.
Elucidation of Article 44
Paragraph (1)
A tax investigator is a special official in the Directorate General of Taxes who is appointed by the official in charge in accordance with the applied tax law regulation. Investigation of a tax crime is conducted in accordance with regulations prescribed on the valid Criminal Law Procedures.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Article 44A
An investigator referred to in paragraph (1) of Article 44 shall terminate an investigation referred to in paragraph (2) subparagraph j of Article 44 where there is insufficient evidence, or where the case does not constitute a criminal tax offence, or where the case is overdue, or the suspect has passed away. Elucidation of Article 44A
Where an investigation on a criminal tax offence is terminated, other than due to its statue of limitations, a notice of assessment can still be issued.
Article 44B (1) For the purpose of the state’s revenue, upon request from the Minister of Finance, the General Attorney may
terminate an investigation of a criminal tax offence. (2) The termination of investigation referred to in paragraph (1) shall only be approved after the Taxpayer fully
paid tax which is unpaid, is underpaid, or should not have been refunded, increased by an administrative fine equal to four times the tax unpaid, underpaid, or which should not have been refunded.
Elucidation of Article 44B
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
CHAPTER X TRANSITION PROVISIONS
Article 45
The provisions of the previous tax laws shall remain in force until December 31, 1988, with respect to taxes payable at a time, a Taxable Period, a Fraction of a Taxable Year, or a Taxable Year ending before the enactment of this law. Elucidation of Article 45
Notwithstanding the revocation of the previous law upon the enactment of this law, to accommodate the settlement of tax assessed in the period or Taxable Year prior to the enactment of this law, the implementation of which was still based on the old law, this law provides the validity of the old law up to December 31, 1988. The five years determination is in line with tax collection statue of limitation.
Article 46 With the enactment of this law, the implementing regulations of the previous tax laws shall remain in force provided they do not conflict with the provisions of this law. Elucidation of Article 46
Sufficiently clear.
Article 47
Deleted (by the Law No. 9 of 1994) Elucidation of Article 47
Deleted (by the Law No. 9 of 1994)
Article 47A
To all taxation rights and obligation that have not been completed, Law Number 6 Year 1983 on the General Provisions and Tax Procedures as has been amended with Law Number 9 Year 1994 shall be enacted upon. Elucidation of Article 47A
In efforts to give certainty to Taxpayers concerning the tax rights and obligations that has not been settled for Taxable Year 2000 and previously, Law Number 6 year 1983 on General Rules and Procedures of Taxation as amended by Law Number 9 Year 1994 are still applied.
CHAPTER XI CLOSING PROVISIONS
Article 48
All matters not covered under this law shall be dealt with by a Government Regulation. Elucidation of Article 48
To accommodate tax matters not adequately provided, regarding procedures or completeness, those matters will be regulated further in Governments regulations. Therefore, it will be less laborious to make adjustments on the implementation of this law and necessary procedures.
Article 49
The provisions of this law shall have the same validity as other tax laws unless otherwise stipulated. Elucidation of Article 49
Sufficiently clear.
